How Personalization, Marketplaces and Monetization Will Transform Digital Commerce by 2020
It’s difficult to go even one day without coming across a news article that highlights how virtual reality (VR), augmented reality (AR), the Internet of Things (IoT) and virtual assistants like Amazon.com's Alexa will transform not just our shopping experiences but our lives.
However, Bill Gates’ famous aphorism, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10,” has never been more appropriate than in the realm of modern digital commerce.
The divergence between what's catching consumers’ attention, what's catching the media’s interest and the factors really making a difference in modern retailing is at the heart of the latest Gartner Report, “What’s Hot in Digital Commerce 2017.” This report looks at the hottest digital commerce topics and products sparking conversation in the context of what will realistically transform the industry as early as 2020.
The Industry Likes Gimmicky Developments, But Needs Them Less
At the heart of the digital commerce conversation are less gimmicky developments that will result in a true paradigm shift. Some of these developments include augmented commerce (AR and VR), “thing” commerce, conversational commerce (artificial intelligence and chatbots) and payments, each of which have enormous potential for deepening brand affinity while returning useful behavioral data.
Aside from some of the previous topics, which are more hotly discussed, the report also dives into granular, back-end subjects. These include subscription management, marketplace integration and management, API-based commerce platforms, B-to-B/B-to-C convergence, marketplaces, monetization and personalization, all of which are discussed less in the public but are equally (if not more) important than some of the less “sexy” topics. While it's certainly more difficult for the second grouping to capture the public’s imagination, one could argue that marketplaces, customer journey analytics and personalization are at the heart of how digital commerce will evolve over the next three years.
The Power of Personalization
Machine learning and real-time updates are driving a much more fluid personalization experience, helping retailers anticipate consumer needs and behaviors. Gartner predicts digital businesses will have the ability to increase profits 15 percent by 2020 via smart personalization engines. The caveat is that retailers and technology partners will need to share customer information, so the ever-increasing volume of data can be turned into actionable insights in real time.
The new breed of personalization engines make use of continuous, real-time user activity, enabling a change of presentation layers based on specific interactions. They do this by creating customer profiles leveraging personal data married with behavioral data from a specific customer (and individuals similar to them). Some personalization engines can update customer profiles in real time. However, it’s becoming more and more imperative for all parties involved to be transparent in how they aggregate, share and use this information given consumer skepticism of such practices.
It’s an exciting time because customer experience is replacing product and price as the new consumer battleground. Now, the challenge is to create the most frictionless, relevant digital experiences to drive satisfaction, engagement and, ultimately, sales.
Gartner reports digital personalization engines increase engagement via an increase in page views and clicks per page, while decreasing bounce rates and introducing greater use of self-service features. All of this working in concert drives higher order values, conversion rates, customer acquisitions, fewer returned items and wider margins.
The Importance and Power of Omnichannel
Similar results are seen when personalization is extended across channels. Almost one-third (31 percent) of U.S. online retail transactions involve the use of two or more devices. It's evident that retailers should be able to use shopper journey analytics to improve customer experience across all devices and consumer touchpoints. This means genuinely adopting a user-focused approach to analytics, not one that's channel- or device-focused.
Where some retailers fall flat is the ability to understand consumer behavior across devices, but not in-store, which creates a disconnect between online and brick-and-mortar interactions. A way to help combat this is by marrying retailers’ CRM data with their marketing technology providers’ cross-device matching solutions, which can help build a seamless picture. However, those suppliers need to have sufficient scale and strong security procedures for the consolidation to work. More specifically, retailers should think about collaborating to share more shopper data in a secure, transparent and fair environment so they each have a more complete picture to drive marketing efforts.
While consumer-friendly technology advancements like VR, AR and IoT sound sexier to the marketer, it's a combination of personalization, marketplaces and monetization that will profoundly transform digital commerce by 2020.
Patrick Wyatt is senior vice president, product management, Criteo, a commerce marketing technology company.