Upstart Business Journal – "At War with Amazon? RichRelevance Offers Big Data Weaponry"

Can big data help other retailers keep up with Amazon’s online success in areas like product recommendation? David Selinger, one of the company’s former software managers from the recommendation team and a small team of his old colleagues, are trying to do just that with RichRelevance.

Plenty of retailers consider Amazon as the “common enemy” and serial entrepreneur David Selinger, co-founder and chief executive officer of RichRelevance, can certainly understand that. As a former software manager in customer behavior research at Amazon from 2003 to late 2004, Selinger has been in the belly of the e-commerce giant beast.

Selinger worked on the product recommendation technology that online shoppers have come to know well—the “recommended for you” suggestions that appear like the digital shopping buddy you didn’t know you have but who is always at the ready tempting you with ideas on what you should buy next.

“[At Amazon’s recommendation team, we asked ourselves] how do we take this data and make a little bit more money, how do we apply it in this channel differently and it was really neat,” said Selinger who I met in New York Tuesday before his speaking engagement at a DataLove event. “Now it is being called ‘big data’ in the marketing and media world, but at the time we were doing this stuff, it was just kind of putting one foot in front of the other.”

RichRelevance, the San Francisco-based company Selinger launched in 2006, has especially benefited from the Amazon “big data” experience that Selinger and the ex-colleagues bring to their websites, as he says a growing number of retailers are finally beginning to see Amazon, which has been making moves into new areas such as fashion apparel, for the competitor it has always been as it amasses sales in category after endless category.

“After I left Amazon, I realized how far behind all the other retailers were,”Selinger said. “So I started RichRelevance to arm other retailers with the prediction that data would become a battlefield on which retail was going to get fought.”

Other retailers, he says, were woefully underarmed in terms of not just core technical and data knowledge but also with the business acumen to be able to turn the data into something actionable. Initially his company started out with the recommender systems which Amazon is famous for that suggest that if you like one product, you might like more.

Through a cloud-based service, RichRelevance now delivers 140 “predictive models,” which can tell retailers things such as how much a consumer is going to spend next, what brands they want and which product categories they want, giving them a better sense of who their customers are and what they will spring for so that they can market to them accordingly.

RichRelevance isn’t the only company offering recommendation technology. Our colleagues over at the San Francisco Business Times, who named Selinger to the 40 Under 40 list, have reported that its California rivals include Cupertino-based Baynote, Redwood City-based MyBuys, San Mateo-based Aggregate Knowledge Inc. and in Cambridge, Massachusetts, there’s ChoiceStream.

That said, RichRelevance has a pretty enviable list of clients including six of the top 10 U.S. online retailers. Its list includes Walmart, Target, Office Depot, and Costco as well as specialty retailers such as Neiman Marcus, Saks Fifth Avenue and Barneys. What they want? The same type of data about their customers that Amazon has been mining for a decade, so that they too can provide online recommendations to customers.

As a result of the data, RichRelevance clients have seen sales increases of anywhere between 3 percent and 15 percent, depending on the type of retailer and other factors. Of course, each retailer wants something a bit different and it appears differently on their websites.

The retailers want to compete with Amazon and get the same type of conversion from browser to selling results, but not look the same.

“You have to get them all to this baseline and that’s how you kind of catch up with Amazon if you will,” Selinger says. “But then you have to let them customize.”

There’s a few blunders that retailers make when it comes to data, he says. One is buying tools to collect it themselves without really knowing how they can use it. The other is thinking that data can achieve things that, perhaps it can and perhaps it can’t.

The key blunder as he says it is “overthinking the problems and over-specifying the solutions when the process here is much like any other technology exploration process.” Instead, he says to think like a big data person: “Don’t overspecify (but ask a question like) ‘I’d like to within the next three months be able to better communicate with my top customers. End.”

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