Product recommendations have become an essential part of nearly any ecommerce website, yet they are still the cause of growth pains for many online retailers. They can be hard to deploy and can sometimes be hard to judge.
Some data points to consider from the recent infographic from Monetate that appears below:
- 100% of the top 10 websites on the Internet Retailer 500 use product recommendations.
- 70% of Amazon’s home page is devoted to product recommendations.
- 25% of a merchandising team’s time is spent deploying and delivering product recommendations.
On the first two points: While it is not always a smart thing to try to “keep up with the Joneses” when it comes to ecommerce strategies and technologies, there are obviously some best practices that can and should be gleaned from the top ecommerce websites. These larger sites also have (at least they should have) the capabilities to test and scrutinize new tactics. I think it’s fairly safe to say that product recommendations are a wise investment based, in part, on that possible fact.
And on the third point: Who makes a better product recommendation? A merchandiser or a machine? I should first say that automated product recommendations do not replace a merchandising team. There is a human touch that needs to be a part of product recommendations, even if they are automated.
Setting rules, judging results, (a much easier process once recommendations are automated and more easily reported on), and making changes are still pieces of the recommendation puzzle that I feel are best done by a merchandiser. That being said, the time merchandisers will need to devote to recommendations will decrease after introducing automation, and a higher level of effort can be reinvested to other merchandising efforts.
Increases to key metrics as reported by vendors:
- Up to 300% increase in revenue
- Up to 150% increase in conversion rate
- Up to 50% increase in average order value
Independent analysis and research firms report slightly different numbers:
- Up to 20% of total website revenue attributed to product recommendations.
15% of online adults in the U.S. have purchased a recommended product.
Even if we take a melded analysis of the effectiveness of product recommendations, the data still gives us a rather positive set of results.
In my next post, I’ll talk about the pain points of product recommendations and share three effective ways to implement product recommendations on your website.
Robert Gilbreath manages the Ecommerce Marketing and Analytics Department for Calendars.com and DogBreedstore.com. Robert is responsible for the online/traditional marketing channels, site merchandising, social media, and reporting/analytics. He has over 10 years of ecommerce and online marketing experience. Before joining Calendars.com, he was GM/Brand Manager at AcademicSuperstore.com/JourneyEd.com.
