In recent months, alternative data has received a notable amount of attention from the finance industry for its usefulness in improving investment management, increasing financial inclusion by assessing loan credit risk and informing bond trading strategies. Many financial institutions and hedge funds have recognized the power of alternative data to change the way they approach their businesses.
Import.io currently works with 57 of the top 100 investment banks to collect and analyze alternative data from the web, and as we speak to more and more prospects and customers, we also see the multitude of use cases for alternative data and web data growing — from dynamic pricing and revenue optimization, building machine learning models and equity research of all kinds, to news monitoring and sentiment analysis.
While the finance sector was one of the first to fully notice and act on the availability of alternative data, many businesses and organizations outside of the banking and investment field could be following suit. With data — and often publicly available web data — being such an influencer of enterprise decisions, many data-driven businesses are seeking their own alternative data sets for guidance. Here are some additional industries that I envision will be using alternative data in the coming years:
Alternative data would allow travel companies to accelerate strategic decisions and gain a competitive advantage.
Through alternative data analysis, travel companies of all sizes and markets can improve transparency and revenue optimization. The web, being the largest source of alternative data, brings a new level of transparency when it comes to accommodation pricing and the availability of travel data like occupancy rates, average daily rates (ADR) and revenue per available room (RevPAR).
I believe alternative data provides an opportunity for travel companies to increase their competitive advantage through the ability to know their customers and differentiate their offerings. By analyzing traveler feedback on rental properties, travel companies can quickly gain insights into customer opinions and preferences when it comes to rental property choices and amenities.
Rapidly identifying and taking advantage of travel trends is another benefit of alternative data analysis. The preferred destinations for travelers across the globe changes depending on several factors such as the season, economy and upcoming holidays. From my experience, using alternative data to identify travel trends like solo travel, economic travel, local experiences and others allows travel companies to use personalized content to target specific customers based on their interests.
Consumers are telling retailers how they want to shop, but it’s up to retailers to listen.
In the past few years, e-commerce has dramatically changed the retail landscape. According to a Pew Research Center survey, 79% of U.S. consumers shop online in some form. Even in stores, according to a survey conducted by SessionM (via Marketing Land), 90% of shoppers use their phones to compare competitor prices, product information and check reviews online. In my opinion, these altered shopping habits open a world of opportunities for both digital and brick-and-mortar retailers.
I believe retailers can create better, more rewarding experiences for customers by harnessing the potential of the growing amount of available alternative data. Using this information, retailers can meet customers where they know the customers will be receptive to messaging.
Instead of spamming their email inbox with offers and advertisements the consumer will never see, retailers can engage them where they are most likely to interact. A great example of strategic customer engagement is through Instagram, which enables in-app purchases so consumers don’t even have to take a break from the app to make their purchase.
Alternative data would enable sharing economy businesses to better understand their ecosystems.
The sharing economy has seen exponential growth since 2014. According to estimates from eMarketer, there will be 86.5 million users by 2021, and the Brookings Institution estimates the sharing economy will generate $335 billion in revenue by 2025. These sharing economy businesses include companies like Airbnb, Lyft, Uber and TaskRabbit.
Due to the nature of their business models, these companies and their communities of service providers and customers typically conduct their business online or through phone apps. Unlike a retailer’s customer base, customers in the sharing economy also include service providers who rent and sell their goods and services on the company’s platform and through their payment provider.
New companies enter the sharing economy every day. I believe these emerging companies can use alternative data to better understand the market they are entering and capitalize on otherwise unseen opportunities. For example, a new home rental startup might want to know Airbnb’s impact on the rental market in San Francisco. Collecting and analyzing alternative data could allow organizations to answer obscure, tough questions to better understand their ecosystem, target markets and competition.
Alternative data from the web could become business-critical to many industries outside of finance. In my opinion, the benefits that alternative data can provide to a variety of businesses and organizations across the globe are countless and, in many cases, have yet to be seen. If these organizations aren’t already adopting or making quick moves to adopt alternative data initiatives, I believe they’re going to miss out on crucial business insights that their competitors will be gleaning from alternative data sources.
These organizations must learn from the mistakes of their predecessors that failed to adopt new technologies and take steps to digitally transform their business and strategies in an effective manner. Otherwise, they risk being left behind to pick up the pieces of missed alternative data opportunities.