Don't get too personal with online sales

While most business-to-consumer e-commerce is still failing to serve the consumer adequately, it looks as if many companies are...

While most business-to-consumer e-commerce is still failing to serve the consumer adequately, it looks as if many companies are losing the plot in moving to the next stage.

Patrick Bossert

Viewpoint

People who have dabbled with making online purchases offer stories of broken promises and unfulfilled expectations to tell, some of which would have rivalled John Cleese's efforts to cater for his guests in Fawlty Towers.

The future trend in B2C, given the analogy, is micro-analysing each guest's habits and second-guessing their needs to an irritating level - instead of making sure the hotel looks great and has a welcoming atmosphere that the guests will want to come back to.

Imagine coming back to your room to find your bags packed."Based on your last visit, we thought you would like to leave a day early."

That is a bit extreme, but making assumptions about people can be counter-productive and lead to a puzzling, if not insulting, experience.

It is a case of traditional brand-value building competing with the current digital-channels marketing mantra of tailoring the retail offering to an audience of one.

The Internet has given retailers more direct access to consumer behaviour and is capable of producing staggering amounts of "clickstream" and other data for analysis.

Technology suppliers are encouraging the analysis approach and offering more elegant "personalised" content platforms but much of it is driven by differentiating products in ever-more competitive markets.

It sounds good and, on the face of it, clickstream data might be useful. But the bitter experience of real-world retailers should hold a lesson for anyone thinking of going down that route.

Loyalty-card data had the same appeal but has proved overwhelming in reality.

Extensive schemes for tracking baskets and trolleys with embedded transmitters to analyse how people shop have revealed nothing new. What they have demonstrated is that the stores with the best managers make the most profit. What those managers are trained in is the art of category management or "common-sense" selling.

It is about needs-based fulfilment. If you group products together in the correct way and present them in the right place at the right price, you stand a better chance of selling them.

The digital medium provides the ultimate platform for mixing and matching products and services to suit different needs. Expedia.com is a great example. If the products fit into a "lifestyle" category aligned with your brand or if you "own" seasonal categories and destination categories, all the better.

Twelve out of the top 15 global retailers live by category management principles. It is not personalised in any way. It is about giving consumers what they want and strengthening the retailer's brand positioning in the process.

Despite the current personalisation craze, there are signs that B2C basics are changing for the better. Notably, Christmas 2000 saw pure-play e-tailers outperforming many of their equivalent hybrid retail/e-tail operations in timely order fulfilment.

Amazon continues to excel as a destination category for book purchases, with clever product grouping and reviews true to category management principles.

Its customer service is excellent - another hard-learnt retailing factor. Its foray into personalised pricing of DVDs, based on a formula for what each customer might pay, illustrated the danger of stepping outside category management principles.

When a customer backlash arose, Amazon ended up apologising for the practice.

"If we started dynamic pricing, we would alienate our 29 million customers that we have worked so hard to build. It is not something that the company would consider. It's just bad business," said Patty Smith, a spokesperson for Amazon.

If personalisation isn't the solution, what is?

The answer is combining category management principles with excellent customer relationship management.

Consumers take a while to become aware of what you offer, educate themselves and then buy. A range of new channels have opened up through which B2C operations can stay close to customers. SMS text messages can be used to push information. Enhanced television can extend a lifestyle brand to a new level, not forgetting mailshots, catalogues, Internet and telephone.

Having a single view of the consumer and their transaction history through all of those channels is vital. That is where the effort needs to be put first and foremost and where the rewards will come from.

Patrick Bossert is head of e-strategy at ICE Group, KPMG Consulting.

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