Personalization helps Amazon prevail

The fact that Amazon’s dominance continues to hurt retailers is surprising to exactly no one. However, the reason for this isn’t necessarily that consumers prefer Amazon. Amazon has managed to nail personalization in a way few retailers have, according to new research from BloomReach, a Silicon Valley company centered on a personalization platform.

According to Forrester research from three years ago, 30 percent of consumers would research products on Amazon first before purchasing them. Surveying 2,000 consumers, BloomReach found that today this number is up to 44 percent, mostly at expense of retail websites. Only 21 percent of consumers said they start their search on a specific retailer’s site.

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“That’s not exactly mind-blowing,” says Joelle Kaufman, head of marketing and partnerships at BloomReach. “We all knew Amazon was gaining in efficacy, but that’s pretty dramatic in three years.”

The survey found that what really separates Amazon from other retailers is its personalization practices. Three-quarters of consumers said Amazon offers the best personalized experiences, followed by Walmart with 9 percent and eBay at 8 percent in an extremely distant second and third. The overwhelming majority of respondents – 87 percent – also said that when retailers personalize, they are influenced to buy more.

Why have consumers come to expect such personalized Web browsing? According to Kaufman, this widespread preference is largely the result of Google. Two-thirds of the study’s respondents claimed that Google has influenced their expectations from other websites. In addition, BloomReach found that, in a survey of 500 retail marketers, 86 percent fear that the predictive capabilities of search engines will influence what people expect from their sites.

“The consumer thinks, ‘I want [brands] to get it right because Google does,'” says Kaufman. “The consumer wants to do business with retailers that know them. We think there’s a real opportunity there for retailers to convey a deeper relationship by leveraging the ability to curate particular types of products, so the consumer comes and doesn’t get overwhelmed with choices.”

But while search engines greatly affect the shopping experience, 44 percent of retailers still consider Amazon to be their greatest threat. By comparison, a combined 41 percent feel as threatened by eBay and their direct competitors.

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Amazon is also Google’s greatest competitor, according to the search giant’s former chief executive Eric Schmidt. Visiting a Berlin software company last November, Schmidt said, “People don’t think of Amazon as search, but if you are looking for something to buy, you are more often than not looking for it on Amazon.”

Kaufman points out that because Amazon did not have any physical store locations, it had no choice but to master the online shopping experience. As a result, the retailers surveyed by BloomReach consider personalization their top investment priority.

“You always wonder, ‘Is [personalization] creepy? Do people ignore it?'” says Kaufman. “I think people are so overwhelmed with choices and so pressed for time that the idea that you can curate a selection just for me is really powerful. It’s basically all the reasons I want to work with a merchant: helping me shorten that list of my choices and then presenting to me what I would like.”

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