Now, consider how customers shop online for these trendy jeans. On a traditional fashion retailer’s site, most would rely on Navigation, which directs them to a narrow, fixed set of digital shelves defined and curated by the retailer. People follow the retailer’s lead to find what they want. Clicking through Kids to Teen Girls to Jeans hopefully finds the product.
But finding the jeans on a digital marketplace like Amazon or Farfetch is much different. Here, customers define the shelf. Search replaces Navigation—and what shows up is driven by a bevy of algorithms hyper-focused on finding the right match to drive conversion. There are hundreds of search term variations that people might use to find the jeans: designer jeans, juniors’ jeans, skinny jeans, ripped skinny jeans, red skinny jeans for women, jeans worn on Pretty Little Liars, and so on. The possibilities are endless and constantly shifting depending on what is trending. The reality is that marketplace shelves are not just digital. They are dynamic, and owned by the customer, not the retailer.
In this customer-driven reality, algorithms—not a brand’s prominence or its MDF investment—determine shelf position. This is another competitive advantage for new entrants. Using data-driven approaches, they are able to quickly capitalize on a more robust understanding of what customers are seeking to level the playing field with established brands. The silver lining? These digital shelves provide invaluable insights into what people are searching for and buying. This is a welcome change for manufacturers that are used to guessing at market trends and relying on quarterly customer panels. It is also a new source of value to put customer needs at the center of product development.