Monthly Archives: April 2017

Big Data for Small Retailers – Is it Doable?

Do Big Data (BD) for small retailers offer an opportunity to compete with the big retailers or is it too much trouble? One of the fall outs of the digitization of business is the massive amount of data that are everywhere. Every time a customer makes a purchase online or registers online, data is generated. The data can potentially tell you almost everything about consumers. Retailers that sort, analyse and interpret BD can add value for customers and so increase their shopping experience.

Surely retailers should take advantage of BD since it contains captured detailed information that probably was overlooked in the past. However, to get the most out of BD, retailers need to be innovative. The promise of new revenues, customers, and new businesses with BD will require development and investment in teams and technology 1. But first let’s have a look at what BD is all about…

What is big data?

Big data is a term that primarily describes data sets that are so large, unstructured, and complex that it requires advanced and unique technologies to store, manage, analyse, and visualize 2. Therefore, big data represents the data sets that cannot be perceived, acquired, managed, and processed by traditional IT and software/hardware tools within a tolerable time 3. Compared with traditional data sets (small data), big data typically includes masses of unstructured data that need more real-time analysis, according to Chen, Mao, and Liu, (2014).

Where can retailers find Big Data? Rajdeep Nair responds as follows on Quora: “Data is everywhere… it can be purchase data or images uploaded by you on the social media site or data sent by mission sent to Mars by NASA. Everything that is there on the internet and company or an organisation’s confidential data stored on the server. Mostly  data is stored on the server, the technology of which is improving and evolving rapidly.”

However, a good place for small retailers to find “Big Data” is on their own systems. Have you ever analysed your own data sets before?

What retailers can do with Big Data

According to Russell Walker 1, firms that are first movers in leveraging BD have great advantages because they develop innovative insights about customers and markets. These insights can transform services, and even business models. Bernard Marr, contributing to Forbes declared Big Data as “A game changer in the retail sector”.

Bernard notes that Big Data analytics is now being applied at every stage of the retail process. Says Bernard: “BD is used to understand what the popular products will be by predicting trends, forecasting where the demand will be for those products, and optimizing pricing for a competitive edge.”  Moreover helps BD retailers to identify the customers that are likely to be interested in their products and works out the best way to approach them. It also to help them making the sale and working out what next to sell them.

Alex Woodie writing a piece in Datanami.com suggests there are 9 ways retailers are using big data technology to create an advantage in the retail sector.

The advantages of Big Data to retailers

  1. Recommendation Engines – by training machine learning models on historical data, the savvy retailer can generate accurate recommendations before the customer leaves the Web page.
  2. Customer 360 – customers expect companies to anticipate their needs, to have the products they want on-hand. Also to communicate with them in real time (via social media), and to adapt to their needs as they change. In the cutthroat world of retail, developing a customer 360 system using Big Data may be a matter of survival.
  3. Market Basket Analysis – is a standard technique used by merchandisers to figure out which groups, or baskets, or products customers are more likely to purchase together. It’s a well-understood business processes, but now it’s being automated with the help of BD.
  4. Path to Purchase – analyzing how a customer came to make a purchase, or the path to purchase, is another way big data technology is making a mark in retail.
  5. Social Listening for Trend Forecasting – platforms like Hadoop were designed to facilitate the handling and analysis of large amounts of unstructured data, such as Facebook posts.
  6. Price Optimization – setting the right price requires knowing what your competitors are charging. Data can be collected electronically using daemons that crawl competitors’ website to get detailed info about product pricing.
  7. Workforce and Energy Optimization – big data technology can deliver benefits on the marketing and merchandising side. As a result it can help big retailers optimize their spending on human capital.
  8. Inventory Optimization – by analysing BD, retailers can plan their seasonality in the shipping algorithms better.
  9. Fraud Detection – retail fraud is a huge problem, accounting for hundreds of billions of lost dollars every year. Retailers have tried every trick in the book to stop fraud, and now they’re turning to big data technology to give them an edge.

Concluding

The narrative about Big Data is more with ‘Big Retailers’ at this moment. However, with smaller retailers adding the online channel to their business, there are ample opportunities for them to use their own data to great effect. Everything else will cost retailers a lot of money. Maybe to start with small data is better for smaller retailers.

Have a look at this video by Tera data corporation more more on Big Data for retailers:

Notes

1 Walker, R., 2015. From big data to big profits: Success with data and analytics, Oxford University Press.

2 Xu, Z., Frankwick, G.L. and Ramirez, E. 2016. Effects of big data analytics and traditional marketing analytics on new product success: A knowledge fusion perspective. Journal of Business Research69(5):1562-1566.

3 Chen, M., Mao, S. and Liu, Y. 2014. Big data: A survey, Mobile Networks and Applications, 19(2):171-209.

Image and video

Pixabay

Tera Data Corporation

Augmented Reality in Retail – a Useful Customer Experience

Not so long from now. There is an eerie quietness in the retail store.  Almost all the customers are wearing identical glasses and head sets, slowly walking through the aisles like humanoid robots. No, it’s not a new episode of Star Trek in the making – this is Augmented Reality (AR) in action.   Retailers are now experimenting with AR to get customers back in the stores.

What is Augmented Reality?

Augmented reality is the practice of augmenting a real-time direct or indirect view of the physical world with virtual information 1. Scholz and Smith (2016) describe the practice of AR as: “Marketers layering digital information (e.g., text, pictures, and videos) over objects and spaces in the physical world (e.g., product packaging, advertisements, or street scenes). And consumers experiencing these hybridized realities via digital screens (e.g., smart phones or video installations) or projections (e.g., holograms)”.

AR can also be explained as the co-existence of virtual and real in the same space, as well as the interactive alignment and mutual registration of computer generated sources with physical reality 2.

Scholz and Smith (2016) have identified the five ingredients of AR:

  1. AR content – is virtual information that is often perceived by consumers through digital devices (e.g., smart phones, large-screen AR installations);
  2. Users – are the people who directly experience an AR layer. Users can share the same physical space. For example, if a screen displays an augmented view of the street behind a bus stop (e.g., bogus window paradigm). Or they may view the same AR layer while dispersed across different locations – for example, when readers of a magazine access the AR content of an active print;
  3. Bystanders – are people who do not experience an augmentation themselves but instead observe a user’s actions either directly – by sharing the same physical space – or indirectly – by viewing content (e.g., images) that a user has generated during his or her augmented experience. Bystanders can affect users’ willingness to engage in AR experiences because they form the social context of the experience;
  4. Targets – are entities in the physical world that are augmented with digital information. In many cases, targets are objects; for example, a marketer might digitally overlay a brand narrative or ingredient information on product packing. Targets may also be people – for example magic mirrors in fitting rooms that superimpose digital images of their merchandise over live images of customers;
  5. Background – those objects and ambient conditions that share the same physical space as the target, but that are not augmented in this particular AR layer.

AR has the potential to be a life-changing technology application. In a recent interview by Bloomberg, CEO Tim Cook of Apple said: “We’ll all have AR experiences every day, almost like eating three meals a day. It will become that much a part of you.” What is the value of AR for the retailer?

Augmented Reality in retail

AR can help Bricks and Mortar retailers to let their customers enjoy their shopping experience and come back for more. Shauna Heller writing in Media Leaders propose that retailers offer headsets for people to wear while in their stores, to guide people through the store with pop-up characters, animations, or even a virtual assistant right through the visor popping up as people walk around. According to Augment.com, AR helps in the following ways to stop buyer uncertainty:

  • Proximity, presence, and interaction – a customer who is shopping for home furnishings can launch models of a bed or lamp to see how the item would actually look and fit (to scale), rather than playing a guessing game. AR advocates for purchases with more certainty and satisfaction.
  • Modify or customize selections – Augmented Reality makes it easy for consumers to explore their options and make personalized modifications.
  • Visualize or understand products and features – a customer must be able to understand and visualize how a product works and functions. AR augment sophisticated demonstrations that make it easier for customers to visualize and understand the intricate features of a product before they purchase.

AR marketing campaigns open new possibilities for brands to engage and interact with consumers, especially those from social media generations. Yaoyuneyong 3, et al found that AR is “immersive, persuasive and powerful” and the two benefits of AR marketing that they’d identified are:

  1. Enhancing communication by engaging and increasing consumers’ level of immersion and
  2. Improving sales strategy and sales processes.

Also, augmented reality can make a difference to the shopping experience for both online and offline retail customers.

Concluding

After all, it took a game like Pokémon GO and millions of people with smartphones a couple of years ago to bring Augmented Reality under the spotlight. However, the real value of AR is not just for the entertainment of its users, but also as a dynamic marketing tool for retailers.

Remember Pokémon GO?

Further reading

  1. How successful are Retailers in the Omnichannel?
  2. Bricks and Clicks Retail – Shopping Experience makes the Difference

Notes

1 Scholz, J. and Smith, A.N. 2016. Augmented reality: Designing immersive experiences that maximize consumer engagement, Business Horizons, 59(2):149-161.

2 Javornik, A. 2016. Augmented reality: Research agenda for studying the impact of its media characteristics on consumer behaviour, Journal of Retailing and Consumer Services, 30:252-261.

3 Yaoyuneyong, G., Foster, J., Johnson, E. and Johnson, D. 2016. Augmented Reality Marketing: Consumer Preferences and Attitudes Toward Hypermedia Print Ads, Journal of Interactive Advertising, 16(1):16-30.

Image and video

  1. shortfilmwindow.com
  2. Pokémon GO

Personalization of Marketing Communication – not just for your Customer’s sake

Personalization of marketing communication is not just a good practice for retailers, but also a way to help their businesses survive. The advent of the internet has rendered retailers the opportunity to offer their customers products specifically customized for them. This is in direct contrast with mass marketing where the objective is to broadcast product offerings to reach the largest number of people possible.

Personalization of marketing communications is to treat each person as a unique individual with distinctive needs and to provide them with customized solutions 1. To be able to personalize marketing communications, retailers need to learn about the customer’s individual needs and preferences in terms of the types of content that the customer is willing to receive and other person-specific characteristics.

The strategic use of data collected during the online buying process and social media sites may be a good starting point for retailers to know their customers better.

Data – the foundation for the personalization of marketing communication

The digitalization of the entire advertising industry is generating ever increasing amounts of data that must be collected, analysed and interpreted 2.  Lying hidden in all this data is information, potentially useful information that is rarely made explicit or taken advantage of. We must just find the data.

The data we need is right before our eyes. Says Woopra: “Social media interactions, email marketing, landing pages, surveys, customer relationship management (CRM) tools, and re-targeted ads are all customer touch points that can tell you about your customer’s needs and interests”.

Once the data are sorted and tabled, retailers can segment and target their customers and also position their products accordingly. However, here the process is done for each customer specifically according the individual’s unique needs, desires and behaviors (customization). So, once customization has been achieved, it makes personalization of marketing communication possible.

Personalized marketing communications used by online retailers

Online shopping has become an important channel for retailers. Unfortunately, it does not afford facile development of an interpersonal relationship or facilitate easy interactions between buyers and sellers 3.  Even worse, many retailers use the online channel to send generic marketing messages via email or text, to the annoyance of their customers. This, however, is not personalized marketing communication.

Retailers need to collect and analyse data about the buying behaviour of individual customers. The profile of the customer will provide guidelines for the retailer how to personalize his/her marketing communication message. Daniel Newman, CEO of Broadsuite Media Group suggests the following ways brands can use data to build personalized marketing tactics:

  • Capture complete data – are you collecting every piece of data that you possibly can? Brands today have more consumer information at their fingertips than ever before, and they can use that data to get to know their customers in depth.
  • Social data – social cues and signals are excellent ways to figure out more about customers than traditional sources like email, demographics, or purchase records.
  • Segmentation – you need to segment your audience into smaller groups for more accurate targeting.

What does a personalized marketing message looks like?

You’ve done all the hard work by sourcing and sorting your customer data. Now it is time to create a personalized marketing message for your customer. Below is an image from GIGYA, a customer identity management agency. The ad shows beauty products that are specifically recommended for a customer with a unique skin type and facial features.

Note that the narrative is in the second person – thus the ad is addressing the individual personally.

The advantages of personalized marketing communications

Retailers that personalize their marketing communication may enjoy the following advantages says Infor Marketing Management:

  1. Improved Return on Investment (ROI) – one study found that personalized website experiences resulted in an average 19% increase in sales. For email, personalization is even more powerful, generating transaction rates and revenue six times higher per email than non-personalized emails.
  2. Outflanking the competition – with personalization, retailers can increase the impact of each interaction to get consumers’ attention and time online – at the cost of the competitors.
  3. Customers expect it – most consumers said it’s important to receive relevant offers when shopping online. And, almost a third wants more personalization during their online shopping experiences, reports Infor Marketing Management.

Concluding

“Personalization is retail’s future; especially as more advanced technologies allow marketers to handle personalization more effectively”, suggests Infor Marketing Management. However, retailers have to invest in the right technology, including marketing automation, CRM, social media management and data analytics tools, as well as more advanced e-commerce platforms.

Bringing the person back into the marketing message may help soften the total onslaught of marketing atomization by means of the internet of things, big data and bots.

Have a peek at this short video from Evergage re personalized marketing communication.

Notes

1 Järvinen, J. and Karjaluoto, H. 2015. The use of Web analytics for digital marketing performance measurement, Industrial Marketing Management, 50:117-127.

2 Grether, M. 2016. Using Big Data for Online Advertising Without Wastage: Wishful Dream, Nightmare or Reality? GfK Marketing Intelligence Review, 8(2):38-43.

3 Lee, Y.J., and Dubinsky, A.J. 2017. Consumers’ desire to interact with a salesperson during e-shopping: development of a scale, International Journal of Retail & Distribution Management, 45(1):20-39.

Read also:

  1.  Chatbots in Retailing – a Fact or a Fad?
  2.  Retail and the Internet of Things

Images and video

  1. Pixabay
  2. GIGYA,
  3. Evergage