As personalisation transforms online shopping, Drapers looks at how the technology has evolved – and what is becoming possible.
The concept of personalised shopping is as old as retail itself. Good shopkeepers have always built their trade on a recognition of their customers, an understanding of what they like and tailoring their pitch accordingly.
In recent years, spurred on by the rapid growth in online shopping and the amount of data that these systems accrue, the process of personalisation has raced into the digital world. In an online sphere in which choice is almost infinite, personalisation has become more of a necessity. “When we talk to our customers, they consistently tell us they are time-poor,” says Farfetch chief marketing officer John Veichmanis.
“Imagine if Farfetch was a physical store – when the customer walked in the door, they’d be presented with more than 300,000 products from more than 2,000 designers. No customer could, or should, have to navigate that amount of product to find the items they want. “Through personalisation, we can present to them the brands, product categories and content that are relevant and interesting to them. Whenever we learn something about a customer, we owe it to them to use that to provide a tailored experience.” That wasn’t always the case. Online retail once treated shoppers as a homogenous group, but times are rapidly changing. The first major step in personalisation was addressing users by name – a seemingly simple action that still causes some brands headaches with mistaken gender and misspelt names commonplace. But a personalised greeting is now old hat.
“It’s not just logging in and being greeted by a name,” says Zalando’s product manager for mobile apps, Kristina Walcker-Mayer. “Customers want the whole experience to be personalised.”
Walcker-Mayer says the personalised experience that consumers receive on Spotify and Netflix is driving high expectations across all industries.
Another company that has redefined what shoppers expect from personalised retail is Amazon. The online giant’s “customers who bought this also bought that” tool brought personalised recommendation to the mainstream – it is now understood to account for 35% of the online giant’s revenue, consultancy McKinsey reports. Amazon’s algorithm is based on a user’s purchase history, items in their shopping basket, products they have rated or liked, as well as what other customers have viewed and bought.
While this sort of personalisation requires the shopper to buy something before the retailer can suggest another item, most businesses are also trying to convert the vast majority of browsing consumers who have not opted to purchase.
The more recent wave of personalisation has been driven by big data – the large quantity of information about individuals that retailers are generating online. Analysis of this data can identify patterns in behaviour; brands can then serve these customers with tailored content and offers to drive conversion. Segmentation is where many retailers are focusing their efforts. Martin Francis, chief customer officer at knitwear etailer WoolOvers, says its personalisation efforts have been focused on creating differentiated customer segments.
“The work we’ve done is low-hanging fruit,” admits Francis. “We’re segmenting our high-value customers into those who want deals.”
Francis says the company has created three core segments with personas attached to them: Iris, an older catalogue shopper; Jane, who shops online; and Tessa, the multichannel shopper. Each segment is served unique content and marketing messages.
Pioneering retailers are even going beyond segmentation and delivering one-to-one personalisation. This ranges from simple solutions – Walcker-Mayer says Zalando has had great success by only displaying products in the size of their customer – to algorithms that order search results based on perceived interest levels of particular product areas and attributes.
Retailers are now striving to go beyond this, too, by delivering a fully personalised homepage to customers – big names such as Boohoo are working towards this goal. Francis believes this real-time personalisation at scale is the Holy Grail for most in the industry. “We haven’t got to nirvana, which is one-to-one personalisation, but the technology is getting there so we can do it in real time,” he says.
In fact, Francis claims WoolOvers could achieve personalised homepages within the next year. “We’ve certainly got enough data; it’s more about our trading and marketing capabilities,” he says, acknowledging that retailers must be able to produce enough content and marketing assets to serve customers at an individual level.
Whether content and product recommendations are personalised by man or machine, they are rapidly revolutionising the shopping experience and delivering some impressive results for retailers. And it is shoppers who are experiencing the real benefit.
“Ultimately, it’s helping retailers to be more relevant and give better service,” says Francis.
As great shopkeepers through the ages have understood, relevancy wins in retail. Technology is enabling retailers to deliver the personalised, feel-good experience that has always helped the best boutiques to stand out and thrive.
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