The Future of Personalization in Ecommerce

Product suggestions are an ingrained part of the ecommerce experience.

With the up- and cross-selling opportunities that a good system can provide, a thoughtful ecommerce experience is invaluable, as Amazon’s paid search and display advertising strategy has shown.

For consumers, suggested products should bring real value. Rather than being haunted for weeks by a product they searched for once, consumers should experience helpful product suggestions which complement their purchases.

Often, this is the case. But have personalized suggestions realized their full potential?

Just 16% of global internet users say they find brands via personalized product recommendations, putting this tactic at the bottom of the list for effective brand discovery channels.

Personalized product recommendations aren’t winning ground as a source of brand discovery. At least, not until recommendation engines become smarter.

Despite being an increasingly popular approach used by brands, it seems they’re failing to grab consumers’ attention early enough in the sales funnel.

By the time consumers are exposed to personalized product recommendations, they’re already several steps along in their purchase journey.

In our survey of 1,678 consumers in the UK and U.S., we investigate how brands can engage online consumers more effectively, creating a smooth shopping experience amidst the choppy seas of choice.

What is choice fatigue?

‘Choice fatigue’ is seen as a well-known phenomenon in psychology and economics. The phrase describes the negative psychological, emotional, and behavioral effect of having too many options to choose from.

64% of global consumers say there’s too much choice online.

Choice can be liberating, but it’s also closely linked with the feeling of loss. If consumers buy your product, it inherently means choosing not to buy other products.

These trade-offs can cause decision anxiety and decision aversion, and if consumers can’t make a decision, it’s unlikely they’ll make a purchase.

Dan Gilbert explains the paradox of choice and happiness in this insightful TED talk.

Choice overload permeates multiple sectors – a recent example of this is consumers experiencing ‘subscription fatigue’ from the number of TV and movie streaming services available, all with exclusive content.

The same applies to the sheer amount of choice on offer from online retailers such as Amazon, eBay and ASOS.

Choice fatigue could be a reason why nearly a quarter of our global respondents want their favorite brands to help simplify and organize their life.

This is particularly the case for older consumers, which might be why we see higher figures in Europe (28%) and North America (34%) for this data point, where internet penetration rates are higher and internet users tend to be older.

What are the effects of online choice fatigue?

In our survey across the UK and U.S., 38% of people agree they often feel overwhelmed by the variety of options available when shopping online.

When asked how they responded to feeling overwhelmed, many online shoppers resorted to having some sort of list in place.

This list could be in the form of saving items in the shopping cart without checking out (15%), bookmarking products to decide later (15%) or shortlisting options to come back to (13%).

Only 1 in 10 consumers experiencing choice fatigue said they would purchase the products anyway, knowing they could return them if unsatisfied. Although returning items is now relatively straightforward, our data shows it’s not necessarily the action taken by consumers overloaded with choice.

While choice fatigue should be a concern for brands and be alleviated where possible, it isn’t driving people offline. Preferring to shop offline because there is too much choice online was only cited by 4% of consumers.

The most common reasons for not buying much online has more to do with the positive aspects of in-store shopping, rather than online shopping being perceived as a negative experience.

Namely, shopping offline allows consumers to get the item immediately (42%) and hold the product in real life before purchasing (31%).

A quarter of offline shoppers say they don’t buy much online because they prefer the brick-and-mortar experience.

People desire to interact with products before purchasing them has made brands rethink their strategy for how they entice consumers to follow through with a purchase.

Smol (“Small, cute”) launched by former Unilever executives is a classic case. Launched in 2017, they send small trial samples of laundry detergent at no cost, before delivering monthly shipments of detergent thereafter

The packaging is neutral, eco-friendly and designed to fit in a letterbox. Smol’s model shows how compressed the purchase journey has become with D2C, social-first brands: consumers go from no exposure in a low salience category to signed subscribers in a matter of moments.

The luxury market, which particularly has struggled to make the transition into ecommerce, could benefit from adopting innovative brand discovery techniques.

Department stores have been the traditional mainstay of how luxury brands present their products to consumers, so moving online presents an automatic challenge.

Luxury shopping tends to be more of a high-touch, emotional experience, with luxury consumers invested in much more than free shipping or easy return policies.

For the luxury sector, having a tangible experience with a product is still paramount, which may be indicative of why Amazon struggles to capture a meaningful market share in the luxury retail space.

The pinnacle of choice and convenience, Amazon holds less appeal for luxury consumers, who are drawn to brands that can act as curators.

Personalization is key.

Increasingly, personalization is becoming a core component of the most engaging user experiences.

In fact:

46% of respondents in the UK and the U.S. say they would give personal information in exchange for more tailored product recommendations.

Personalized marketing is not a new phenomenon, but with the power of rich media content and revolutionary machine learning tools, brands are now able to deliver dynamic and tailored shopping experiences to drive engagement and customer loyalty.

For example, eBay now uses AI-powered tools to anticipate the needs of buyers, recommend items and inspire shoppers.

With fine-tuned personalization abilities, the site tries to customize the shopping experience to the needs of every shopper.

A big part of this eBay’s strategy was introducing Interests, which allows shoppers to personalize their shopping experience based on their passions and unique style.

16-24s in the UK and U.S. are 1.5x more likely to cite their style as the most important thing recommendations should be based on when clothes shopping.

Google is also upping the ante on personalization, in a bid to try and lure consumers from Amazon. In Google’s new Shopping experience, consumers receive recommendations based on their shopping histories, search histories, and lists.

Users will also be able to buy online or locally, with more than two billion products mapped by Google to local retailers. This local shopping functionality is a key differentiator between the world’s most popular search engine and Amazon.

What is the future of personal suggestions?

A lack of personalized recommendations actually comes low down in online shoppers’ biggest frustrations – perhaps because they add to the shopping experience, rather than being an integral part of it.

But recommendations could become integral if they played a part in solving other frustrations.

For example, unexpected charges (22%), unexpected unavailability of items (18%) and poor search/filter results all top the list.

Suggestions don’t have to be product-related, but should shine a light on how a user can search for items and find which are in stock, at what price.

In the future, more advanced AI and smarter search tools will allow users to filter results easily and get the exact results they want.

AI will eventually allow highly tailored recommendations based on tens and even hundreds of user preferences and attitudes.

When we asked consumers what they most wanted a personalized recommendation to be based on, a third chose their budget (32%) followed by their personal style (21%) and brands they liked (13%).

We then asked UK and U.S. online shoppers which type of personalized content would persuade them to make a purchase. 38% said a result tailored to their tastes and interests, 35% said being shown what other people similar to them had bought, and 32% said recommendations related to what they had bought in the past.

Just under a quarter say that online product recommendations don’t help them weigh up a purchase decision because they prefer to explore on their own. However, very few consumers (4%) say ads are no help because they’re irrelevant or confusing.

Personal recommendations can connect the final touchpoints in a purchase.

Online product recommendations can be very valuable in helping consumers overcome choice fatigue, but simple suggestions may not be as effective as they once were.

Brands should now be looking to create tools that advance personalization even further.

One easy way to do this is by giving consumers transparency and autonomy in how recommendations are shown to them and how they search for products. At the same time, brands should seek to understand consumers’ frustrations with the current ecommerce experience.

56% of respondents in the UK and U.S. said they wanted online retailers to make it easier to categorize and organize products, compared to only 20% who wanted them to make it easier to see what others thought.

However, reviews do seem to play an important role in giving the consumer the final assurance or push they need to make a purchase: 42% of consumers said that they used customer reviews on the seller’s site as their final marketing touchpoint before making a purchasing decision, and 28% used reviews on dedicated review sites.

48% of global internet users have left a product review in the past month.

High-quality products (48%), rewards and discounts (41%) and love for the brand (32%) are the strongest motivators for our global consumers to advocate or promote their favorite brand online.

Personal recommendations should primarily serve to help customers navigate through a range of products and narrow down which ones are right for them.

But they should also create links between research and purchase touchpoints to satisfy any indecisive or wavering customers. This might mean linking to customer reviews once some form of shortlisting or checkout basket has been created.

User-friendly search, filter and recommendation tools shouldn’t be seen as helpful add-ons. They’re functional necessities which help augment the ecommerce experience and give consumers a reason to shop online.