3 Big Ideas Retailers Won’t Achieve by 2013

Looking back at 2012, a handful of trends have dominated headlines in the ecommerce and retail space. These include the so-called omnichannel experience for consumers across all touchpoints, heightened privacy concerns and the use of big data to increase customer engagement and drive sales. While progress has been made in all three areas, none of them will come to fruition by the end of 2013.

Vendors won’t achieve an omnichannel experience
Omni-channel, the unique yet fluid cross-channel experience in which customers can interact with any series of retail touchpoints and maintain a connected experience, has become a buzzword that many within the industry believe will be achieved in 2013. In reality, many retailers will not master the art of creating this seamless experience anytime soon.

More demanding consumer expectations are driving retailers to tailor the experience based on touchpoint. Customers don’t care what the channel is, they simply want anytime, anywhere access, regardless of platform. It’s this now mentality that vendors are trying to address. Big retailers like Amazon and Wal-Mart have already begun to address omnichannel, implementing services such as same-day delivery or even allowing customers, in Wal-Mart’s case, to order online and pickup in store. However, the rest of the industry is still behind.

In 2013, vendors will not develop a comprehensive experience but will break down omnichannel into manageable pieces by starting to connect channels where it makes the most sense. We’ll first see vendors link their websites with their brick and mortar stores, enabling consumers to buy online and pickup in store or buy in store and have their purchases delivered. We’ll also see the creation of in-store mobile apps that will act like sales agents—using machine learning and consumer data to upsell, cross sell and personalize the shopping experience.

Privacy surrounding personalization won’t be as big of a concern as expected
It’s important to point out that personalization doesn’t mean an invasion of privacy. Increasingly, studies are showing that if businesses can build lasting relationships with their customers, those customers will be more receptive to a personalized experience and overlook previous privacy concerns. As we move toward developing lifetime value and encouraging repeat customer visits, privacy issues become less important to customers who have great relationships with retailers.

I always like to use the example of my relationship with Nordstrom: If Nordstrom wants to use my data to recommend products to me, I’m fine with that since the retailer has earned my trust over the years. Now, if I didn’t have a relationship with a retailer and they used my personal data in a way that I considered obtrusive to personalize my experience, I would immediately take notice and probably leave the site or walk out of the store.

For non-commodity purchases, the days of the “one and done” transaction are over. Today, customers want to feel an emotional connection with the retailer. They want a relationship, not a transaction, where the retailer understands customer needs and makes personalized recommendations that feel genuine. Customers who have these types of relationships with retailers will overlook privacy for an enhanced engagement. I know I do.

And for those retailers who have a large number of unknown or anonymous customers, there are types of personalization that don’t require profile data or personally identifiable information (PII). Many well established companies use real-time behavioral data and search terms to understand consumer intent and deliver highly relevant content.

While privacy is a legitimate concern from the customer and the retailer perspective, building engaging, personalized customer experiences will trump serious privacy concerns.

Retailers won’t really leverage the power of big data
We’re seeing a major trend toward using big data to drive the next level of insights and more purchases by consumers. Key to this trend is the concept of algorithms and machine learning. The big data wave is coming, but few businesses will unlock its power anytime soon.

The idea that machines can help people make decisions has finally become mainstream. The fact that Google is a $225B business with “the algorithm” as a key building block has made it a much more acceptable paradigm. While access to big data is a good place to start, it’s essential to understand how to process that information. Many vendors have access to large amounts of data but don’t know how to make sense of it. Machine learning provides the tools necessary to make that data actionable.

Businesses are still at the initial stages of realizing the power of machine learning. Machine learning will empower vendors to categorize and segment the tens of thousands of customer discussions happening at the same time, build popular customer buckets and deploy personalized experiences based on customer segments and intent. Leveraging this type of technology will enable interactions that feel like 1to1 personalization and deepen vendor relationships with customers.

While vendors will make efforts to achieve these three goals—moving toward an omnichannel experience, allaying privacy concerns and fully leveraging the power of big data through machine-learning—we will see progress, but we won’t see any of these fully realized by the end of 2013.

Dan Darnell is vice president of marketing and product at Baynote.