The Value of Descriptive Analytics: Evidence From Online Retailers

Ron Berman, Marketing, The Wharton School, and Ayelet Israeli, Harvard Business School

Abstract: Does the adoption of descriptive analytics impact online retailer performance, and if so, how? We use the synthetic control method to analyze the staggered adoption of a retail analytics dashboard by more than 1,000 e-commerce websites, and find an increase of 13–20% in average weekly revenues post-adoption. We demonstrate that only retailers that adopt and use the dashboard reap these benefits. The increase in revenue is not explained by price changes or advertising optimization. Instead, it is consistent with the addition of prospecting and personalization technologies to retailer websites. The adoption and usage of descriptive analytics also increases the diversity of products sold, the number of transactions, the numbers of website visitors and unique customers, and the revenue from repeated customers. In contrast, there is no change in basket size. Put together, these findings are consistent with an indirect effect of descriptive analytics, and they suggest that the adoption of analytics serves as a monitoring device that allows retailers to assess the value of new technologies. Without using the descriptive dashboard, retailers are unable to reap the benefits associated with these technologies.

Read the working paper here.