Today’s retailers need to adopt a data-driven view — with the goal of understanding how website features and advances in AI will affect consumer behavior.
In a world where customers are shifting a significant portion of their purchases from off-line to mobile and online channels, the mantra for retailers is to embrace the change and capitalize on the virtues of digital commerce. But rather than haphazardly implementing various website features, retailers should adopt a data-driven view — with the goal of understanding how different types of information that consumers collect via the website affect their behavior.
We researched the effects of web technologies on a retailer’s critical performance metrics such as sales and returns. To study these effects, we needed to measure consumers’ actual web technology usage and match it with their transactions. Toward this end, we partnered with a women’s clothing retailer that has a large online presence and offers the type of web technologies that consumers typically encounter in e-commerce. Overall, we studied 7 million purchases made by approximately 1 million unique customers of this medium-size company over three years, and focused primarily on two months’ worth of data, consisting of 183,000 transactions and 52 million lines of server logs that tracked consumers’ web activities. Detailed findings from our research were published in the academic journals Management Science and Information Systems Research.
Our findings suggest that managers should encourage consumers to embrace innovative technology features like different types of web technologies, personal assistants, and apps, because such usage is generally associated with a higher level of sales. But our research also indicates that it’s critical for retailers to take steps to avoid five common digital retailing mistakes.
Mistake 1: Letting a Consumer Get Lost in a Sea of Products When consumers do generic searches on the web, a retailer should not just present a large set of products to them. Rather, the company should guide the consumer through a process to narrow the search results. This is important because a large set of potential options can confuse consumers and lead them to abandon the purchase process.
Some companies already do this. For example, Nordstrom Inc. has “Nordstrom Style Boards” enabling store salespeople (called stylists) to offer product recommendations to customers via the internet, and J. Crew’s website offers the “Very Personal Stylist,” a service that gives customers a way to connect with a personal shopper 24/7. But for many companies, significant improvements are still needed in this area.