You would be often finding your inbox loaded with promotional mails with offers, sales and discounts of various products. Surprisingly, most of these mails will be promoting the things or items that you were searching to buy this season. How did these online retailers come to know of your preferences? Let us explore how.
The Indian shopping style has witnessed a changed in terms of a shift from brick-and-mortar stores to making more online purchases. The customers have developed vastly different and more sophisticated expectations of products, services, values and environment, than what they had five or even three years ago.
Resultantly, the rules for the marketplace have changed for retailers as well. With the Internet and social media, consumers now have instantaneous access to a wealth of content about retailers and their products. This gives them the power to seek a more personal and smarter shopping experience. Therefore, to match up with the pace of the consumers, the eCommerce retailers have come up with predictive analytics, which help them to predict the category of items their consumers are looking for.
In a recent case in USA, a large retail chain started sending information related to pregnancy products to an unmarried young girl. The girl freaked out. Not because, she was shocked to see offers on such products but because she was clueless of how the retailer came to know about her pregnancy when she hasn’t even told her parents about it. No, the retail chain was not spying on the girl, instead analyzed products looked for or purchased in the past by the girl.
The online retailers have adopted software that let them keep a track on the buying or searching trends of the consumers. Whenever you are making a purchase, all the relevant data e.g. your age, gender, location, time of purchase, products bought etc. are saved in retailers’ database. The more purchases you make with the same retailer, the more information it has, to analyze your preferences, income group, current needs etc. For instance, if a consumer is tracked shopping new schoolbooks and dresses, the retailer immediately analyses the consumer to have a school going kid and would send offers for the school products that the consumer is likely to buy over next 12 months.
Apart from noticing your shopping trends, the analytics also maintain a database of your date, time and product category of purchase. For example, if you are buying an expensive piece of jewellery or holiday every June, it is likely to be your anniversary or if you are buying toys or books or something similar, it is likely to be your child’s birthday.
Retail giants rely on information about their customers to make strategic decisions. Amidst the scenario, predictive analytics give retailers data they can leverage to differentiate themselves, customize a shopping experience and make the retail organization operationally efficient, customer-focused, and highly profitable. So armed with the requisite data of your buying behavior, the online retailers are geared up with their marketing strategy.
The whole idea is to use data to uncover and pursue untapped opportunities to drive growth and efficiency and create strategies to target customers who are problem-aware, but who are not necessarily solution-aware. While retailers believe that it helps them in better serving their customers, not all customers think the same way. They get concerned about their privacy issues.
Though the law is not very clear on privacy violation in India but internationally, retailers have to be careful that they are not collecting or sharing any individual’s specific information without user’s consent. Even if they don’t get explicit permission of user for sending targeted advertising, they certainly allow the user to ‘opt-out’ from any such activities. However, this is not applicable when retailers are not sending any communication to users but only her information to show the correct products when user is browsing their site.
About the author: Neeraj Jain is the Co-founder at Reviews42.com. His previous associations include Metalogos, his own business advisory and financial consulting firm; Spark Capital Advisors and Adventity. He holds a Post Graduate Diploma in Management from the Indian Institute of Management, Ahemdabad. He is also a B.Tech in Electronic Engineering from the University of Lucknow.