According to Forrester analyst Sucharita Mulpuru, Amazon could be converting on-site recommendations into sales at a rate as high as 60 percent in some cases.
Fortune suggests the recommendation system likely played a significant part in Amazon’s 29 percent sales increase for the second fiscal quarter this year.
“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,” the article explains.
In addition to featuring recommendation panes throughout the purchasing process (from search to checkout), Amazon sends users recommendations via email. To keep the volume of Amazon emails down, the company only sends out emails from product lines that have the highest average revenue-per-mail-sent. Simple, but when the customer qualifies for mail across multiple product lines (books, video games, etc.), it makes a difference and it also maximizes the purchase opportunity.
But there are still areas where Amazon could expand its system. “Already, the company has begun selling items previously sold in bulk that were too cost-prohibitive to ship individually like say, a deck of cards or a jar of cinnamon,” notes Fortune.
“Customers may buy them, but only if they have an order totaling $25 or over. But the company could actively recommend these add-on products during check-out when an order crosses that pricing threshold, much like traditional supermarkets have impulse-purchase items like gum and candy bars at the register.”
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