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Recommendation technology helps retailers
capitalize on sales patterns
From February 2009
By Fiona Soltes
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Some trends simply can't be missed. Think
Beanie Babies, Cabbage Patch Kids and Tickle Me
Elmo, and you know full well how obvious they
can be.
Hiding in the shadows thrown by these mega-fads,
however, are thousands of other small trends,
and retailers have long hoped to latch onto them
before it's too late. Enter richrelevance's
personal recommendation technology, complete
with a proprietary feedback loop.
David Selinger, founder and CEO of San
Francisco-based richrelevance, says it's all
about using data to move sales forward; in
essence, it's not just recognizing the trends as
they're starting to occur, but also being able
to take full advantage of them once they have.
That begins with a process called "ensemble
learning," which takes the place of more
traditional tactics like collaborative
filtering.
With ensemble learning, the e-commerce
technology runs more than 15 different types of
real-time recommendations, such as recently
viewed items and top sellers. Based on the
previous behavior of the shopper (or others like
him), the technology chooses the best two to
four recommendation types for each page.
Someone who previously purchased an electronic
item, for example, may receive two sets of
recommendations: One under the heading, "people
who viewed this item also purchased this item,"
the other, "people who viewed this item
ultimately bought." Another shopper who's been
looking for something of a certain brand, or in
a certain price range, could receive additional
recommendations based on those criteria, as
well.
"Now, the whole concept of retail is way too big
for us to wrap around a single narrative,"
Selinger says. "Instead it's: ‘Let's try all of
the things that make sense, and see which one of
them works for your customers.'"
Selinger, whose resume includes stints as vice
president of software development and data
mining at Overstock.com and the head of
research and development for the data mining and
personalization team at Amazon.com, says the
problem with most recommendation technologies is
they're open-loop systems: Once a suggestion is
made, there's no way to tell if that suggestion
impacted the shopper or led to a sale. The
richrelevance technology constantly incorporates
what it's discovering into the process,
identifying what's working — and what isn't.
The system is completely automated, but if
there's a certain item or line that the retailer
wants to promote, that's possible, too. And it
all happens in real time — much in the same way
that trends can appear and then dissolve. The
technology helps customers feel that the
retailer knows what they want, sometimes better
than they know it themselves.
Who, how, what, where
Even with those shoppers considered
"low-engagement" with a low probability of
return, "a lot of information is still given to
us," Selinger says. "We might know, for example,
that they used Google to find the site, we know
what they searched for and, if they purchased
something, we know where that item was shipped
to. And that can help us latch onto new trends.
"If I bought the book ,"The Kite Runner," during
the holiday season," he says, and the retailer
later recommends another book by the same
author, "that might be interesting to me."
The company's most notable retail client is
Sears. It targets large enterprises with "a
pretty broad selection of products," Selinger
says, but clients range from those with 1,000
SKUs to "a few hundred thousand."
Perhaps one of the most appealing aspects of the
technology, from the retailer's perspective, is
the fact that it can be up and running in a
matter of days or weeks, even with "massive
organizations." And in these days of faster
searches, shipments and trends, that speed is
increasingly important.
"That's been where the rubber meets the road,"
Selinger says. "When we engage with a customer,
we're not just engaging as a vendor. We become a
partner, and that makes all the difference." |
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