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Luisa Via Roma (LVR), a luxury fashion retailer that sells hundreds of well-known brands including Balmain, Gucci, and Dolce & Gabbana, has been working with e-commerce personalization platform Dynamic Yield to improve its personalization capabilities.
Since implementing Dynamic Yield's technologies, LVR has seen a significant jump in conversion rates and a 15% increase in average revenue per user, highlighting the importance of personalization in luxury retail.
LVR has introduced a number of personalization techniques to improve its e-commerce performance.
- LVR has customized sites for each country. The sites highlight products that resonate based on customer behaviors in specific areas, Nicola Antonelli, web project manager at LVR, told BI Intelligence. This can be an effective way for retailers with substantial geographic reach to cater to their respective demographics. Similarly, L’Occitane has designed region-specific checkout pages, which resulted in a 15% increase in mobile sales.
- Customers receive personalized search results. Results are automatically sorted by price depending on the customer's spending history, according to Mukund Ramachandran, VP of global marketing at Dynamic Yield. This allows LVR to get the most expensive, and possibly most appealing, products in front of its highest-spending customers, making the experience better for shoppers and the results better for LVR.
Dynamic Yield also enables LVR to try out personalization features with A/B testing,Ramachandran told BI Intelligence. LVR is able to test which recommendations resonate best in each country — for example, consumers in some countries may prefer to see items related to products they've bought before, while others may want to be shown products often purchased with their order. This can be done before full implementation, and opens the door for tests on new personalization features like social proofing, or displaying how many people have purchased a specific item in a region. Such testing enables LVR to stay on top of customer trends in different geographies, and ensure that it is employing personalization techniques likely to resonate locally.
Personalization is particularly important in the increasingly competitive luxury space.There are tons of luxury brands, and while they all have their own appeal, they are a part of a crowded marketplace that is seeing cost per acquisition increase, Antonelli said. Retailers must get the most out of each individual customer, and with personalization capable of boosting sales 6-10%, it’s an effective way to secure higher spending and keep consumers coming back.
One of retailers' top priorities is to figure out how to gain an edge over Amazon. To do this, many retailers are attempting to differentiate themselves by creating highly curated experiences that combine the personal feel of in-store shopping with the convenience of online portals.
These personalized online experiences are powered by artificial intelligence (AI). This is the technology that enables e-commerce websites to recommend products uniquely suited to shoppers, and enables people to search for products using conversational language, or just images, as though they were interacting with a person.
Using AI to personalize the customer journey could be a huge value-add to retailers. Retailers that have implemented personalization strategies see sales gains of 6-10%, a rate two to three times faster than other retailers, according to a report by Boston Consulting Group (BCG). It could also boost profitability rates 59% in the wholesale and retail industries by 2035, according to Accenture.
Stephanie Pandolph, research analyst for BI Intelligence, Business Insider's premium research service, has written a detailed report on AI in e-commerce that:
- Provides an overview of the numerous applications of AI in retail, using case studies of how retailers are currently gaining an advantage using this technology. These applications include personalizing online interfaces, tailoring product recommendations, increasing the relevance of shoppers search results, and providing immediate and useful customer service.
- Examines the various challenges that retailers may face when looking to implementing AI, which typically stems from data storage systems being outdated and inflexible, as well as organizational barriers that prevent personalization strategies from being executed effectively.
- Gives two different strategies that retailers can use to successfully implement AI, and discusses the advantages and disadvantages of each strategy.
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