Online retailers are trying to cozy up to their customers in a bid to keep them spending at their websites.
From luxury men's clothier Harry Rosen Inc. to athletic shoe giant Nike Inc. and upscale fashion specialist Saks Fifth Avenue, retailers are starting to make Internet shopping a more personal experience, one $2,400 Brunello Cucinelli silk jacket at a time. Otherwise, they risk losing customers to a cyber-rival, which can be just a click away.
"The e-commerce playing field is very competitive and it is very difficult to distinguish yourself from other retailers," said Larry Rosen, chief executive officer of Harry Rosen, which recently launched a personalized online shopper adviser program provided by its in-store staff.
"That is the big problem with e-commerce – it's very impersonal."
In a faceless online world in which shoppers often use the Web simply to find the best deals, merchants feel the pressure to reach out to consumers on a one-to-one basis to keep them coming back.
Now retailers are investing in algorithms and other technology to customize digital shopping advice while collecting more information about customers to pinpoint their likes and dislikes. Merchants are even customizing the products themselves. Nike, for example, charges a premium for made-to-order sneakers, with colour, monogram and other choices.
Consumers increasingly expect to receive online offers and recommendations that are tailored to their personal tastes and interests, according to last year's 7th Annual Consumer Personalization Survey by digital marketing specialists Magnetic (formerly MyBuys) and E-tailing Group. A Magnetic study found that 41 per cent of consumers who got a "highly relevant" digital ad or e-mail from a retailer spent more with it than with rivals.
Amazon.com Inc. and Netflix Inc. were pioneers in using algorithms to monitor customer buying patterns and recom- mend other purchases based on that information, said James Green, CEO of Magnetic in New York. In today's ultracompetitive retail landscape, "it's incredibly hard without a very differentiated service to offer products at a higher price," Mr. Green said.
Gathering information about customers is key to connecting with them and winning them back, said Ethan Song, CEO of men's wear e-tailer Frank & Oak of Montreal. It finds that 65 to 75 per cent of its customers return to shop with it compared with an average of 43 per cent at other retail Internet stores.
Matt Corker is one of those repeat customers. He started to shop at Frank & Oak 10 months ago after filling out an online survey about his likes (professional-looking work outfits in subdued colours with a pop of colour) and dislikes (bright flashy prints) and signing up for its subscription service. With a budget of $150 to $300 a month, he gets a crate of clothing delivered to his Vancouver home monthly from Frank & Oak, shipping back rejected items in the same box.
"It took the guess work out of shopping for me," said Mr. Corker, a 30-year-old recruitment consultant who has spent more than $2,000 at Frank & Oak on dress shirts, pants and cardigans. "Each time they get more and more accurate in terms of things I would be looking for."
He's not worried about privacy issues. "It's the type of information I'm ready to share."
Brick-and-mortar retailers are beginning to bring their sales staff's services to their online shoppers – and provide a personal touch.
Harry Rosen last fall tested a program that it dubs Virtual Harry under which each of its salespeople sets up his or her own personalized HarryRosen.com web page. It allows customers to find staff online, chat with them and get a sampling of product ideas, which can lead to purchases. Staff can use information they already collect about their in-store customers' buying habits to help shoppers on Virtual Harry, which is now a permanent feature on the site.
For instance, one of Harry Rosen's salesmen received an online chat request one night last week from a customer who was looking for a bomber jacket, Mr. Rosen, the CEO, said. Familiar with the customer's preferences, the salesman promptly e-mailed him a picture of a $2,400 Brunello Cucinelli silk bomber. By the next day, the customer had paid for the item on the site's secure payment link and had it shipped to him.
"Our secret weapon has always been a well-trained associate or clothing adviser," Mr. Rosen said. "I think of it as a natural progression in e-commerce."
While e-commerce now makes up about 2.5 per cent of privately held Harry Rosen's total $300-million-plus of annual sales, he expects Virtual Harry to help lift that to 6 per cent within a couple of years, and eventually 10 per cent, he said.
Saks Fifth Avenue launched a similar initiative at saks.com this month, allowing shoppers to connect 24/7 with the retailer's sales staff on their personally curated Web pages.
Saks president Marc Metrick predicted the new tool will help "convert" more saks.com browsers into buyers. "It puts together our highest traffic channel, which is our website, with our highest converting channel – our stores" – and their employees, he said.
In customizing product choices, Saks and other retailers increasingly are counting on technology to match up customers with appropriate merchandise.
Saks uses algorithms to customize the array of products it shows prominently to customers on its website based on their recent purchasing and browsing patterns.
At Frank & Oak, if a customer prefers conservative styles for work, the e-tailer places white and blue dress shirts –typical choices for traditional office wear – at the top of that customer's feed, Mr. Song said.
Even grocer Loblaw Cos. Ltd. uses the automated tech tool to personalize its PC Plus loyalty program for online and offline shoppers. The algorithms can predict when a customer will want to buy a product next from past purchasing patterns and provide a discount for the customer to buy the same item again, said Jim Noteboom, a senior vice-president at Loblaw.
PC Plus members get a personal flyer based on their buying habits, he said. The effort seems to be reaping rewards: PC Plus members spend one-third more than average non-members, a spokeswoman said. "We try to reflect as best we can how the customer likes to shop us," Mr. Noteboom said. "We don't try to change dramatically their pattern."