Data vs. Goliath: How retailers come out on top in the age of transformation
On June 6, Treasure Data hosted marketing leaders from across the Bay Area to discuss how companies can compete against the “Goliaths” in the marketplace through innovative and responsible use of customer data. We were lucky to be joined by partners Cloudwick and Chartio, who provided additional color on the topic. For those who couldn’t join us, our CMO provides an overview of key retail trends and successful strategies below. Check out the accompanying webinar for even more insight!
We read a lot these days about a “retail apocalypse.” The rise of Amazon, a glut of malls, and a growing preference for spending disposable income on experiences rather than things are often cited as signs of said apocalypse.
To be sure, we’re seeing a lot of store closings and bankruptcy filings, including big, venerable brands. But at the same time, retail sales are expected to grow about four percent this year, according to the National Retail Foundation. So, what’s really been happening is a steady transformation of the industry as the lines between online and offline continue to blur.
It’s becoming increasingly clear that as this transformation unfolds, the winners will be those that make the best use of data to understand their customers at a very deep level, and give them a unique and personal experience. We’re at a watershed moment when traditional retailers have the opportunity to use data at scale to carve out a niche and take on the Goliaths of the industry.
Technology is at the core of retail’s transformation
While this retail transformation has been occurring, there’s also been a tremendous proliferation of technology to help marketers attract, retain, and drive customer loyalty based on what channel they’re in, and what device they’re using. If you’re like most companies, you probably have at least 10 or 15 different solutions to help you figure out what your customers are up to as they shop online, in your store, or even on the phone in your store.
The good news is, that puts more data about your customers at your disposal than ever before. The challenge is that all these systems typically don’t talk to each other. Data silos are nothing new, but the risk associated with them has increased because the Amazons of the world can collect and crunch through massive amounts of data in real time. The gap is widening between companies that can rapidly incorporate data insights into the customer experience, and those that can’t.
The challenge of managing an ever-growing amount of customer data is outpacing most companies’ ability, and willingness, to invest in the necessary resources. For companies that don’t want to build massive data science teams, there’s a new generation of marketing technology that is democratizing the ability to derive insights from large volumes of disconnected data.
Putting the puzzle together
This new technology is not so much about collecting the data as it is about putting the pieces together. Customer Data Platform (CDP)s are at the center of companies harnessing this influx of data, ingesting and normalizing data from all the different tools they use. At the same time, the system is constantly negotiating all of the data that’s coming from external sources, looking for identity markers such as cookies and tags it can match to your customer data in order to enrich it.
If you have weather data about a certain city, that may not be meaningful, but if you can track the weather and relate it to what customers are buying in your store, that becomes valuable, and actionable. Most companies cannot do this, even though they are collecting plenty of data. The data is coming in so fast and from so many different channels that it’s hard to make sense of it all. CDPs deliver the one single customer view that drives uniquely personalized retail and eCommerce experiences that today’s customers are now demanding.
Transformation in real life
It’s clear that retail is ripe for changes, but what are the examples of companies who have actually been able to harness the data to navigate to the future? Wish.com is a prime example of an eCommerce retailer that is radically changing the shopping experience. Wish has risen to the #1 shopping app on the IoS store above Amazon through deep understanding of the customers they are seeking to serve. The company wins with two unique strategies: compete on price and drive purchases through discovery rather than search. For example, 9 out of 10 purchases on Wish do not include any type of search. Wish customers browse to find what they’d like to buy, just as if they were shopping at a mall.
These two strategies require sifting through enormous amounts of data to tailor the experience for each customer. Each day, Wish manages transaction data for 2 million items purchased, 120 thousand daily customer service interactions, 300 thousand vendor interactions, 70 million product skus, and other items. Paired with a recommendations algorithm, consolidated customer profiles ensure that 95% of products that cross the field of vision of customers are relevant.
The Wish example shows that underneath the noise about the retail apocalypse in the shadow of big eCommerce, there’s a tremendous amount of innovation going on in retail today. It’s not solely about data or technology. It’s about having the ability to understand and delight your customer like never before. Data and technology are simply the way to get there. Up until recently, only the Amazons and Googles and Facebooks of the world have had the technology infrastructure to crunch through all that data at scale. Like retail itself, all that is about to change.
If you’d like to hear more about the opportunity for retail’s transformation with data, listen to my webinar “Data vs Goliath.”