Privacy: A Digital & Physical Convergence

The Internet has unequivocally changed life as we know it.

MindBlown

Long gone are the days of card catalogs, almanacs, and typewriters. The rapid change in technology has enabled us to stay “connected” and make decisions within seconds right from the palm of our hands. The Internet has provided consumers a convenience, that today, is still unmatched by any other value-creating source or activity.

Today, more and more consumers are seeking out their favorite brands and products through online searches and e-commerce sites. With shipping made easy, what’s not to like about eliminating long check-out lines, crowded stores, and the ever-so-popular, parking situation at your local mall? With so much traffic and free-flowing information happening on a daily basis, companies started to realize that the digital space is nothing more than another revenue generating opportunity. No other company has cashed in on this opportunity like Amazon.

Forecasts indicate online sales are set increase by more than 30% by 2020, making the industry account for more than $90B in online transactions. In an article last year by Forbes, Amazon is using artificial intelligence to dissect their users purchase history and preferences in order to deliver a unique shopping experience. The goal – To deliver a frictionless shopping experience and provide its users “full” control of their shopping journey.

But how much control does the user actually have? The company is planning on using proprietary algorithms to increase how much their Amazon Prime members (households) spend on purchases. On average, the company’s 63 million Prime members spend $1,300 per year, and through this initiative, the company believes it can increase it to $10,000 simply by sending their members items they didn’t know they needed.

I’ll let you digest that for just one second…

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The idea seems rather innovative, but intrusive at the same time. Yet Apple reaped these same benefits when it introduced the Apple iPad. Consumers didn’t know they needed a “tablet” until one was put in front of them.

Big Data is giving companies another dimension into analyzing consumer behavior. From the moment you land on your favorite website, how you navigate, what you click, how much time you spend on a page, to the items you browse through, is all being collected to formulate consumer profiles. Companies then take this information to see if there are any trends in preference or how to simply better position products to invoke consumers into pulling the trigger on a purchase.

By offering consumer convenience and tracking their data freely, you would figure this to be a win-win situation for companies, but it’s not. What happens to brick-and-mortar shops when customer traffic and in-store sales are on the decline? How do you remedy the unbalanced shift to e-commerce? Last October, Estee Lauder, one of the world’s most iconic legacy brands reported that department store sales fell from 54% in 2012 to 40% in 2017. The growing popularity of e-commerce has accounted for nearly 11% of the company’s revenue as reported by Morningstar.

So how do you converge the ability and advantages of the digital world with the fledgling physical?

Enter tech companies…

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Emerging technologies are now aiding companies with the ability to analyze images, video, and even human-like judgements. While it may be harder to track what exactly is capturing a consumer’s attention, or keeping consumers engaged within the in-store “experience”, technology behind human observation is narrowing the gap. Just last month, Scanalytics, a Milwaukee-based startup showcased their floor-sensor design to help businesses track movement. This new tool is helping retailers gain new insights on consumer habits. The technology is turning traditional retailers into “smart” retailers by identifying high traffic areas, what aisles or shelves are most profitable, to which products are being taken off the shelves.

This leads me back to the title of this post. As a consumer, is this an infringement upon your privacy? Do your really pay attention to the amount of surveillance that surrounds you?

Personally, I think it’s fascinating. What’s the difference between these types of observations and someone browsing for products on Amazon, or searching through Netflix for something that fits their lifestyle? Data is being collected whether you know it or not. Now, I’m not saying privacy shouldn’t matter, but if this is what it takes to earn a little more convenience, why not? Heck, Amazon is doing it with their new Amazon Go stores. Oh, you think they’re not monitoring how best to deliver upon the “consumer experience or track inventory consumption?”

Just imagine you’re out on the hunt for your favorite pair of Asics, or this years highly sought after Chanel – Boy Bag. You can thank the floor sensors and video analyzing technologies put in place to deliver the necessary information companies look for to understand what items must be readily available. Sounds like a win-win to me.

Would this type of tracking bother you? Sound off in the comments, and as always…

Thanks for kikinitwithraf

 

 

 

 

 

 

 

6 comments

  1. A very thought-provoking post! My first instinct would be to say yes, this type of tracking does bother me. It feels a little overwhelming to think that this technology is being developed to intentionally push me into purchasing more than I would have without it. There is a fine line between creating a smooth experience and creating a planned experience that was planned by the company, not the consumer. I think in this sense, it is not so much about the privacy as much as it is about the control aspect. I hate how close to manipulation this gets. Yes, it could be useful for this type of technology to place the products I want right where I can find them but what if the product wasn’t even something I wanted? If I fell for it and purchased it, the coercion techniques worked. On the other hand, if it was something I actually wanted, then I could see myself being thankful and impressed by this technology. For that reason, I think I could get over my initial instinct of being creeped out by the tracking and looking forward to learning more about it. After all, it is as you said, fascinating, and incredibly strategic.

  2. Amazon “believes it can increase it to $10,000 simply by sending their members items they didn’t know they needed.” Eek. That scares my wallet.
    With retail industry experience, and hope to fully enter the field post-graduation, I believe making every consumer’s shopping experience specialized is the most strategic move retailers have made in the recent decades. Who wouldn’t like to feel understood while they shopped? Comforted by a “personal stylist,” speaking not just in regards to clothes, but any purchasable item? It’d be like walking into your favorite boutique in your town, greeted by the same salesperson that has worked with you for years now. They pull items from the back they just got in today because it screams you! It is convenient and the personal touch goes a long way.
    However, as a consumer, I see how this shopping experience feels violating. It isn’t a salesperson who you’ve gotten to know over the years. It is a computer. An algorithm that has dissected your choices. Your data running through their systems as you scroll through their site, directing you to make purchases you didn’t originally intend on.
    My view is conflicted, but I am excited and hopeful that more people post their opinions on your blog post!

  3. A great blog post. Before I get into my point, I want to note that I was already surprised by the number $1,300 of an average Amazon Prime user’s annual spending in light of Tara’s comment haha. Although privacy infringement (even digital) can be a form of violation for the 4th Amendment in dissecting the words and implications carefully, the issue discussed in this post doesn’t seem to necessarily violate people’s privacy in my opinion. The information they extrapolate from these data mainly revolve around their purchasing behaviors or taste, which I believe is something that many consumers, if not all, are willing to share with the seller when they enter in to the shop (both physically and digitally). Otherwise, the sellers wouldn’t know what the buyers want, and as a result, they will not be able to provide better customer experience should they have known customers’ taste. If customers really want a more advanced technology and customer experience in shopping, they inevitably have to share what they want with the sellers. This eventually creates a win-win situation for both the sellers and customers.

  4. Very interesting and alarming read. Whats crazy is how eventually people might have to sign some sort of terms of use contract before entering a store, just as they would if they were using a mobile app. I wonder if consumers will react differently to this type of privacy agreement than they would with online shopping, because in this case a consumer might be more aware of whats going on around them.

  5. Great post! There is a conflict indeed between AI trying to know consumers better and consumers privacy. It reminds me of the precision marketing I mentioned in my presentation. While some customers might think the shipping platforms like Amazon are getting smart, others might think that is an invasion to their privacy. Totally agree the opinion on apple’s “intrusive” ideas. Although I was thinking Apple as an example of innovations back then, now I think Apple is a little bit manipulative after reading this blog. After all, an very interesting article to read!

  6. In an ideal scenario, we would be “helping the store help us” in finding things we are looking for and would benefit greatly from having. In such a situation, previously unknown problems in a consumer’s everyday life can be successfully addressed by having any store peruse the bits of data that a consumer’s preferences are made of. This also takes into account the subconscious behavior we exhibit that may elude even ourselves! I recall reading in marketing journals that recent innovations in eye-tracking technology unveil more information about a consumer’s tastes than the consumer himself was even aware about. If a company practicing ethical salesmanship were to obtain this kind of data, then it could easily position its products and services to best suit the needs of the consumer, creating a mutually beneficial relationship where the consumer has all the possible solutions he would ever need at his fingertips, and the company’s perceived value delivery increasing in magnitudes in the eyes of its customers.

    However, in a dystopian scenario, the opposite could easily become true: that companies intrusively and unsettlingly obtain troves of data on consumers in order to unnecessarily upsell on services that people don’t need for the sake of an additional %1 gain on the bottom line. Using psychological profiles generated from extensive analytical data, companies could exploit our deepest insecurities and hesitations in order to sell a product or service that we would never use in our daily lives. Once we realize that we have been duped, it could very well already be too late to obtain a refund or reimbursement.

    Personally, I’m in cautious agreement that the new techniques to market and sell to consumers will create welcome change in a marketplace that has remained stagnant for years in its functionality. Even with the introduction of e-commerce, many stores online still operate as if they had simply digitized their physical presence. It’s just good business sense and an economically-sustainable practice to avoid tarnishing your brand in the eyes of a potentially loyal consumer base. As companies start to act upon the data they have on us, I’m sure a few will take the negative route. But I believe that those will be the first to fail in the new marketing age, with the remaining companies the ones that exhibit ethical consumer marketing techniques.

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