As we welcome 2010 I ask what will be the next step in the ongoing evolution of the online shopping experience—as it advances beyond a transaction-only focused environment to a rich experience that provokes product discovery and engagement. Retailers worked hard in 2009 to improve the online experience, and shoppers rewarded us accordingly. A new survey of shoppers at popular Web sites revealed increases in satisfaction—up 7% to 79 on a 100-point scale—with every leading retailer, the highest it has been in its five-year history.* So while increases in online shopping might be partially attributed to tough economic times, or sporadic inclement weather, let us not forget that online shoppers are happier than ever before with their experience.
Google’s quiet rollout of new personalization features
Google made quite a few significant announcements this year about its search—headlined by real-time search, a new animated homepage and a magazine layout for images in Universal Search. For retail, they launched product ads and an e-commerce site search. But, tucked midway into this week’s blog post on search is a brief announcement that deserves greater attention than such a limited mention would suggest. Google introduced “Extended Personalized Search” which personalizes your Google search results to activity linked to your browser’s cookie, including queries and results you click—regardless of whether or not you are signed in to your Google account or have Google toolbar enabled. Google calls the new functionality in this scenario “signed-out personalized search.” Conversely, should you be signed into your account, you receive “signed-in personalized search.” You can read the full description of the two categories here. Long story short, Google has succeeded in quietly rolling out a feature that search engine guru Danny Sullivan is calling “the biggest change that has ever happened in search engines.” The full article can be found here.
The retailing community and the vendors that provide supporting roles, like RichRelevance, have spent the better part of this year gearing up for the make-or-break 24-hour marathon: Black Friday. While consumers haven’t completely abandoned the shopping mall experience, it’s clear that based on early results from the kick off of the holiday shopping season, the area where retailers witnessed the most promising growth across the board was through the online retail channel:
- More Online Shoppers: One-quarter of Americans shopping over the weekend (28.5%) were shopping online according to the National Retail Federation.
- The Gap is Closing Between Online/Offline AOV: Online shoppers spent 35 percent more on Black Friday web purchases than a year ago, with the average order value reaching $170.19, according to Coremetrics. Offline, the average spending slipped 8% to $343.31 per person from $372.57 a year ago according to the NRF.
- Shoppers Are Increasingly Purchasing More Items Online: According to Coremetrics, shoppers bought an average of 5.4 items per order, up 18% from 4.6 items in 2008.
- Early Shopping: Online retail spending for the first 27 days of the November-December holiday season was $10.57 billion marking a 3-percent increase versus the corresponding days last year, according to Coremetrics.
- Black Friday Increases Online: ComScore reported $595 million in online sales, representing an 11-percent increase versus Black Friday 2008.
When we launched RichRelevance, we chose the tagline “next generation personalized recommendations” because the status quo solutions – all first generation products – were not delivering on the promise of a faster, easier, and more enjoyable shopping experience. Our new class of hyper relevant product recommendations was architected to address some of the fundamental issues that plague traditional approaches to product recommendations. I became familiar with the challenges of personalized recommendations while at Amazon where I ran the R&D team focused on personalization. Over the years at Amazon, and again at Overstock.com, I learned a few key lessons that would later inform the core of RichRelevance’s approach.
In response to richrelevance receiving the “2009 Best Place to Work” in the SF Bay Area recognition, one of my advisors reached out to me and asked a pertinent question: what are you doing to preserve your culture?
He sent me a link to an article in the Harvard Business Review on how Pixar (another Bay Area company!) has maintained their culture of innovation for almost 15 incredibly successful years. I never pass up an opportunity to learn from those I admire—and this was definitely one of those. Even if you don’t like rats, you liked Ratatouille; even if you love sushi, you enjoyed Nemo; and everyone loves toys, so Toy Story was a slam dunk. Pixar may not be a model of a perfect company, but especially in a down economy, intelligently investing in people and culture multiplies ROI many times over.
Last quarter, we launched MyRecs a “zero-integration” product building on the data and integration of our RichRecs and RichMail products. The results are exciting thus far and are only getting better.
We have deployed MyRecs on a few etail sites, and it appears that MyRecs has found one of those product-development “Eureka” zones: an engaging shopping experience which achieves the objectives for the shopper and the retailer. For the shopper, MyRecs is a convenient place to see personalized shopping recommendations based on shopping history. For the retailer, MyRecs increases conversion and AOV (Average Order Value). The graph to the right shows the average AOV across retailers for users exposed to MyRecs vs those who didn’t see MyRecs; AOV went up very significantly. Similarly, conversion for these users was more than double.