A big advantage for online retailers compared to brick-and-mortar retailers is that they see exactly what their costumers do on their site. For example, the online retailers can see which products costumers have considered before they bought something. Brick-and-mortar retailers are now looking for more sophisticated ways to understand customer buying behaviour and want to take advantage of tempting insights from technology and data analytics (Techrader, 2015).
One of the ways to do this is by tracking customers with Wi-Fi hotspots and surveillance video cameras. The combining data gathered by those two technics creates detailed information of customer behaviour going into, and moving around the store. This data will be brought together with sales systems and transactions data to “build a picture of how well a store front serves to bring customers in, where shoppers go within the store, whether the layout makes browsing easy, if checkout queues are losing customers and other insights into customer shopping habits and needs” (Techradar, 2015). People do not need to connect to the Wi-Fi hotspot of a location to obtain the location data. When you leave your Wi-Fi connection active, your phone will effectively leave a digital footprint, his MAC-address. By adding the content from the cameras, the information becomes more granular and detailed (like making gender and age profiles). But also reactions and emotions of shoppers can be tracked. This is off course very useful information for a store to decide were to place specific products or how customers experience the sales force.
What do you think, will this be a big thing in about 3 years? And is this even possible with the current privacy laws? Is there a possibility that shops will lose customers by implementing this technology in their stores? Maybe people will accept this because they are used to being tracked on the internet and they do not care anymore.
E-commerce is a big threat to physical stores. The brick-and-mortar retailers are losing market share to webshops every year. The percentage of online shopping increased from 5% in 2007 to 9% in 2012 in the United States (Economist, 2012).
I think most retailers don’t invest enough effort in building a relationship with their customers. The main things that allow brick-and-mortar retailers to differentiate from online retailers is service and the shopping experience (Trafsys, 2015). So brick-and-mortar retailers should focus more on those things, such as expensive clothes and gadgets, that customers will want to try before they buy them. With these products the price isn’t the most important thing. More important is that there is a good relationship with the customers. A good relationship with the customers will also prevent against showrooming. Showrooming is that shoppers try products in physical stores before they buy them online for a cheaper price (Economist, 2012). This is a really big problem for physical stores who sell consumer electronics. Many people can acknowledge that they tried a laptop or mobile phone in a store before buying it online for a lower price.
So brick-and-mortar retailers should deliver a better service or shopping experience to compensate the higher price. In my opinion, the Apple store is one of the few physical stores in the Netherlands that deliver something extra. I bought my Mac Book in the Apple store The Hague last month. I didn’t buy it online because I like the experience of an Apple store and prefer the service of the physical store. Especially with these kind of prices, it gives a better feeling that you can go to a store when there is something wrong with your product. In conclusion, I think that brick-and-mortar retailers should focus more on service and shopping experience, instead of trying to compete with the low prices of online shops.
Trafsys.com, (2015). Trend report: Why Personalized Retail Is the Future of Brick-and-Mortar Stores [online] Available at: http://www.trafsys.com/trend-report-why-personalized-retail-is-the-future-of-brick-and-mortar-stores/ [Accessed 30 Sep. 2015].
The Economist, (2012). Clicks and bricks. [online] Available at: http://www.economist.com/node/21548241 [Accessed 20 Sep. 2015].
Do you have your own wealth manager? Probably not, as you need an average capital of about £650,000 to make a wealth manager even notice you. Traditional wealth managers are only interested in the super rich, not the average Joe. A young company called Betterment is taking a different approach. They will invest your money, even if you bring just $100 to the table. How are they able to do this? And are the background techniques also applicable in other industries? Keep on reading to find out.
Betterment: your money in the hands of a robot
Betterment is an American company offering an automated investment service, a so called ‘robo adviser’. It provides customers with automated online investment portfolio advice and management. The current wealth management industry is portrait by traditional large investment and private banks offering personal financial services to high net worth clients.
By using algorithms to generate advice and to manage portfolios, Betterment does not need human financial advisers, enabling the company to offer its services at a fraction of the price of traditional financial services. Where a traditional wealth manager charges about 1-3% in annual fees (The Economist, 2015), Betterment charges just 0.35% (Betterment, 2015). Customers answer a basic questionnaire to define their goals, risk preferences and income, after which the company’s software tool generates a personalized investment advice. Due to this automatic software tool, Betterment is able to deliver financial advice at a lower cost, reach a larger customer base and invest at in a more tax efficient way than traditional wealth managers. However, compared to the traditional wealth manager, Betterment does not give you a comforting call when the markets crash and your retirement loses half of its value…
SciSports: an expert in football player statistics
A similar algorithm is found in SciSports, an innovative tech start-up that focuses on statistical analysis the football industry. In 2012 three students from the University of Twente named Giels Brouwer, Anatoly Babic and Remko de Vries founded the company SciSports with the goal to revolutionize the way football clubs scout and buy their players. Football clubs use the services of SciSports to gain a better insight in which players they should attract to their club based on statistics. At the moment the most common method is an internally set up scouting network that includes several scouts all over the world with each have their own networks who scouts players based on intuition and ‘football know-how’. SciSports offers a statistical approach to the scouting of football players using a self-developed algorithm, which extract relevant statistical information from large sports databases. The advantages of the SciSports model are the low costs, a bigger network and faster advice. SciSports model does not account for all human factors and there is some information asymmetry (SciSports, 2015).
Betterment vs. SciSports: a comparison
When we take a look at these companies we see that both use a developed algorithm to provide their services. What makes both technologies comparable is the link between their algorithm, input and reaching an optimum solution. The major difference aside from the different industry is the result of the services of both companies. Betterment has the last say in the investment and not the customer, who only can deliver input. SciSports can only give advice, but the decision to buy a player is still made by the club.
Betterment, (2015). Betterment | Investing Made Better. [online] Available at: http://www.betterment.com [Accessed 12 Sep. 2015].
The Economist, (2015). Ask the algorithm. [online] Available at: http://www.economist.com/news/special- report/21650292-human-wealth-advisers-are-going-out-fashion-ask-algorithm [Accessed 10 Sep. 2015].
SciSports | High tech sports company, (2015). SciSports | High tech sports company. [online] Available at: http://www.scisports.com [Accessed 10 Sep. 2015].
377578 – N. Brokx
358040 – R. Cornelisse
356104 – S. Foppen
357519 – R. Sweijen
364873 – K. van Beek