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      The Value of Descriptive Analytics: Evidence from Online Retailers
      19 Jan 2021Working Paper Summaries

      The Value of Descriptive Analytics: Evidence from Online Retailers

      by Ron Berman and Ayelet Israeli
      Analytics are descriptive when they describe what happened. Descriptive-analytics solutions are popular among marketers and retailers. This paper provides a benchmark for the benefits of using a descriptive dashboard and illustrates how to potentially extract these benefits.
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      Author 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.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: November 2020
      • HBS Working Paper Number: 21-067
      • Faculty Unit(s): Marketing
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      Ayelet Israeli
      Ayelet Israeli
      Associate Professor of Business Administration
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