It’s not just about pricing — Millennials are much more conscious about their buying decisions than they are perceived to be.
Let’s look at how I do things, maybe with a slightly less important decision, like the time I had to pick where to eat dinner in Seattle when I was on tour last year. First I texted four friends who travel and eat out a lot and whose judgment I trust. I checked the website Eater for its Heat Map, which includes new, tasty restaurants in the city. Then I checked Yelp. And GQ’s online guide to Seattle. Finally I made my selection: Il Corvo, an Italian place that sounded amazing. Unfortunately, it was closed. (It only served lunch.) At that point I had run out of time because I had a show to do, so I ended up making a peanut-butter-and-banana sandwich on the bus. The stunning fact remained: it was quicker for my dad to find a wife than it is for me to decide where to eat dinner.
- Aziz Ansari
Everyone’s talking about us Millennials these days. Apparently, we're into the sharing economy, we can't afford to buy homes anymore and we generally are an entitled bunch. Opinions galore for sure, some valid, some dubious.
When it comes to e-commerce though, what is for sure is that almost universally, traditional retailers really don't understand Millennials, and, consequently, what it takes to sell to them.
Having too much choice is a bad thing
E-commerce websites offer way too much choice. These stores are a deluge of information, specifications, and vanity metrics. Consumers often find it impossible to choose from among a hundred similar-looking products with minuscule differences that cost roughly the same.
We find this quite strange because e-commerce wasn’t supposed to be this way. E-commerce promised a golden future of limitless choice in which consumers would be able to get much greater value for their money, and not be restricted by a physical retailer’s limited inventory.
Instead, we're faced with a deluge of data, a venerable tsunami of choices, fake products, cheap Chinese knock-offs and products that are spec-ed too close to each other.
On paper, having lots of choice sounds good. But as Aziz Ansari points out, having too much choice can be a really bad thing.
Here’s a short lesson: People are less likely to buy when they are faced with more than 5 similar products to choose from. There’s just too much stress and indecisiveness involved.
On the surface it doesn’t make sense — why would retailers intentionally miss out on more opportunities to sell?
Millennials don't demand more choices, they demand choices that fit their unique profiles
The original philosophy behind providing consumers with a million choices was born sometime in the post-war boom, during the heady times of the American Dream. It was created in an attempt to sell as much product as possible by catering to a wide range of backgrounds, tastes, and needs.
Back in the pre-internet age, retailers just did not have any means to understand the diversity in consumers profiles, beyond geography and demographics.
Large-scale generalizations (most ham-handed, a few downright racist) were made and products were designed and manufactured as such, resulting in many, many different configurations, colors, variations, and sizes.
In addition, retailers just did not have the means to target individual shoppers with products that fit their need, instead bombarding them with a hundred choices, when in reality just 2 or 3 would have sufficed to make a sale.
Today’s retailers still embody that carry-over. Take a look at the plethora of choice that Macy’s has on offer below:
Given this immense amount of choice and data, it is no wonder that that an increasingly large number of millennials are shopping on sites like Etsy or (in the future) Pinterest, where the focus is on carefully curated selections, either by the seller or by the act of picking specific tastes.
Millennials don’t buy based on price alone — their decisions are much more complex
Millennials aren't as price conscious as you'd think. Yes, we hate a bad deal, but we hate bad products even more. So much so that any product that is sold below a certain price threshold (as averaged between its competitors) is unlikely to sell very much as most people think it's a knock-off (unless it explicitly brands itself as a low-cost alternative to a premium brand, a.k.a. the OnePlusOne.)
Further, making comparisons based on price is not so simple. Here’s a straight-forward price comparison:
Here’s a more challenging comparison:
Retailers can leverage product data to provide smarter choices
Retailers should look to hyper-target products to specific demographics using rich product data. Information on colors, sizes, dimensions, material allows for retailers to address choice in a smart, customer-centric ways that have not been done before. Solutions like Hits Analytics can help retailers create product-specific ads targeted at specific demographics on Facebook.
Here’s an intuitive choice for a customer crafted using product data:
Start-ups like LiveTheLook are creating exciting new paths in fashion retail by pulling in user-generated data on preferences and tastes to showcase hyper-curated products to their users.
This is cutting-edge development in fashion retail; by tailoring product catalogs to individual shoppers, retailers form a closer connection with their customers — as does a personal tailor — that often creates longer lasting loyalty.
More data benefits retailers: operational efficiencies that result from big data far outweigh competitive pricing strategies
Using product data, retailers can rapidly realize efficiencies in operations and sales channels through UPC-based tracking, better inventory management, retail insights, shopping trends analyses and a lot more. Cost savings resulting from data-driven analysis allows for investments in design and innovation, enabling a move away from undercutting prices.
Most of our company’s competitors tend to offer features like repricing or competitive pricing tools. While product pricing freshness is one of our core value propositions, we view these approaches to retail as boring and lazy ways to sell more stuff. It’s a crying shame that retailers and their providers don’t make better use of data to better target shoppers.
Our company, Semantics3 maintains a database of 75 million unique products and monitors over 10 billion price points every day. This database is far richer than just pricing data — it offers crucial data points like images, specifications, product descriptions and retailer data that lets e-commerce companies create more personalized choices for their users.
The message is clear — if you are a retailer selling online, do not fear data. Instead, embrace it wholeheartedly.
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Hari Viswanathan & Anand Ramachandran