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Big Data in E-Commerce and Retailing

Paola Gonzalez

DeVry University

Professor Rebecca Day

BIAM 410: Database Concepts in Business Intelligence - 10996

7/08/2022
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Abstract
We live in a data-driven world. This is not just about having more data but recognizing that

"big data" will become the fundamental way to operate many enterprise systems. Data

security is often one of the most overlooked aspects of enterprise IT, and this needs to change

soon. In today's digital economy, organizations are not just collecting more customer and

employee data than ever before; they are also transmitting more sensitive customer and

financial information over networks than they ever have before. Consequently, the same

actions taken to protect the information in the past may not consider the risks involved with

big data.

The importance of data security has never been greater. The Internet of Things (IoT) and

other emerging technologies have brought many new ways to access and use valuable data,

such as smart homes and healthcare devices that can communicate their internal states to

Internet-connected devices. As more digital sensors are added to enterprise systems, they

create a wealth of data that needs to be analyzed. If this data is not secured, it can easily be

stolen or manipulated. This Shift from IT Data to Enterprise Data: Where Do We Go from

Here? With this shift in how information is created and used, organizations need to change

their data security strategies to address big data. These changes start with who owns the data

and how it is protected. Traditional hierarchical models of information security are no longer

sufficient for big data.

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Big data in e-commerce and retailing

Introduction

Big data is any data with a large amount of information within it, a large amount of

information that is difficult to process or analyze. No particular threshold needs to be reached

before you can call something "big data ."It is all based on how much data is in the dataset.

Big data is undoubtedly making its way into all facets of business but has left many

questions. Big data can be challenging to understand, and running successful businesses from

this point can easily be a minefield. It will take skill, planning, and experience to make the

most of the information available. Big data has been used in all aspects of e-business, and

now it is time to take full advantage of it. Big data has been linked to the emergence of e-

business in recent years; It is a massive and fast-growing opportunity that is still relatively

untapped by most companies. Big data can provide a myriad of insights; with this fact

explored in this research paper, there are many ways big data can be applied to your business.

E-commerce offers enormous opportunities for retailers, but sometimes it is hard to know

what to look for when running an online store from an analytics perspective. Big data is

undoubtedly making its way into all facets of business but has left many questions. In this

paper, I shall examine the many benefits of big data to e-commerce and suggest ways in

which they can be used to deliver better customer service. An analysis of Big Data and its

benefits to the following areas; online shopping will be conducted.

What are the primary sources of big data used in e-commerce?

There are three sources of big data worldwide:

 Internal data from employees

 External data from customers

 Data from partners, vendors, governments, and others.

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The primary sources of BIG DATA in E-commerce & RETAILING are all three

mentioned above, especially data from customers and partners, vendors, and the government.

Internal Data is the most apparent source of big data for any company, including e-commerce

& retail companies. In a world where customers are becoming more and more powerful, e-

commerce & retail companies can use this vital resource internally; this data can be used to

monitor employee productivity and increase the effectiveness of store managers. External

Data -external sources of big data are mostly online customer transactions, including sales

history, purchases, product searches, location tracking, and social network activity, e.g.,

Facebook, Instagram, and Twitter (Liu et al., 2020). Even in traditional e-commerce &

retailing company, big data can be obtained from customers who visit the store and are

willing to share their data with you.

Data From Partners - This can be the most efficient and compact form of data, so it is

essential in e-commerce & retail. A good example is when an online customer buys a product

from a partner. The partner can collect important information about the customer from

RETAILING platform. The ability to understand people, markets, and sales trends has

changed the way business is done. In 2016, various technologies--from digital analytics and

machine learning algorithms to advanced data visualization--had a more significant impact

than ever (Liu et al., 2020). Big data can provide insights that lead to better decision-making

in many areas of e-commerce and retailing.

It is predicted that soon, big data will take on an even more active role in the world of

e-commerce and retailing as a must-have tool. Trends are already being observed that show

how these companies have been using it better to inform decision-making (Zheng et al.,

2022). However, there is still much potential for big data to be applied in the future. For

example, one exciting trend is the so-called "Internet of Things ."Nevertheless, what can big
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data contribute to this? "E-retailers have been using big data to understand customer behavior

better and predict future demand. However, new initiatives are on the horizon that aims to

leverage that information more effectively. The World Economic Forum's recent report, "The

Future of Retail," pointed out that e-commerce and retailing were projected to generate $19

trillion in sales by 2020; similarly, it also predicted significant changes to strategy as this

market continues to expand ("Future of retail," n.d.).

Some big data use cases in retailing include the ability to understand customer

behavior better worldwide and predict future demand using predictive analytics; the ability

for companies to forecast demand or inventory management using historical data; and a new

trend towards direct consumer engagement for e-commerce. Concerning this, big data is

impacting e-commerce in several ways; the growth of e-commerce markets has been

dramatically influenced by the proliferation of digital devices and disposable incomes. Big

data is helping e-commerce grow and flourish in several ways. Demand forecasting: E-

commerce-focused retailers can employ big data platforms and software to analyze all

historical sales data, discrepancies between seasonal sales, and other potential business

patterns (Singh, 2020). When conducting an extensive data analysis, variables like politics,

climate change, and fashion that influence demand are taken into account. This allows for the

accurate forecasting of demand, which aids retailers in optimizing inventory levels and

creating a more individualized shopping experience. Machine learning and extensive data

analysis are primarily used to identify a customer's regular purchasing patterns and personal

preferences, allowing for the customization of the store's appearance to suit the customer's

tastes.

Dynamic pricing uses machine learning algorithms that consider multiple factors to

adjust a product's price in real-time. Retailers can get an advantage over rivals in the market
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by boosting the price of specialized goods through dynamic pricing (Singh, 2020).

Companies that engage in e-commerce and retailing regularly use analytical algorithms to

assess client feedback in order to obtain a thorough understanding of customer attitudes and

improve their services.

What type of data security should be included in e-commerce?

In order to keep customers' information safe and secure, e-commerce companies

should have a dedicated team of security professionals who work closely with the

development and design teams early in the process. The more they know about the company's

data, its standards and requirements, and where sensitive customer data is located within site,

the better they can safeguard it against malicious outsiders. Hence, the development and

design teams should be responsible for their actions. Suppose sensitive data is stored on the

server. In that case, it should be stored in a separate secured area that cannot be accessed

from regular traffic, or it must be encrypted with a dedicated SSL encryption certificate. If

the data cannot be encrypted on the server itself, it should be sent to an independent server

that can guarantee security against external attackers. It is a good idea for the company to

have an SSL certificate installed on all e-commerce servers, a password to access the server,

and an employee that can administer the server. Customers who want to use credit cards

online should do so through a secure HTTPS connection. The new Payment Card Industry

Data Security Standard (PCI DSS) requires companies to follow specific standards when

processing PCI DSS-compliant data "What you need to know about securing your e-

commerce site against cyber threats," 2020). An excellent example of this is (PCI DSS Level

1). If a company cannot meet the above PCI DSS standards, it could face sanctions from

credit card companies and their banks; e-commerce website owners should ensure PCI-

compliant measures to avoid this possibility.

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Today, "big data" is commonly associated with scaling businesses. The enormous

amount of data available makes it possible to predict consumer behavior with incredible

accuracy. However, pitfalls in using big data should be considered before implementing such

a strategy for your business. In the early 2000s, online businesses had a big boom due to the

popularity of e-commerce sites such as Pinterest, eBay, Amazon, craigslist, and many more.

While these sites became quite popular, it turned out that they were not profitable because

they were spending more than they were taking in. Many of the businesses were losing

money immediately because they were not able to maintain the influx of money that the

businesses needed to survive.

I believe that big data is a precious resource and can potentially improve online sales

and profits at any company. However, big data is hard to use efficiently because not every

company or user has access to or enough information. Big data has three significant

problems: insufficient data to build a large sample size (Ogbuke et al., 2020). This can be

solved by marketing companies using their data to make their product more appealing and

increase sales. The second problem is that it is hard to organize the data because there is so

much of it. You need a place to sort your data into categories and subcategories of associated

businesses/products to show the most relevant information or products that match what the

user searched for (Ogbuke et al., 2020). Lastly, another issue is the lack of data science

professionals to analyze this data and give out the necessary recommendations to retailers. It

becomes quite expensive for a business to use big-data software in their businesses and, at the

same time, hire professionals to analyze this data; you will realize that most of them will be

operating at a loss if this happens, especially on small-scale retailers.

Conclusion
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E-commerce is one of the most booming industries in the world today, with use cases

such as big data analytics and predictive marketing being widely discussed. However, while

retailers can benefit from these technologies, it is essential to note that they come at a cost to

both the company and its customers. It is no secret that e-commerce giants like Amazon

constantly track their customers to improve their product offerings and deliver more

personalized experiences. Although this sounds good, it is essential to note that certain

customer experience aspects remain constant across products and platforms. In the case of

clothing, for example, one size does not fit all. A shirt made for a man is quite different from

that made for a woman, and it is essential to get these things right when designing a product.

A recent report by marketers predicts that over the next year, big data initiatives will

reach one-third of all shoppers. Until recently, retailers have relied solely on their analytics

tools to measure performance and other internal metrics. However, the major shift that's

happening right now is that they are starting to invest in technologies that give them insights

into how their customers interact with their products. For example, retailers can now make

guesses about a consumer's size by analyzing his or her previous purchases. This has opened

up a whole new range of possibilities for online retailers and has made it possible for them to

create unique digital experiences for every single one of their customers.
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References

Future of retail. (n.d.). World Economic Forum. https://www.weforum.org/projects/future-

of-retail

Liu, C., Wang, S., & Jia, G. (2020). Exploring big e-Commerce data and customer-perceived

value: An empirical study on Chinese online customers. Sustainability, 12(20),

8649. https://doi.org/10.3390/su12208649

Ogbuke, N. J., Yusuf, Y. Y., Dharma, K., & Mercangoz, B. A. (2020). Big data supply chain

analytics: Ethical, privacy and security challenges posed to business, industries, and

society. Production Planning & Control, 33(2-3), 123-

137. https://doi.org/10.1080/09537287.2020.1810764

Singh, S. (2020). The Pivotal Role Of Big Data In E-

Commerce. Entrepreneur. https://www.entrepreneur.com/en-in/technology/the-

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%20products

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