What is data sharing and what are the basics for developing a strategy that benefits both your company and its partners?
Companies can build their competitive edge with data collection and analysis. And to create even more value, companies can also share their data with their ecosystem. Here’s what you need to know to develop a win-win data sharing strategy that can benefit your company and its partners.
What is data sharing?
Data sharing is when public or private organizations, companies and partners make their data available to one another. Data sharing is not a new practice. However, the increase in the volume and quality of the available data, as well as the development of technologies to use it (particularly BI in the cloud), makes this type of sharing more accessible.
Producing, cleaning and using data requires technical resources, human skills, time and budget. This is why many public data sharing initiatives have been developed. A number of them exist, for example, in the ecosystems of public and private research, entrepreneurship and education. The idea is to collaborate for the benefit of all involved.
Open data is accessible for download on the official portal for open data in the United States (data.gov), Canada (open.canada.ca) and Europe (data.europa.eu, with 82 catalogs from 36 countries with 1,348,366 datasets as at July 2021).
How do companies benefit from sharing data?
Apart from these “public” initiatives, why would a company decide to share its data with its clients, partners or even competitors? First of all, it’s important to differentiate between open data available to all and data shared between companies (using a private data exchange platform or a data marketplace for a fee).
The main advantages for companies sharing data are: sharing the costs of collecting, analyzing and updating data; developing growth thanks to better information; and better productivity. The data then becomes a “product” that companies can share with or sell to their ecosystem. A data product strategy that can open new markets and sources of revenue.
In the financial sector for example, credit card companies share information with merchants and brands to enable them to get a better understanding of the customer’s buying journey and their consumer habits. Banks also share data between themselves, even with competitors, to detect fraudulent transactions and accounts. In the travel industry, airlines and hotel companies also depend on external data from travel reservation websites, to better understand their customers’ habits, and adapt their prices accordingly. And players in the industrial sector, particularly the auto sector, have also understood the benefit of data sharing. All stakeholders along the production chain, including subcontractors, require information about product performance and use. This helps them to improve industrial design and processes.
A closer look at 3 successful data sharing initiatives
GeoPost (La Poste’s international express package business) and Nike Belgium share data in real time for their package delivery cycle. Analyzing and sharing data with its logistical partners is now at the heart of Nike’s strategy to better meet its customers’ needs, from product personalization to the choice of delivery methods. For the last 10 years Nike has shifted its sales strategy, making it more direct-to-consumer (DTC), via its stores and online stores. In 2011, DTC accounted for 16% of the brand’s revenue, compared to 35% in 2020. Nike also invests in data analysis technology through acquisitions. One example is Celect, a predictive analytics company the brand acquired in August 2019, and the startup Datalogue a data integration platform acquired in February 2021.
Another example of data sharing comes from U.S. retail giant, Walmart, which owns over 10,500 stores and clubs under 48 brands in 24 countries, as well as e-commerce sites. Walmart resells its sales analytics to its listed brands and its partners to help them optimize their marketing, sales and logistics strategies. Walmart’s data café is the largest sales data exchange hub in the world. Every hour it processes 2.5 petabytes of data from over 1 million customers. The data café receives data from internal sources and from over 200 external sources (such as weather). This includes 40 petabytes of transactional data that is quickly modeled, manipulated and visualized.
Carrefour is another company from the sales world that has taken such initiative. In June 2021, the French distributor launched its new data and retail media strategy via its data platform called Carrefour Links. It is designed for the Group’s partner companies to better respond to customers’ needs by creating more personalized and pertinent experiences. The platform is based on the data lake created by Carrefour (one of the largest in Europe) and on technologies from Criteo (advertising), Google (cloud) and LiveRamp (data connectivity). According to a study conducted by Boston Consulting Group and Google, with this type of platform using artificial intelligence and large-scale data analysis, Carrefour’s partners could generate over 10% growth in sales. They could use predictive demand models, offer more pertinent local assortments and more personalized customer services. Carrefour has stated that this data sharing strategy is the fruit of three years of digital transformation, and that it opens up a new sector of business focused on data.
Want to develop a data sharing strategy for your company? Contact our teams at BI Solution to get started!
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