Types of Recommendation Engines

Per Oct 2013 Internet Retailer report, 76.4% of the ecommerce sites in the Internet Retailer Top 500 now feature product recommendations but only 38.8% say they offer both product recommendations and site personalization. As end users, we have come to expect awesome tailored content, similar to our very own Facebook and Twitter newsfeeds, to reduce the time to discovery and to help us achieve our goals faster, while making us feel confident of our decisions. In this blog, I have attempted to compile types of recommendation engines that exist today, and examples where each is successful.

To begin with, there are two fundamental user intentions: search & browsing. Of these, browsing (exploratory intention) holds the excellent opportunity for a recommendation system versus search (specific intention). Recently mentioned by Carlos Gomez-Uribe, the VP of Product Innovation at Netflix [1],

“the company’s 75% of the viewer activity is driven by recommendations. Our [Netflix’s] search feature is what people do when we are not able to show them what to watch. In contrast, 90% of what people buy on eBay comes from search.”

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3 Pillars of Digital Marketing

One of things that I like about consulting is the diverse industry & functional knowledge that one learns (or has to learn) in a short period. One such exciting project around global digital presence transformation for a client propelled me to study further about the current market trends & technologies around capturing online shopper’s time and attention.

To begin with key pillars of digital marketing tactics (partially inspired from [1]) can be grouped by customer engagement continuum of attract, acquire, and retain.

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Is it only a matter of time before all large stores in town centres are closed due to Internet shopping?

Probably not in the near future. For example, for any of the following product categories shoppers would prefer an in-store experience.

  • Luxury product where first-hand experience informs the final decision (iPad 4 vs. iPad mini; MAC cosmetics, home design), or
  • Inexpensive category serving urgent requirements (fresh grocery/salt/shampoo)
  • Localized niche stores (coffee shops)

Think of IKEA, Apple, Nordstrom, Tiffany’s, DSW, Safeway and Toys”R”Us.

Additionally, while online shopping is an effective research tool, in-store shopping provides the level of confidence that no amount of online experience can, especially so in the context of female shoppers. In 2007, the Wharton study ‘Men Buy, Women Shop’ had observed: ‘Women are happy to meander through sprawling clothing and accessory collections or detour through the shoe department. They like to glide up glass escalators past a grand piano, or spray a perfume sample on themselves on their way to, maybe, making a purchase.’

Hence I see online stores co-existing alongside physical stores, while each type evolves in its size, shape & format to complement one another. Read: Best Buy’s Innovate or Die Retail Strategy.

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