With Amazon and Google Encroaching, Retailers Defend Their Market Share with Individualization

google-300Two big announcements from Google and Amazon have huge retail industry and ecommerce implications. While retailers have typically focused on competition amongst each other, their true competitors online are Amazon and Google. Amazon’s ability to provide a plethora of goods quickly at consumers’ digital fingertips and doorsteps has disrupted the retail industry already. And now, there’s more.

Amazon’s recent moves into private-label perishable foods, apparel, and packaged goods are a continuation and extension of the company’s domination of online ecommerce. The company accounted for 60% of US online sales growth in 2015, and is now turning up the heat, setting its sights on disintermediating more brands and eliminating one more link of the supply chain by leveraging the company’s incredibly high traffic and intimate understanding of categories ripe for their intervention and the convenience of Amazon Prime.

For Google, its recent announcements around mobile, local, and visual search are allowing the company to own even more of the customer acquisition funnel. Retail ads for related products will appear as shoppers browse Google Images, so they can easily click through to make online or in-store purchases. These latest capabilities expand on Google’s deep understanding of shopper demand and intent, providing a way for advertisers to seal the deal by converting browsers to shoppers. In the process, Google can deepen its understanding of every step of the purchasing process, from the first searches to the final selection and payment for a product or service.

With these announcements, both Amazon and Google are extending their reach by gathering and leveraging data in ever-more powerful ways.  Amazon’s march to private label is not based on a random selection of additional categories or products, but is fueled by its already rich shopper database. The company already knows what consumers are interested in based on their searches and purchases on Amazon’s dominant digital retail site. Google’s expansion with mobile, local, and visual is the company’s land grab of more data on consumer interest at the search initiation level and its ability to turn that information into highly relevant and successful search results.  Google is data rich when it comes to consumer intent and is further stuffing its coffers with even more shopper intelligence.

Retailers, Brace for a Shopper Intelligence War

Ready or not, retailers find themselves in the middle of a shopper intelligence war. There’s only one winning strategy for retailers: to establish more intimate relationships with their customers that locks in brand loyalty. This is the only way to insulate brands against the Amazon juggernaut and maximize conversion events from Google. How to achieve this strategy? The winning tactics will come straight from the opponents’ playbook: Only brands that gather and skillfully leverage intelligence on the individual interests of their customer base will have a chance of succeeding against other retailers and even against Amazon.

Retailers Already Have the Data They Need

Google knows what each individual is looking for based on all the information a person types into their browser and on the actions they take thereafter. Amazon has huge and incredibly granular data about demand, price point, and shopper interest in everything from books to t-shirts or toaster ovens. Both companies are leveraging their wealth of first-party data.

Retailers have similar data on their users, too—but most aren’t taking full advantage of it. The challenge for retailers is to leverage that data to deliver more intelligent and relevant experiences for their shoppers, speed shoppers to the items they are most interested in, and create successful shopping discovery. While most retailers have implemented some form of personalization, individualization is the next and more powerful step to meeting the expectations of the digital consumer in a way that helps win their loyalty and secure their business, despite the lure of Amazon and Google.

Retail Right with Individualization

With the latest individualization technologies, software understands the interest of each site visitor, and analyzes it at an individual level, not in aggregated segments. The technology deduces from the clickstreams which items or attributes seem to interest each shopper most, and then shows them the items that most closely match their interests and intent across the shopping experience. In the course of one visit, individualization capabilities draw closer and closer to identifying what the visitor wants—and remembers those preferences if the visitor leaves and returns later. Additionally, the technology can even deduce an individual’s thought process.

For example, did the customer look at a product in great detail but then shy away when they calculated the price? Or abandon the cart when they added in the shipping cost? There’s a lot of data to be gleaned at the individual level, and if retailers can put those insights to work immediately—in the next screen the customer sees—conversions and revenue per visit typically increase.

This strategy works because shoppers can find it overwhelming to sift through then select from the plethora of goods offered online. If retailers leverage individualization to showcase just the products the customer is most likely to be interested in, based on his or her individual behavior, this helps the customer to focus on relevant products and ultimately make a buying decision.

Individualization also helps from an inventory management perspective. Retailers can see what customers are interested in, even if they’re not ready to buy. What’s more, the information also helps retailers identify microtrends among their customer bases, so that they can make more intelligent and efficient inventory decisions for the next year.

When retailers get individualization right, they create better relationships with customers, so customers come directly to the retailer when they’re ready to buy, rather than searching on Google or going directly to Amazon. Despite the huge advances that Google and Amazon have made, customers don’t really have relationships with Google or Amazon, but they often have strong brand loyalties. When retailers can earn—and keep—that loyalty by presenting site visitors with an individualized, intelligent, and intuitive experience, they can defend their territory even when the Google and Amazon juggernauts roll nearby.

 Kurt Heinemann is the Chief Marketing Officer at Reflektion


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