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Big Data Analytics and its Application in E-Commerce

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 Big Data Analytics and its
Name: Uyoyo Edosio
Application in E-Commerce
Using Case studies of
Adidas, Walmart and Amazon.com
Table of Contents
1 Introduction ......................................................................................................................................................3

1.1 Definition of Big Data Analytics ..............................................................................................................4

2 Big Data Analytic Techniques and its Application in E-Commerce ................................................................4

2.1 Social Media Analytics and E-Commerce................................................................................................4

2.1.1 Technology behind Analysis Social Media Data..............................................................................5

2.1.2 Text Mining: .....................................................................................................................................5

2.1.3 Sentiment Analysis (Based on Machine Learning Algorithm):........................................................5

2.2 Case Study: Walmart Inc. Social Media Analytics ..................................................................................5

3 Big Data and Predictive Analysis .....................................................................................................................6

3.1 Technology behind Product Recommenders on E-Commerce Websites .................................................7

3.1.1 Collaborative Filtering:.....................................................................................................................7

3.1.2 Clustering Algorithm ........................................................................................................................7

3.1.3 Case Study: Use of Product Recommender in Amazon.com ...........................................................7

3.2 Price Management / Dynamic Pricing: .....................................................................................................8

3.3 Case Study of Amazon.com Dynamic Pricing .........................................................................................8

3.4 Wal-Mart: Prioritizing the Point of Sale...................................................................................................8

4 Mobile Analytics and E-Commerce .................................................................................................................9

4.1 Technologies behind Mobile Phone Analytics .........................................................................................9

4.2 Case Study: Adidas “Light You Up” Mobile Campaign ........................................................................10

5 Conclusion ......................................................................................................................................................10

6 References ......................................................................................................................................................10

2
 Abstract-This era unlike any, is faced with explosive with 23% using social media to respond to
growth in the size of data generated/captured. Data customer opinions and questions.
growth has undergone a renaissance, influenced
This survey evidences the fact that exchange of
primarily by ever cheaper computing power and
electronic information via social media site has
the ubiquity of the internet. This has led to a
positively impacted Ecommerce in terms of revenue
paradigm shift in the E-commerce sector; as data is
and brand awareness.
no longer seen as the byproduct of their business
activities, but as their biggest asset providing: key However, with the advent of big data analytics there
insights to the needs of their customers, predicting will be more informed/ data driven strategies for
trends in customer’s behavior, democratizing of businesses communicate with consumer. Such that E-
advertisement to suits consumers varied taste, as commerce vendors/businesses, can harness/analyze the
well as providing a performance metric to assess the tremendous data (Big Data) generated from Electronic
effectiveness in meeting customers’ needs. Data Interchange (EDI), in order to gain better
This paper presents an overview of the unique understanding of consumer behavior. Such unique
features that differentiate big data from traditional insight can be applied to improve customer service,
datasets. In addition, the application of big data guide business strategy, and provide democratized
analytics in the E-commerce and the various services to customers. Fig. 2 below illustrates further,
technologies that make analytics of consumer data the importance of big data analysis to organizations
possible is discussed. (based on a survey carried out by Mckinsey on 115
Further this paper will present some case studies of leading organizations) (Wielki, 2013)
how leading Ecommerce vendors like Amazon.com,
A practical example of such E-commerce business is
Walmart Inc, and Adidas apply Big Data analytics in
Amazon.com –by utilizing special software to analyze
their business strategies/activities to improve their
cookies and clickstream on consumer browsers, the
competitive advantage. Lastly we identify some
Company can identify patterns in consumers’ shopping
challenges these E-commerce vendors face while
habit and hence can provide customized/democratized
implementing big data analytics.
offers, advertisements and discounts to such consumer
(Mosavi & Vaezipour, 2013).
1 INTRODUCTION

Over the past years, the capacity of the world to

exchange and generate information has increased from
0.3 Exabyte in 1986 (20 % digitized) to 65 Exabyte’s in
2007 (99.9 % digitized) (Manyika et al., 2011). Figure 1
illustrates the growth in data from 1986 to2007
For instance, in 2012 Walmart’s transactional databases
were estimated to contain over 2.5petabytes of customer
related data.
The growth of data is fed by the availability of cheaper
computing and ubiquity of the internet. Nowadays,
virtually everything is done electronically; people
exchange information over the internet and engage in
buying and selling via the internet (Assuncoa et al.,
2013). Ecommerce vendors have taken advantage of the
use of the internet to market goods and services, improve
revenue and brand awareness. In the year 2012 a survey
carried out on businesses in the United Kingdom
revealed the following:
 Sales on Website totaled £164 billion, which
represented 6% of business turnover (This is a 1%
increment from 2011).
 82% of businesses had a website, while 95%
Figure 1: Data growth between 1986 and 2007
broadband Internet.
(Manyika et al., 2011)
 43% of businesses had social networks accounts,

3
 Figure 2: Benefits of Big Data Analysis to Businesses 2 BIG DATA ANALYTIC TECHNIQUES AND ITS
(Wielki, 2013) APPLICATION IN E-COMMERCE

2.1 Social Media Analytics and E-Commerce

Social media analytics (SMA) involves the collection of

data from social media sites/applications (such as, wiki,
Facebook, Twitter, GooglePlus, blogs etc) and
evaluating such data to gain insights/knowledge. Social
media data can be classified as big data as it bears the
3V characteristics. (For instance each day there is about
35 million status updates, and over 100,000 tweets per
minute on Twitter) (Assuncoa et al., 2013).
Social media sites are not just networks of
interconnected people, but virtual community, where
people interact, exchange information and share
opinions. These activities are capable of influencing
consumer’s perception on a particular brand. This is
Based on a survey carried out on 6,000 social media
1.1 DEFINITION OF BIG DATA ANALYTICS
users, it was revealed that:
Presently, there is no unified definition for the term  Almost 40% of social media users have bought an
“Big Data", however, the most widely accepted item after “favoriting” or sharing it on a social
definition of Big data is in terms of 3 characteristics, media site
volume, velocity and variety also referred to as 3 V’s –  71% of social media users are more likely to
Variety refers to the heterogeneous nature (made up of purchase based on referrals.
structured and unstructured datasets), Velocity depicts
the speed at which data is captured, and Volume refers  74% of consumers depend on social media
to the size of data (usually in Petabytes, Exabyte and networks when making decisions on what to
Terabytes) (Russom, 2011) (Edosio, 2014). purchase.
Due to these characteristics, it is impossible to  Facebook influences 30.8% of social media users
effectively manage and analysis big data using purchasing habits, while LinkedIn and YouTube
traditional databases. However, using special tools and influence 27% of social media site users
technologies (such as: Hadoop Distributed files system) respectively (Seave, 2013).
Big data effectively managed (management of big data
includes process, storage, real-time/near real-time As a result of the above statistics, a lot of Ecommerce
analysis). In addition, when special data mining vendors are adopting social media analytics for the
algorithms (such as: machine learning and clustering following reasons:
algorithm) are introduced to the big data analytical  To gain competitive advantage and business
framework, one can derive insight from data (Fan et al., values
2013).  Drive customer traffic,
For the purpose of this study, we will limit the study of  Boost customer loyalty and retention,
big data analytics to three categories as follows:  Improve sales and revenues, improving customer
1. Social Media Analytics: Refers to analysis of large satisfaction; and most importantly to create brand
volume of data generated from social media awareness and build reputation (Hea et al., 2013)
applications/sites (Hea et al., 2013) (Melville et al., 2009).
2. Predictive Analytics: Refers to use of historical data
to forecast on consumer behavior and trends Fig 3 below illustrates how various organizations utilize
(Mosavi & Vaezipour, 2013). social media sites in their business activities.
3. Mobile Analytics: This refers to the analysis of large
volume of data generated from mobile phones,
tablets and mobile gadgets (Li & Du, 2012).

4
 .

2.1.2 Text Mining:

This technique is highly dependent on the use of text
based content from blogs and social media sites to
make judgment on the relevance of an issue. As
illustrated in the Fig 4, Text collected is filtered using a
keyword filter to retrieve relevant knowledge. The
Ecommerce marketer generates list of keywords
pertaining to the product being monitored. These key
words can be used to identify sentiments about a
product (Melville et al., 2009).

2.1.3 Sentiment Analysis (Based on Machine

Learning Algorithm):
This technique of analytics works using either a
machine learning algorithm or artificial intelligence, to
detect sentiments about a particular good on service.
Basically each words obtained from the big data is
analyzed and tagged, after which it is referenced with a
predefined word, or synonym which interprets whether
the opinion is positive or not. (Yi & Niblack, 2005)
For instance if a text from a Facebook post says
Figure 3: How Organizations use Social Media Sites (Office “iphone5 is awesome”
for National Statistics, 2013)
MLP Sentiment Analysis= iphone5 + is+ awesome
2.1.1 Technology behind Analysis Social Media
Data Each of these statements is then analyzed (using a
predefined sentiment database) to predict the emotions
of each word. The term “awesome” is predicted to be
positive hence this statement is positive publicity for
iphone5.

2.2 Case Study: Walmart Inc. Social Media

Analytics

Walmart (referred to as ASDA in the United

Kingdom) is an American multinational retail
corporation (The Center for Media Justice, 2013).
In April 2011, Walmart purchased Kosmix, a social
media start-up focused on e-commerce. Kosmix
developed a software application which had the ability
to search and analyze social media applications (like
Twitter, Facebook, Blog spots) in real-time in order to
provide personalized insights to users. Kosmix was also
developing a knowledge base application called the
“Social Genome” which had the capacity to capture
information and relationships about people, events,
topics, products, locations, and organizations. When
Figure 4: Analysis of Social Media Data (Tan et al., 2013)
Walmart purchased the company they changed the
name to @WalmartLabs.
Basically there are two common techniques for
analyzing social media data, they include: Text mining,
The Walmart’s Social Genome (publicly referred to as
and Sentiment analysis (using machine learning) (Tan
Walmart Shopycat) software constantly captures data
et al., 2013)

5
from social media sites in real-time with billions of
entities and relationships.
The software performs a semantic analysis of social
media and feeds its output to a custom built e-
commerce applications for Walmart (The Center for
Media Justice, 2013).

In January 2013, the Company reported that its social

media analytics software project is capable of indexing
and searching 60 billion social media documents and in
turn help its marketers to understand sentiments, trends,
and popular products on a real time basis. The software
also has the capacity to see sentiments based on
geographic locations and predict trends in all Wal-Mart
stores as well as ecommerce stores (The Center for
Media Justice, 2013).
Figure 6: Benefits of predictive analytics (Millard, 2013)
3 Big Data and Predictive Analysis
Predictive analytics is the use of past/historical data to
predict future trends. This analysis makes use of In summary, predictive analytics based on the
statistical models and machine learning algorithm to definitions above, deals with use of data to determine
identify patterns and learn from historical data (Shmueli and identify possible future events. This technology has
& Koppius, 2011). Figure 8 below has the details. been around for a while, though the adoption has been
Predictive analytics can also be defined as a process low because of the complexity and costs. Using the Big
that uses machine learning to analyze data and make data analytical platform to analyze these data (alongside
predictions (Puri, 2013). data mining and machine learning algorithm), E-
commerce vendor can efficiently predict consumer
behavior faster, more efficiently and at more effective
cost (Mosavi & Vaezipour, 2013).

There are various applications of predictive analytics to

an organization Fig 6 and Fig 7 illustrate the benefits
and usage of predictive analytics in organizations. 67%
of businesses aim at using predictive analytics to create
more strategic marketing campaign in future, and 68%
sight competitive advantage as the prime benefit of
predictive analysis (Millard, 2013).
Broadly speaking, predictive analytics can be applied in
Ecommerce in the following ways:
 Product Recommendation
 Price Management
 Predictive Search
Figure 5: Uses of predictive analytics in an organisation
(Millard, 2013)

6
 3.1.2 Clustering Algorithm
Clustering Algorithm technique works by identifying
groups of users that have similar preferences. These
users are then clustered into a single group and are
given a unique identifier. New customers cluster are
predicted by calculating the average similarities of the
individual members in that cluster. Hence a user could
be a partial member of more than one cluster depending
of the weight of the user’s average opinion (Sarwar et
al., 2002).

Figure 7: Steps involved in Predictive Algorithms

3.1 Technology behind Product

Recommenders on E-Commerce Websites
Figure 9: Clustering Algorithm based on (Sarwar et al., 2002)
Typically a large e-commerce site offers thousands of
3.1.3 Case Study: Use of Product
product and services for sale. Navigating and searching
Recommender in Amazon.com
for a product out of thousands on a website could be a
Amazon.com is currently the world’s largest online
major setback to consumers. However, with the
retail store. Amazon started off as an online book store
invention of recommender system, an E-Commerce
and rapidly diversified into production and sales of
site/application can quickly identify/predict products
consumer goods, electronics, and house hold items
that closely suit the consumer’s taste (Sarwar et al.,
amongst others.
2002). There are two main algorithms/technologies that
In Amazon product recommenders are used to
support the recommendation system:
personalize each customers experience on the online
1. Collaborative Filtering
store. Products are adapted to suits each customers taste
2. Clustering Algorithm
(on a real time basis). This is a Big Data challenge as
Amazon captures millions of customer’s data.
3.1.1 Collaborative Filtering:
Amazon makes use of clustering algorithms and
Using a technology called Collaborative Filtering (CF),
collaborative filtering to group customers based on
a database of historical user preference is created.
preferences. Their product recommender system
When a new customer access the ecommerce site, the
group’s customers into clusters/groups based on:
customer is matched with the database of preferences,
in order to discover a preference class that closely - Similar search
matches the consumers taste. These products are then - Item to Item collaborative filtering.
recommended to the new consumer (Sarwar et al.,
3.1.3.1 Search based Product Recommender at
2002).
Amazon.com
Search based (also called content based search) utilizes
a consumers purchase history and rated item to create a
search query which find other items (such as author or
similar genres) similar to consumers taste. For example:
if a customer purchases a DVD called the “God
Father”. The product recommender will recommend
movies either from similar authors, similar genres, and
similar directors (Linden et al., 2003).

3.1.3.2 Item to Item collaborative filtering at

Amazon.com
Amazon.com not only uses its product
Figure 8: Collaborative Filtering Algorithm based on (Sarwar recommendations on its e-commerce store, but also it is
et al., 2002) used as a Marketing tool in form of email campaigns.

7
By clicking on the link “Your Recommendations”
customers can filter product by product
recommendation based on items currently in their
shopping carts.

- Item to Item collaboration at Amazon.com

works by matching each of the users purchased
or rated items to an item that is similar.
- The algorithm builds a similar items table by
and finding items that customers tend to
purchase.
- The algorithm also builds a product-to-product
matrix by iterating through item pairs and
computes a similarity metric for each pair
(Linden et al., 2003).

3.2 Price Management / Dynamic Pricing:

It involves the use of historical data such as: previous
purchases, clickstream, cookies, enterprise resource
planning systems to dynamically set prices of an item
or offer customized discounts. This technology
customizes the price/ discount for a particular good to
suit a particular customer in real time. Hence, it is
possible to two different customers to purchase the
same item from an online store at two different prices
(Grewala et al., 2011). Whilst this technology has it
benefits, customers may get aggravated or feel sense of
discrimination due to the price variation.

3.3 Case Study of Amazon.com Dynamic

Pricing
Several consumers are becoming increasingly aware of
price discrimination in Amazon.com. For instance in
September 2000, CNN reported that some customers of
Amazon where aggravated over price discrimination on
the price of a particular DVD. One the buyers reported Figure 10: Dynamic Pricing at Amazon.com- The same
that the price of a DVD after deleting cookies on his product has two different prices for two different users
computer, differed by $2.50 margin. Also figure 10
illustrates a practical example of price discrimination of 3.4 Wal-Mart: Prioritizing the Point of Sale
a particular product by Amazon.com. In another In 2013, Wal-Mart Labs purchased a company called
instance, CNN reported that Amazon.com made use of Inkiru. Inkiru is a startup that uses predictive analytics
dynamic pricing algorithm while selling a product in analyzing big data. The predictive technology was
called “Diamond Rio MP3 Player” for $51 less than its designed to capture data from diverse sources and help
original price (Ramasatry, 2005) Walmart create personalized marketing/ merchandising
campaigns to targeted customers (Puri, 2013).

8
4 Mobile Analytics and E-Commerce shopping (Ofcom, 2009) (Tao et al., 2012)
(Ververidis & Polyzos, 2002). Hence mobile phones
can serve as a medium to propagate e-commerce
activities.

By analyzing big data generated from mobile phone

data exchange, ecommerce companies can provide
value added services such as: Geo advertising:
Location based discounts. E-commerce vendors can
also identify location patterns using existing
customer data to convey prospects customized
messages to customers in a timely manner (Ofcom,
2009).

Some of the benefits of using mobile phone

analytics include:
- It is a much cheaper, effective and timely
platform to promote products and services to
Figure 11: Growth of Mobile users in the UK
consumer (Ververidis & Polyzos, 2002).
between 2003 and 2008 (Ofcom, 2009) - Advertisement can be sent in real time based
on their locations, and proximity from a
store, by leveraging on data mined for GPS
information from customers mobile phones
(Li & Du, 2012)

4.1 Technologies behind Mobile Phone

Analytics
Location-based services aims at offering
personalized mobile transactions to some specific
individuals at a particular location, by using
knowledge of their current location (Li & Du, 2012).
Basically the technologies that foster location based
marketing include the use of RFID tags, Bluetooth
and GPS to identify user’s proximity to a particular
location.
Bluetooth location Based Advertiser: This
Figure 12: Uses of Mobile phone (Ofcom, 2009) location based system makes use of Bluetooth to
target users with special offers at a specific time of
the day. For example: Based on studies of users of a
Over the years there has been massive growth in the particular supermarket, discounts can be offered to
number of mobile phone users. The size of mobile targeted consumers. Such discount can be conveyed
phone users in the UK grew from about 40 million in- store using the Bluetooth location based service
in 2003 to over 78 million in 2008(See figure12 for system to target such customers when they are
details above) (Ofcom, 2009). around the e-commerce store (Li & Du, 2012).

In like manner, there has been radical change in the

uses of mobile phones, previously mobile phones
where just utilized as a mere tool for
communication, however in this era mobile phones
are used to perform variety of functionalities such
as: send emails, games, track people (using GPS),
perform banking transactions , online shopping
amongst others etc. Figure 13(above) illustrates the
uses of mobile phone ( 35% of smart phone users
admitted to using their mobile phones for online

9
 Despite these challenges a lot of companies are
moving ahead to adopt big data in their e-commerce
strategies. According to Mckinsey in (Manyika et
al., 2011), majority of the top five business
organizations in the USA claim to yielding
tremendous growth. Hence, noting the promises big
data analytics holds for e-commerce there is need to
train necessary skills and build good governance
framework for big data analytics.

Figure 13: Flowchart of a Bluetooth enabled location

based advertisement system based on (Li & Du, 2012)
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