- AUR-in retail stands for average unit retail.
- AUR-in retail gives the average selling price of a product.
- Retailers use AUR to identify pricing trends and product trends.
- AUR can also guide your pricing strategy vis-a-vis your competition.
- Integrate.io is a powerful data integration platform that helps you combine AUR with other metrics for profit-boosting insights.
AUR stands for average unit retail. It gives you the average selling price of a product in a given time period. An important e-commerce metric, AUR is typically calculated quarterly. But why is it important? And how can you use AUR-in retail to boost your e-commerce business? Let’s take a look at this important business metric and how Integrate.io's data integration solution can help you bring all your e-commerce data and statistics together.
Table of Contents
- What Is AUR-in Retail?
- How to Calculate AUR-in Retail
- Why Is AUR-in Retail Important?
- Complete Guide to Data Analytics and AUR-in Retail
- Reverse ETL and AUR-in Retail
- Customer Experience, Reverse ETL, and AUR-in Retail
- How Integrate.io Can Help With AUR-in Retail and Your E-Commerce Strategy
What Is AUR-in Retail?
Average unit retail gives you the average selling price of an item over a certain time period. Retailers, both online and offline, use AUR for competitor price analysis. You can also use AUR-in retail to compare product sales across categories. For example, let’s say the AUR for baby shampoo decreases quarter-on-quarter. It could mean that you sold more units of baby shampoo this quarter compared to the last quarter. Higher unit sales could also indicate that you can bump up your per-unit pricing to increase your profit margins.
You shouldn’t look at AUR in isolation, though. When combined with other key metrics, such as average unit margin (AUM) and conversion rates, it can help you steer your overall business strategy. We will come back to this. But first, how do you calculate AUR-in retail?
How to Calculate AUR-in Retail
Calculate net sales of a product and divide it by the number of units sold. That will give you the average unit retail for that product. For example, say your net sales of baby shampoo are $2,500 between January and March. You sold 100 units of baby shampoo in that quarter. Therefore, AUR for baby shampoo in the Jan-Mar quarter is $25.
It is important that you calculate net sales on markdown prices and not retail prices. The two could be the same, but very often they are not.
Why Is AUR-in Retail Important?
Retail can be a very competitive market. Profit margins are low. Most retailers, both brick-and-mortar and online, rely on numbers for a healthy bottom line. And the numbers are there. In 2021, global e-commerce sales reached nearly $5 trillion. That figure is expected to double by 2025. AUR-in retail can help you leverage the rising tide of e-commerce. Here’s how:
- For inventory planning: Say that analysis of annual AUR numbers indicates high and low trends during certain months. You could use that information to guide your inventory management strategy. Peaking AUR could mean lower demand. You could use it as a cue to have less in stock during that time period.
- For product trends: Compare AUR for different products in your inventory in a given period. Note the ones that are performing well. These could inform your larger business strategy. For example, if baby shampoo is performing well across all categories, it could tell you that your most loyal customer base is new mothers.
- For a larger strategy: AUR, in isolation, gives you only a small part of the picture. Higher AUR could mean lower unit sales, which might mean you are losing your market share. If your AUR numbers are consistently good but you aren’t turning a profit, maybe you need to renegotiate terms with your suppliers. Key e-commerce metrics, such as conversion rates and profits, together with AUR, can turbocharge your e-commerce marketing strategy. That's why having a data integration solution like Integrate.io is so vital to making your e-commerce business as profitable as possible.
Related reading: 5 Ways to Increase E-Commerce Sales
Complete Guide to Data Analytics and AUR-in Retail
Modern e-commerce stores collect data points across customers’ journeys. This data holds key insights into customer behavior, product and pricing trends, competitor analysis, and a lot more. Until recently, much of this data existed in silos. Your sales and marketing teams couldn’t use most of it. That is changing now, thanks to powerful data warehouses and reverse ETL solutions like Integrate.io's powerful data integration platform.
What is reverse ETL?
ETL stands for extract, transform, load. It’s how you collect customer data from various sources and store it in your data warehouse. Typically, engineering teams pull this data into business intelligence (BI) tools to generate insights. The problem is, that sales and marketing teams are not familiar with BI tools. Most teams work with third-party customer-centric apps such as Salesforce. You can transfer data from BI tools to third-party apps with API connectors, but that process is slow and prone to errors.
Enter reverse ETL. Data in your data warehouse connects directly to your third-party apps. For example, data can flow to Salesforce, where your marketing team can use it to trigger event-based actions. And this happens in real-time. For instance, your marketing team can design an email campaign for abandoned shopping carts. They can segment the campaign based on demographics and purchase history. When your data warehouse is connected to Salesforce with reverse ETL, it becomes easy for your team to deploy the campaign based on important metrics.
Related reading: 7 Ways to Reverse ETL
Reverse ETL and AUR-in Retail
At its most straightforward, AUR and reverse ETL can inform a dynamic pricing strategy for your e-commerce store. For example, flash sales on certain product categories every time AUR crosses an industry benchmark. But such strategies take a very limited view of key performance indicators (KPIs). KPIs do not function in isolation. AUR trends can indicate several underlying issues. In conjunction with reverse ETL, AUR-in retail can help with optimization of customer experience and drive growth. Let’s take an example case study.
Continuing with the sale of baby shampoo, let’s say your AUR is performing consistently. It is at par with key competitors. However, you are unable to turn a profit in the category. The two most plausible reasons for that can be:
- Your procurement price is too high.
- Your selling price is too low.
In the first case, you need to strike better deals with your suppliers. With reverse ETL, you get real-time shopping trends for baby shampoo on your e-commerce store. With the help of forecasting models in your CRM or ERP, you figure out the inventory you will need to meet the quarterly demand. Based on this data, you order the product in bulk, negotiating better business terms with the suppliers.
In the second case, you need to justify a price bump to your customer base. Bundling products across related categories can be one way to do it. With reverse ETL, you get customer behavior data in your CRM. Your CRM gives you insights into shopping patterns. You use these insights to inform your product bundling strategy.
The above is a very small example of the power of reverse ETL optimization of your e-commerce stores. At Integrate.io, we have made it really simple for you to harness the power of data analytics and reverse ETL. Our platform connects to the most popular data warehouses including Amazon Redshift and Snowflake. We give you a plug-and-play ETL pipeline that runs between your data warehouse and third-party apps. Customizing the pipeline to your needs is really easy; you don’t need a team of data engineers to do it for you.
Related reading: E-Commerce Reverse ETL
Customer Experience, Reverse ETL, and AUR-in Retail
Let’s say you have a healthy AUR across your most important categories. You are turning a profit. But you need to boost revenue. Slashing prices can be a short-term strategy to increase your market cap. But focusing on customer experience might be a better long-term solution. With reverse ETL, you can positively impact customer journeys across the entire funnel.
You can identify customer touchpoints and deploy pipelines for real-time data analysis. In the case of e-commerce stores, a typical customer journey for a new user might look like this:
- Visits store
- Adds items to shopping cart
- Either abandons cart or proceeds to make an account
- Completes the purchase
- Either gets the product on time or there is a delay in delivery
For each of these touchpoints, you have customer data in your data warehouse. With reverse ETL, you segment that data into different lists with your third-party marketing application. You set up your marketing campaigns by defining the frequency of actions and what actions to take.
For example, you might decide to segment your abandoned cart list into people who have abandoned it recently and people who abandoned it a week ago. You give the two lists different discount coupons to lure them back to the store. You might even test different email copies, subject lines, and headlines to see what works. All of this data is again collected in your warehouse and feeds into your third-party marketing apps with reverse ETL. You can start to leverage the power of automation in your e-commerce marketing strategy.
How Integrate.io Can Help With AUR-in Retail and Your E-Commerce Strategy
Integrate.io is a new data integration and ETL platform. Our drag-and-drop visual interface makes it really simple to deploy ETL pipelines for as many customer touchpoints as you need. Our pre-built connectors can easily integrate with your existing e-commerce tech stack. You don’t need a separate team of data engineers. Nor do you need to change your data stack to accommodate our ETL and reverse ETL solutions. See our deep e-commerce capability for yourself. Get granular level insights into customer behavior and shopping trends. Sign-up for a 7-day demo today.