AI in online retail: How is hyper-personalisation driving the sector?
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AI in online retail: How is hyper-personalisation driving the sector?

By Deborah Williams 20 Aug 2019

Technology advances are enabling retailers to introduce new levels of customisation, with companies introducing artificial intelligence (AI)-based hyper-personalisation experiences to tailor and follow consumer shopping trends.

AI in online retail: How is hyper-personalisation driving the sector?
AI in online retail: How is hyper-personalisation driving the sector? Credit: geralt via Pixabay

Retail Insight Network explores the world of AI in online retail with Raj Badarinath, marketing and ecosystems VP at US-based omnichannel personalisation platform RichRelevance, to find out how hyper-personalisation is driving the industry.

 

What is hyper-personalisation?

Hyper-personalisation combines real-time behavioural data with unstructured data from textual information found in product descriptions, ratings and reviews using natural language processing (NLP) to become their personal tastemaker and curator.

Badarinath says: “Customers today expect personalised experiences, with products and services tailored to their individual preferences. With this in mind, hyper-personalisation is knowing and serving your customer as an individual, and not part of a rough, probabilistic segment. In effect, it creates a ‘segment of one’ for each customer, by understanding their likes, preferences and behaviour – inspiring them to discover more products and content that will suit their unique taste and providing a productive, pleasant and totally unique shopping experience.”

 

How do consumers feel about the use of hyper-personalisation?

According to the latest ‘Creepy or Cool’ survey, by RichRelevant, of the 2,577 respondents across the UK, France and Germany, 80% of UK consumers want transparency from retailers about the use of AI.

The study also found that 75% of UK respondents are unfamiliar with AI, 43% value resources like AI to personalise their shopping experiences and 80% of UK respondents want retailers to disclose if they are using AI to market products and outline how they are using the technology.

Almost one-third of UK consumers said they are willing to share more personal data for an improved shopping experience.

 

How is AI personalising online shopping?

Badarinath says: “Online shopping offers a seemingly infinite array of choices on virtual aisles and it’s leaving shoppers overwhelmed, less satisfied with their purchases and paradoxically more hesitant to make buying decisions despite the variety.

“The response to this lies in personalisation. With the use of AI-driven machine learning which analyses shoppers’ behaviour online, gauging customer interests, learning and tailoring recommendations for each individual customer, hyper-personalisation helps brands and retailers offer a more engaging and positive experience to consumers.

“Today, online shops are able to tailor everything from searching for products, auto-suggestions, personalised navigation and categories to the content of their websites and tailored offers for each customer, depending on their needs and affinities. When it feels like the store was built just for that individual customer, this is hyper-personalisation at work.

“Hyper-personalisation cannot happen without AI, specifically the patented Xen AI engine – which uses NLP and Machine Learning to better understand and individualise for each customer. Xen AI allows digital leaders to deploy ‘strategies’ – the pre-defined decision models for retail- with the confidence that the best strategy amongst the set will be automatically applied to every decision to create the most personalised experience for any shopper.”

 

How can hyper-personalisation create a better customer experience?

“Every business today, regardless of industry, knows its goods and services are becoming rapidly commoditised. Competing and winning require differentiation through memorable experiences as the next evolutionary step in the Experience Economy.

“Customers today have more options than ever, as well as the means to acquire anything they might possibly want thanks to online shopping and global deliveries. Shopping has never been so easy – but what shoppers want is relevance: to feel recognised and understood by their favourite brands. After all, loyalty goes both ways, and for someone to remain faithful to a brand or retailer for years they need to receive something in return.

“What hyper-personalisation provides in this sense is an improved experience, one that shows customers that they are individuals in the eyes of the brand and not just parts of a demographic.

“In offering shoppers an experience tailored to their own, self-stated and unstated needs, likes and preferences, hyper-personalisation brings the shopping experience from irrelevant or even tedious to fulfilling and unique. In this way, it helps brands and retailers build consumer loyalty, while shoppers are able to enjoy shopping in environments, be they online or offline, tailored to them.”

 

Can hyper-personalisation be implemented in physical retail?

Badarinath says that hyper-personalisation in physical retail can take a few forms:

1) Clienteling applications: These are replacing the standard point-of-sale systems with tablets that free sales associates on the floor to freely walk around, mingle with customers, take orders and payments, and more importantly, use hyper-personalisation to upsell and cross-sell relevant products and services on the go.

2) Mobile apps with beacon technology: There are companies that have implemented beacons that detect when a customer is in the store and after a full opted-in permission grant, can send the most relevant offers and promotions using push technology.

3) Digital kiosks: An easy way to engage and provide help and guidance, with the addition of educational videos on what customers may be looking for using hyper-personalisation.

4) Augmented reality applications: Incorporating hyper-personalisation can help with applications, such as overlaying a map, similar to a GPS, on the aisles of a grocer and can suggest upsells and cross-sells in context, taking into account special needs or restrictions, such as gluten-free etc.

5) Robots: Companies such as Japanese multinational telecommunications conglomerate SoftBank have introduced robots in branches. SoftBank’s ‘Pepper’ – a semi-humanoid robot that engages with consumers using facial recognition technology – also has a screen that can be used for hyper-personalising the experience, taking into account all prior behaviours and affinities just like a real-life sales associate.

 

The future of online retail within hyper-personalisation?

Badarinath says: “Marketing automation has come a long way, from a mere tool for ads to a fortune ball that reveals the needs of today’s highly demanding customers. The technology advancements in this field have empowered marketers to use their knowledge of customers and the under-utilised information of their own products, to unearth valuable insights and create highly personalised experiences.

“In the midst of today’s retail slump, hyper-personalisation empowers online retailers not only to resurrect their business online but also to compete effectively against Amazon, and ensure customers remain loyal to them while keeping their offerings relevant to their customers.”

 

What is the main lesson for the retail industry to know about hyper-personalisation?

Hyper-personalisation is the next step of evolution in serving customers in a personal manner in every digital channel, at scale. The industry has been hammered by the rise of Amazon, direct-to-consumer businesses and more. But the fact that retailers and brands possess the most trust, transactional and loyalty data, and high street presence still means that with the right technology it is still possible to turn the tides and create a differentiated position in the market. The demographics and psychographics of the retail customer base are rapidly changing and hyper-personalisation will soon become the baseline to sell to tech-savvy customers.