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Personalization may be the key to competing with Amazon


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Most shoppers, 57%, are looking for something specific when they shop on Amazon, and 63% know what they want beforehand, according to a report from SmarterHQ.

This suggests that Amazon’s dominance is largely due to its easy shopping options and fast delivery, and not because it’s the best way to discover new products or just browse.

Specialized retailers have the ability to offer personalization that Amazon can’t, Michael Osborne, CEO of SmarterHQ, told BI Intelligence. Amazon carries a huge number of product categories, sometimes making it difficult to determine what products and discounts to highlight and when, hampering its personalization and product discovery capabilities.

Meanwhile, retailers that offer a single product category can more easily correlate their behaviors, leading to more effective personalization tactics. Although shoppers may not know exactly what they want when they go to a specialized retailer, the company’s specific personalization can make recommending the right product easy. This is much more difficult for a broad marketplace like Amazon, giving specialized retailers a leg up on the site.

Personalized recommendations can stop shoppers from bouncing to Amazon. If a brand doesn’t recommend a customized list of products in marketing messages, 47% of consumers will move from the brand’s website to Amazon. This suggests that personalized product recommendations that include previously viewed products and items that may appeal to consumers could do wonders for those struggling to combat Amazon. Implementing such personalization generally requires artificial intelligence (AI), which retailers should look to invest in, not only to compete with Amazon, but also because retailers that have introduced personalization see sales gains of 6-10%.

Stephanie Pandolph, research analyst for BI Intelligence, Business Insider’s premium research service, has written a detailed report on AI in e-commerce that:

  • Provides an overview of the numerous applications of AI in retail, using case studies of how retailers are currently gaining an advantage using this technology. These applications include personalizing online interfaces, tailoring product recommendations, increasing the relevance of shoppers search results, and providing immediate and useful customer service.
  • Examines the various challenges that retailers may face when looking to implementing AI, which typically stems from data storage systems being outdated and inflexible, as well as organizational barriers that prevent personalization strategies from being executed effectively.
  • Gives two different strategies that retailers can use to successfully implement AI, and discusses the advantages and disadvantages of each strategy.