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Personalized shopping a growing niche in e-commerce

August 15, 2014

Online retail has a growing niche within it, and chances are stores within it can pick out a better outfit than you can.

Online retail has a growing niche within it, and chances are stores within it can pick out a better outfit than you can. 

Start-ups these days have begun to offer consumers increasingly personalized shopping experiences, and now some are literally choosing the products you buy for you, reported The New York Times. These retailers gather data based on customer preferences and then use algorithms to determine idiosyncratic product packages or choices. 

One such company is Stitch Fix, which uses consumer data and professional stylists in order to put together boxed outfits for female users, the newspaper noted. Another example is Trunk Club, which is like Stitch Fix, but for men, and more expensive.

Data companies gather varies based on their services. Birchbox, for example, asks users for the color of their skin, hair type, age and other questions. The answers are matched against others in the user-base and a box of styling samples is sent to the customer – who can then test them and purchase full sized versions of products that worked out. 

“At a mall or online, the choices are overwhelming,” Katrina Lake, the founder of Stitch Fix, told the newspaper. “Then if you buy something and you want to return it, it takes a long time. People just expect a more personalized experience now.”

E-commerce sales are expected to surge 20.1 percent by the end of this year to reach a global total of $1.5 trillion, according to research from eMarketer. As online retail continues its global takeover, niche services for shoppers are bound to arise, and this new sort of shopping experience has potential to change the consumer experience. 

Stitch Fix is learning about personalization from an old head in the customized recommendations business. In order to assist with big data analysis the company hired Eric Colson as its chief analytics officer, reported The New York Times. His previous job was at Netflix where he worked on the media streaming company’s recommendations for viewers. 

Netflix has approximately 800 engineers working on the back-end of the site, according to Wired. And it can be gathered that they’re doing a good job on the company’s recommendation algorithm, since it is estimated that 75 percent of viewer activity on the site is fueled by it. Users streamed an estimated 4 billion hours in the first quarter of 2013 alone. This means about 3 billion hours of streaming activity per quarter is based on recommendations. 

“I think there’s way more data science at work here than people may realize,” Bill Gurley, a general partner at the venture firm Benchmark, an investor in Stitch Fix, and member of the company’s board, told The New York Times. “There’s a 15-page profile, there are over 66 characteristics tracked and there’s a predictive heat score for every single item against every single user.”

Personalization not only for online stores
Physical stores are getting in on the personalization game too – and surprisingly, the opposite is true as well. Birchbox, the personalized styling products start-up, recently opened its first physical location in the SoHo neighborhood of Manhattan, the publication reported. Employees as the store collect shoppers’ emails as new customers fill out physical versions of the questionnaire used for recommendations. 

“We realized that shopping online, if you know exactly what you want — it’s fast, it’s so simple, it’s cheaper,” Katia Beauchamp, a founder and chief executive of Birchbox, told The New York Times. “But it’s not about the enjoyment, the hobby, the sport. We use curation and personalization,” she said, “As a way to make the Internet have some of those fun and satisfying elements of shopping.”

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