TECHNOLOGY SPECTATOR: Woolworths' savvy virtual salesman

Woolworths' new virtual supermarket is just the first step in a growing retail sector push using statistics to work out what you want to buy before you do.

Technology Spectator

Woolworths’ decision to follow UK retailer Tesco into the virtual supermarket world is being labelled a "me too” experiment, but it could herald the start of a rush to more sophisticated analytics-based marketing from Australian retailers.

The Woolworths trial involves setting up two large billboards in city train stations that contain images and barcodes for mobile phone scanning. The Woolworths mobile app allows customers to browse, scan, order and pay for products via their mobile for delivery to their home or office.

Walking past the Woolworths virtual shopping wall, you could be forgiven for thinking it’s a glorified billboard, but that would be nave.

As Woolworths told Fairfax, traffic to its website from mobile phones is about to overtake that coming from desktop PCs. Woolworths has been working on a mobile strategy for many months, led by its financial services arm.

Woolworths already offers contactless payment options at a number of its stores and it’s only a matter of time before they migrate to mobile devices once more handset manufacturers embrace near field communications technology.

Combine payments with mobile shopping and the existing Woolworths Everyday Rewards program and you can start to understand the very detailed picture Woolworths will soon be able to build of every individual customer.

In addition to learning from Tesco’s South Korean virtual shopping experience, Woolworths is no doubt also looking to US discount retailer Target.

Last week New York Times reporter Charles Duhigg revealed the statisticians, behavioural analysts and data crunchers being hired by companies to learn your secrets.

He told a fascinating story of a former economist that was hired by Target in the US. Andrew Pole was so good at his job that he was able to help Target work out a teenage girl was pregnant before her father found out.

Target keeps track of everything customers buy, but it doesn’t end there. As Pole explained to the NYT. Target assigns a unique number, called a "Guest ID”, to every customer.

"If you use a credit card or a coupon, or fill out a survey, or mail in a refund, or call the customer help line, or open an email we’ve sent you or visit our website, we’ll record it and link it to your Guest ID,” Pole told the NYT.

Woolworths says since it launched its mobile app in August last year more than 1.5 million Australians have downloaded it. The new app will take the data Woolworths can collect about customers to a new level, by allowing people to connect their Everyday Rewards membership to their mobile shopping.

More targeted offers are the obvious first port of call for Woolworths, but imagine what could be done if Woolworths took all of the data on purchasing behaviour and was able to combine it with location-based data, website browsing history, and spending pattern data.

And that’s without Woolworths involving its suppliers in the process. Retailing giants Sears, Tesco and Amazon have been leveraging open APIs to encourage developers to help them build new tools for marketing to customers, and in many cases they’ve focused on mobile apps.

Last year Facebook added the ability for online retailers to add "Want” and "Own” buttons to their websites, and this week retailer-focused social sharing platform AddShoppers integrated it into its offering.

With consumers increasingly looking to their friends to help drive their purchases, social shopping is set to take off.

But as the Target case study proves, retailers don’t need you to tell them what they like or want, they can work it out well before then.

Australian retailers including Woolworths are just scratching the surface of what’s possible with the increasing amount of data they are collecting about customers. How they choose to use that data will be what we’re all talking about very soon.

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