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Basket Size Is A Slam Dunk Metric For E-Commerce

Forbes Technology Council

CEO of Stor.ai.

E-commerce was already growing at a stellar pace when the pandemic broke out and shot it to the stratosphere: In 2022, global online retail sales are set to reach $5 trillion as our collective purchasing habits become ever more reliant on the ease and convenience of digital shopping.

Even grocery shopping—long a mainstay of brick-and-mortar establishments—is moving more and more online as consumer expectations for value and convenience grow.

Many of those customers who do opt into online grocery shopping rarely wait to restock on a weekly basis, often buying “on the fly” as the need arises—with the value of each of their frequent purchases often shrinking.

So, with such “bite size” purchases becoming more prevalent, how can online grocers ensure they remain profitable?

Basket size is a critical metric.

Why Basket Size Matters

Basket size is a retail metric that can actually shed light on the success of marketing, sales, customer experience and even brand engagement—all by tracking the dollar amount or “size” of each online purchase.

Monitoring average basket size can help online sellers understand why customers’ average order increases or decreases during different periods of time. Analyzing these basket size metrics can also offer a glimpse into the performance of individual products and let retailers know if they are providing the type and variety of goods that will satisfy shoppers’ needs at the moment of purchase.

The insights don’t stop there: Basket size can help retailers understand which items are frequently bought together, the impact of seasons and holidays on shopping habits, and so much more. Ultimately, these metrics help e-commerce sellers offer the right products to the right shoppers at the right time.

In addition, in this age of instant gratification, expectations for instant delivery are only growing. But large fulfillment centers are rarely located close enough to customers to meet these growing demands, meaning that on-demand deliveries are restricted to a limited number of items. Thus, basket size itself is inherently limited. And, together with the rise in micro-purchases, the resultant costs of fulfillment and delivery frequently outweigh the value of the acquisition.

The solution: making every effort to grow basket size.

Every Basket Is Unique

When it comes to increasing average basket size, personalization is key. The reason is simple: Personalization drives engagement, long-term engagement builds loyalty, and loyal customers drive business.

By using data collected from shoppers, online grocers can create a more personalized and targeted shopping experience for each individual customer. For example, by looking at any customer’s order history, retailers can tailor marketing campaigns to resonate during specific times of year. The more individualized a retailer’s marketing efforts, the more likely customers will be to find (and purchase) the items they truly need.

So, for example, if retailers know that a given customer buys diapers once a month, and they bought diapers last week, the personalized offers for the following two weeks might include baby formula or toys instead.

Another approach is optimizing product discovery with a personalized search experience throughout the customer journey. Case in point: If you know a consumer’s favorite craft beer is on sale, simply highlight that product next time they do a more generic search for beer.

Grocery retailers that have gathered information on customer transactions, individual profiles and preferences, and loyalty-based data over long periods of time have a competitive advantage. If properly analyzed and utilized, this data can forge a direct path to increased average basket sizes and higher total sales.

From Basket Size To Share Of Wallet

In addition, basket size is closely intertwined with another key metric for retailers: share of wallet. And the more effective grocers’ personalization strategies are, the closer this correlation is likely to be.

The process works as follows: As the capabilities of personalization tools grow, fueled by advances in AI and data analytics, grocers will expand their capacity to target shoppers not only with additional groceries but also with products that they would otherwise purchase from other retailers, like electrical goods. In so doing, retailers are expanding the share of a customer’s wallet that is spent at their store—enhancing their ability to retain that customer for the long term.

The Bigger The Basket, The Bigger The Win

As e-commerce continues to grow, online grocers must make average basket size growth a key strategic goal for their digital transformation. Retailers that use personalized data to best understand and serve their customers will go a long way to bulking up their final purchases. In short, basket size is the slam dunk for sustainable and profitable e-grocery.


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