The Internet has unequivocally changed life as we know it.
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…
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…
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…
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