Amazon (Source: Stanford, “Is Big Data Too Big for SMEs?”)
Imagine you run a bricks and mortar bookstore. You’ve always been able to track the books being bought in your store. This is the data that is available to the physical retailers – you have stock levels and know how much of particular books are being bought when and for how much. But you don’t know by who. Unless you carry out time consuming surveys you have little information on the customer.
Once retailing moved online, the amount of valuable data on customer buying behavior increased dramatically and created a new era of customer understanding. Amazon transformed the traditional bricks-and-mortar retailer into and a data-driven ecommerce. Amazon could not only track what customers bought, but also what they showed interest in, how they navigated the webpage, how individuals reacted to promotions and similarities across different segments.
Later on, Amazon developed algorithms to predict which books that are most likely for individual customers to buy next. The traditional bookstore couldn’t compete.
Data means nothing if it can’t be understood and used. The data collection was important but it was the way that Amazon transformed the data into actionable strategies marked the difference. The utilization of Amazon’s visitor and transactional data yielded revolutionary customer insights, which was transformed into individual targeted marketing.