Peer and Algorithm Recommendations Boost Buying Online

By March 27, 2009
L'Atelier US

Personalization is the key to contemporary e-business, whether it’s advertising, marketing, or custom Etsy tea cozies. With online shopping, the practice is indispensable. It would be difficult to find a regular Internet user who has never looked twice at a recommended item on “Your” Another pioneering example of this is the Netflix site, which, like Amazon, became a leader in its own category. The complex algorithms necessary to drive such recommendation systems are pricey, and until recently only the larger retailers could afford to develop them. Now with their true value exposed and the advancing market, smaller companies can participate. Additionally, with independent shops dropping off as the economic going gets tough, those same small guys cannot afford to skip this tool that has been around for ten years.

Despite the success of this powerful tool, nearly three-quarters of online retailers in the United States do not make use of personalized product recommendations on their sites. A Vovici study released Thursday via eMarketer showed that only 27.6 percent of retailers offer these recommendations.

Senior analyst Jeffrey Grau of eMarketer says that the growing number of success stories will provide incentive for more retailers to join in: “, for example, currently uses a low-tech solution to offer personalized recommendations on only some product pages, but its recent expansion into product categories beyond shoes may be just the impetus needed to push the retailer over the hump.”

Naturally, math-based personalization is not the end-all to a successful retail experience. According to Grau, even though automated recommendation systems are rapidly improving, sometimes peer recommendations provide more meaningful results. Sites that reflect this parallel trend include shopping social networks Kaboodle, ThisNext and The Sugar Network.

While forty percent of retail sites plan to add personalized product recommendations, 36.7 percent plan to add customer reviews and ratings: the two highest priorities after video.

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