Strategy

5 Ways “Individualization” will Change Retail eCommerce in 2015 and Beyond

By: Cameron Conaway • February 24, 2015

The first generation of “personalization” was a groundbreaking idea in eCommerce. It worked by identifying demographic commonalities among digital shoppers, bucketing them into segments, and targeting each with the content demonstrated by A/B tests to perform the best per group. In an industry that suffers from notoriously low margins, it nudged both engagement and conversions up. At the time, that was a big deal.

Today, eCommerce is on the verge of another evolution: Individualization.

Where early personalization was an important first step towards incorporating broad-based customer preferences into eCommerce platforms, individualization is proving to completely reshape digital shopping. And, as you’ve guessed it, is based on the individual, rather than segments.

See also: Individualization vs. Personalization.

By using first-party data combined with real-time analysis and response, digital retailers can create a relevant storefront for every single individual shopper. What does this mean and how will it change the retail industry?

Here are five immediate changes that will affect marketers, eCommerce directors, and customers:

segmentation in the rearview mirror, individualization is within sight

1) Marketers will not waste time with tedious segmenting

Individualization will save everyone a lot of time. Marketers will gain back the time it takes to hypothesize on what content will resonate with certain groups, tediously match product attributes with segments, and run A/B tests to prove or disprove hunches. Rather than “wait and see” through the rearview mirror what’s been effective, individualization begins working with the very first digital interaction. This means marketers will finally be able to add “nimble” to the list of adjectives that describes their work. They’ll be equipped to respond to trends as they are developing and adjust strategy on the spot.

Presenting products and content that is meaningful at an individual level is proving to be a much more effective carrot than giving away merchandise. This is why individualization will reshape ecommerce.

2) eCommerce directors will no longer be forced into reckless discounting

Over promoting and swooping, site-wide discounts are detrimental and should no longer be necessary. When a customer’s preferences are met, their intrinsic interests naturally drive them back to shop more. Presenting products and content that is meaningful at an individual level by leveraging customer intent is proving to be a much more effective carrot than giving away merchandise. As a result of redirecting their focus from segmentation to individualization, eCommerce directors will see better conversions and rely less on promotions.

 

The path to individualization will create better customer experiences, in additional to increasing retailer revenue and conversion rates.

3) Shoppers will have an infinitely more guided path to purchase

Here’s a paradox. Consumers want endless options, but they don’t want to have to make too many choices. Marketers should understand that no one wants to sift through pages (or aisles), struggling to land on the perfect product. (To better understand this psychology, read The Paradox of Choice: Why More Is Less.) Retailers should identify a shopper’s preferences and actively connect them with those products. They should reshape the shopping experience to make finding relevant items easier. Retailers should seize opportunities to offer upsells and additional items at the appropriate times, but be sure these are highly on-target and not overwhelming.

 

Individualization Changes Retail eCommerce

4) Device agnostic shopping will become a reality

One of the major challenges in eCommerce is maintaining a closed loop in the sales cycle as consumers hop between devices. Marketers are beginning to understand that focusing on the individual – rather than on segments – is the answer to this dilemma. Personalization data should not vanish into thin air when the same customer switches from browsing on their phone to more serious shopping on their desktop or tablet. In 2015 and beyond, more eCommerce sites will be able to identify individual shoppers as they move from one device to another, even when they are not logged in. Explaining how this is possible is fodder for another blog post.

 

Omnichannel merchandising - Individualization Changes Retail eCommerce

5) Improved customer experiences will extend beyond Marketing

As Forrester pointed out in a recent report, individualized experiences are quickly becoming a major priority for CX professionals. This means more customer-focused experiences everywhere – even at banks – where the report cites an example of Wells Fargo redesigning its ATM UI around the individual transaction history of each account holder. For example, if a customer is likely to withdraw $100 from their checking account the majority of the time, $100 will become the first option they see after entering their PIN.

Compared to first generation personalization and segmentation practices, the advantages of an individual-focused eCommerce strategy are immense. The concept is going to continue to play a larger role in retail over the next couple of years as marketers, eCommerce directors, and CX professionals continue to understand the massive value that individualization brings to the table.

Innovative site merchandisers are already seeing significantly higher conversion, revenue, and engagement than their peers who are still lagging behind.

Cameron Conaway

Cameron is the Director of Content at Reflektion. His work as a journalist and content marketer has appeared in Forbes, Newsweek, and The Guardian, among other outlets. Connect with him here on LinkedIn and on Twitter @CameronConaway.