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Predicting our needs is the new normal
A customised shopping experience achieve higher order value and higher conversion rate. But mostly, it makes customers feel understood and appreciated, according to Patrick Obolgogiani, Head of Nordics at Nosto.
What are some of the major changes in the e-commerce landscape in the last few years?
— We’ve finally reached the mobile tipping point. Fashion retailers are now seeing more sales coming from smartphones than desktops. 46% of the spending is coming from mobile phones, with 44% from desktops and 10%, tablets. And not only are smartphones driving more sales, but they are also overwhelmingly the biggest source of traffic: 58% of the visits are done on mobile phones, nearly twice as much than visits on desktops (31%).
— Also, consumers’ attention span has been significantly shortened over the past couple of years. The expectation of relevant content and instant gratification have led to very impatient consumers. This has created a demand for new technologies allowing retailers to maximise the limited time they have with their target audience.
Describe Nosto and its service.
— Nosto is the number one AI-powered personalization solution for the world’s top e-commerce retailers. What this means in practice is that we tailor every single impression for each shopper, to maximise the relevance of what they see — essentially creating thousands of versions of the same store. This makes shopping way more enjoyable, and increases the business results for the retailers.
Why is it important to create a tailored experience?
— Providing a customised shopping experience has a powerful impact: customers spend twice as long on a website, have a 18% higher order value and achieve a 133% higher conversion rate, according to Nosto’s reports. Creating customization from vast aggregates of customer data can be daunting. But retailers that use AI can create behavioral profiles from big data sets — including a shopper’s location, individual tastes, price sensitivity, brand affinity and purchase history — for every shopper. That data can be leveraged to display products and content that best reflect the shoppers’ preferences. As a result, customers feel understood and appreciated.
What are your thoughts on physical versus online retail?
— In 2018 alone, approximately 5 000 stores from well-established brands and retailers closed their doors. With that said, many pure play online retailers have also setup popup stores to have a physical connection with their customers. Most likely, we’ll eventually find an equilibrium between the ideal presence in both on- and offline worlds. Today’s consumer values and expects a cohesive connection between their offline and online shopping experiences, which makes it critical for bricks-and-mortar retailers to shift towards an omnichannel strategy.
What do physical retailers need to do?
— Physical retailers have an opportunity to use the value of technology and behavioral data to remain competitive. In 2018, Nike launched its first Nike Live concept store, a physical store built entirely on online data and driven by digital interactions. The location and its product selection were curated using their digital commerce data gathered from the surrounding area. This data will also help determine which offline locations are worth investing in and which products they’ll carry to cater to that area’s demographics.
How do consumers respond to a service like Nosto?
— Services such as Spotify and Netflix are raising the bar, both on what’s expected as well as acceptable in terms of personalisation on the consumer side. If you think about unique playlists tailored to our taste buds, and movie feature banners changing depending on our previous behaviour, predicting our needs is the new normal. In fact, since most people are shopping also with the bigger marketplaces like Amazon, who invest heavily in machine learning, the lack of intelligent capabilities can cause a lot of frustration on the consumer side. The primary benefits revolve around enjoying a more relevant experience, where each piece of content, whether it’s a product feature or a video clip, is catered to your preferences, intentions, and behaviour.
How do you think about privacy and using consumer data in a responsible way?
— We feel strongly about maintaining consumer integrity. The GDPR regulation creates challenges for some retailers, but transparency goes a long way. At Nosto, we deliver personalization based on both transaction data (if consumers have given consent to use this), and behavioral data from real-time shopping sessions to personalise their experience on a 1:1 basis. However, this doesn’t mean that data is stored on an individual level; each session fuels our algorithm to learn more and become even stronger.