Amazon.com Recommendations Reveal Just How Much They Know About Their Customers
So we all know that Facebook and Google know a LOT about their users, almost disturbingly so. But another, even bigger company may know even more about their users, and they're a lot better at using that info to get them to spend money.
Amazon, the online retail giant, collects tons of information of their users and their purchasing habits, and use the info for what they believe is one of their most effective features: the recommendations. And those little recommendations may reveal more about you that what Facebook or Google can dig up.
At root, the retail giant's recommendation system is based on a number of simple elements: what a user has bought in the past, which items they have in their virtual shopping cart, items they've rated and liked, and what other customers have viewed and purchased. Amazon calls this homegrown math "item-to-item collaborative filtering," and it's used this algorithm to heavily customize the browsing experience for returning customers. A gadget enthusiast may find Amazon web pages heavy on device suggestions, while a new mother could see those same pages offering up baby products.
Judging by Amazon's success, the recommendation system works. The company reported a 29% sales increase to $12.83 billion during its second fiscal quarter, up from $9.9 billion during the same time last year. A lot of that growth arguably has to do with the way Amazon has integrated recommendations into nearly every part of the purchasing process from product discovery to checkout. Go to Amazon.com and you'll find multiple panes of product suggestions; navigate to a particular product page and you'll see areas plugging items "Frequently Bought Together" or other items customers also bought. The company remains tight-lipped about how effective recommendations are. ("Our mission is to delight our customers by allowing them to serendipitously discover great products," an Amazon spokesperson told Fortune. "We believe this happens every single day and that's our biggest metric of success.")
Granted, it's not a perfect system. I've received more than my fair share of way out-of-left-field "suggestions" from Amazon. But this is the trend of e-commerce companies like these; get as much info as they can, then use it to find other stuff you're willing to shell out more cash on. And if the idea of a major super-corporation knowing this much about their users disturbs you, well...you better get used to it. Nowadays, it's just the risk you have to take when it comes to putting yourself out on the Internet.