May 15, 2018
Originally posted on Total Retail.
Today’s leading retailers win at personalization. They know it’s imperative to meet their customers across channels, tailor interactions, and make the customer feel like every shopping experience has been designed with their unique preferences in mind. As new technologies crop up, from chatbots to product recommendations to smart fitting rooms, merchants have focused personalization efforts on the browsing and transacting experience. But can they do more?
The critical opportunity that many brands have missed is bringing the same personalization innovation to the back end. The strategic use of new technologies like big data and artificial intelligence (AI) across supply chains, fulfillment centers, manufacturing and more is the key to unlocking a new degree of personalized commerce. We’re in an age of commerce where Amazon.com has bought Whole Foods—anything is possible! By infusing personalization technologies from the inside out, not simply tacking it on the front end, retailers can unlock a new realm of customer experiences. This is the forgotten piece of customer experience innovation, and it’s time for retailers to implement personalization end-to-end.
Know Why End-to-End Personalization Matters
Taking a step back, let’s talk about why achieving personalization end-to-end matters in the first place. After all, the consumer’s primary point of interaction surrounds browsing and point of purchase, right? Well, effective commerce is about connecting supply to demand, and that means going beyond fulfilling transactions to identifying where, who and when a customer may be.
The retail industry has preached “doing omnichannel” as if it were a feature to uncover new revenue. Omnichannel must be core to the business, not a separate strategy to add bells and whistles. The same technology that we’ve used to create omnichannel front-end experiences—e.g., machine learning algorithms—are more than buzzwords. They’re actual principles that optimize the supply chain and improve operations like inventory planning or fulfillment optimization, which eventually contributes to perfecting the end customer experience.
We’re still early in the evolution of AI and its adoption, but pioneers have been smart to infuse such technologies where it matters. For example, German pharmaceutical Merck KGaA uses AI and machine learning sensors throughout its supply chain to automate operations for pharmaceutical and healthcare products. At the end of the day, retailers use the browsing and transacting layer to show their customers that they understand them. Extending this personalization to the supply chain is a strategy for understanding customers in a way they didn’t even know they wanted to be understood, and then acting swiftly on that intelligence.
Win With Product and Experience
So why is retail so narrowly focused on the tip of the iceberg when personalization can be applied to much more than browsing and transacting? What if AI could proactively suggest that you divert a certain amount of inventory to a specific geography given predicted demand in that area, or propose that you increase production of one product over another? True end-to-end personalization means competing with a differentiated product that steals customers’ hearts, and remembering that “the last mile” is just as important as the first, second or third.
Amazon has done this exceptionally well. After all, it didn't buy Whole Foods just to enter the grocery business; it did so to round out its supply chain, recognizing an overlapping customer base and an opportunity to deliver a complete experience. Similarly, Walmart has long been a supply chain case study with the infrastructure in place to distribute endless products to stores across the country. In the past year, Walmart's bold acquisitions of companies like Bonobos and Jet.com have allowed for its continued supply chain innovation and delivery of experiences that it previously couldn’t provide, such as fast shipping for e-commerce orders. The Walmarts and Amazons of the world are technology companies, and they’re quick to make the right investments on both the front- and back-end to not only stay competitive, but ensure continued dominance. Everyone else must strive to do the same.
So what’s a retailer to do? Success comes down to offering such a personalized experience that you attract customers into your store—online or physical—and then offer a differentiated product and experience that compels them to not only buy, but come back for more. Of course, new technologies are expensive and not all retailers have the means to overhaul their supply chains overnight. By blocking and tackling to take on what you can, customers will quickly see a difference. Drop shipping, for example, is a low-risk and cost-effective way to expand your assortment and improve the supply chain. Partnerships are also key, leveraging the expertise of others to streamline your own operations.
Retailers already take personalization seriously, but it’s time to extend this promise to the entirety of the supply chain. Modern technology is positioned help, but so many visionary retailers today struggle to see the full potential. Applications for virtual reality, AI and machine learning are already at our fingertips. It’s up to retailers to use them creatively and holistically to help their businesses thrive. Building personalization from the inside out is the forgotten piece of the customer experience that nobody can afford to ignore.