Here we are two years into the pandemic, and we’ve certainly learned a few things about why ecommerce success is so tied to having strong product recommendations, online personalization and rock-solid demand forecasting. Here are 3 core reasons why ecommerce product recommendations and personalization urgency has never been more pressing than it is today.
1. Global ecommerce grew by $27 trillion during Covid.
According to UN trade and development experts UNCTAD, the ecommerce sector saw a “dramatic” rise in its share of all retail sales, from 16 percent to 19 percent in 2020, representing a $27 trillion leap in ecommerce around the world. Even with in-person shopping having picked up again this year, the trend was furthered in the United States during the first 3 quarters of 2021, with ecommerce reaching $612.86 billion, up 16.4% from $526.72 billion in the first three quarters of 2020.
The Covid variants such as Omicron that we’ve seen impacting market volatility are only going to further fuel the drive from traditional to digital retail and beyond in the year to come. This is why forward-looking retailers are so focused on boosting conversions at the digital point of sale, which means a search experience that helps shoppers discover the products they really want based on their style, personal preferences, and current context.
2. Supply chain challenges have brought inventory to an all time low.
Both the buying and supply chain optimization decisions that retailers are making today are perhaps more critical than they’ve ever been given the disruptions we’ve seen at every link in the supply chain, thanks to circumstances set into motion by the pandemic. Maintaining the appropriate inventory mix at the right time and delivering a quality customer experience are among the top challenges that all retailers face.
This means that demand prediction accuracy is never more critical, and it starts with having finely-tuned product data that measures across thousands of attributes to determine exactly why things sold in the past. It’s a level of long-desired granularity that retailers are counting on to boost conversion rates, reduce returns, and to combat the current supply chain crunch. Having a strong sense of what inventory will actually move within high-margin windows. or which proxy products to order based on product and consumer intelligence, is something that goes a long way toward ensuring that the products that are ordered are the products that will sell.
3. Competitors like Amazon grew 220% in profit during Covid.
Finally, given all of the volatility in the retail space, we’re seeing that competitive threats to traditional retail ecommerce have never been higher, as consumers are overwhelmed with options. Often they’ll default to what’s easiest and/or most ubiquitous.
This leaves retailers with a challenge to surmount: how do they differentiate and move nimbly to counter such competition? Truly customer-centered digital transformation offers a path forward away from outdated ecommerce stacks and a reliance on simple tools like text-based keyword search and spreadsheet-based demand forecasting. Retailers have a golden opportunity to stop making bad guesses about shoppers and inventory, and rely instead on product and consumer intelligence that guides shoppers to what they’re looking for in real time - then send that gathered intelligence to key destination systems to continue to boost the effectiveness of their search engines, product recommender systems, demand prediction models, allocation planning and item set-up processes.
The macro conditions that are defining the current retail ecommerce space are clear; the urgency to evolve to meet the challenges that these conditions present to retailers is as well.
If you’d like to talk with our experts about how product and consumer intelligence is leading to 8-9 digit boosts in revenues for Lily AI customers, we’d love to hear from you. Request a demo, and let us know how we can help!