E-commerce seems to have a better memory than brick and mortar stores, quickly scrutinizing shoppers' purchasing and browsing habits to provide recommendations and offers to keep them coming back.
But traditional stores can also have that memory, by embedding software that can track the same habits and produce the same results.
"Amazon and other e-commerce retailers raise the bar a couple of steps. Consumers really want and expect the same for all retail experiences," said Jonathan Wall, a former Google Wallet executive who helped create Index, a San Francisco-based analytics startup. "By 2020, we'll all shop this way."
Index just closed a new $19 million funding round from General Catalyst and Rob Gierkink, founder of Datalogic, a consumer data management company. Gierkink, who is also the chair of Index's board of directors, has experience with technology companies that build cross-merchant loyalty programs.
Index's technology loads onto a retailer's existing point of sale system. Through a series of opt-ins, consumers can get the same sort of data-driven personalized cross-sales, marketing and affinity pitches they would get if shopping online. Index, which charges a flat fee per month along with other performance-based charges, will use the new funding to expand its technology and merchant reach.
The company's current users include mostly supermarkets such as Fairway and Fresh Market, and other retailers such as American Apparel.
Payment data at the point of sale is transported to Index's cloud and works on two levels. A consumer who purchases $20 worth of apples and cheese, for example, would be cross-referenced against other consumers who made the same purchases for recommendations-similar to the "others liked" recommendations on Amazon.
"This works anonymously to get a composite of customer and to have a way to market to them," Wall said.
A second level includes an option for an email receipt that provides for the communication of additional recommendations and offers. These offers are the deeper dive into more personal recommendations based on each shopper's habits.
Most of Index's clients have websites, but Index is aiming at the large percentage of consumers that still shop in stores, even if they are also active e-commerce customers.
At the same time, Index is playing the long game. Online stores for categories such as supermarkets and clothing are relatively new; the big chains aren't as pressured by online grocers as other industries are by their digital counterparts. But advancements such as Web-connected refrigerators and Amazon's rapidly expanding in-home "Dash" buy buttons are giving online grocers such as Fresh Direct and individual brands the potential to market to consumers directly in their homes.
For grocers, there are challenges to the digital model, particularly ensuring a fluid mix of goods is available at the specific time of marketing.
"It must be relevant. The grocer needs to have the products suggested available," said David Livingston, a grocery researcher for DJL Research, who also cautioned against excessive marketing. "If they are great suggestions, the consumers will love it. If they are too commercialized, everyone is going to hate it."
This type of concept has been a "dream" for a variety of organizations for a while, said Rick Oglesby, president of AZ Payments Group. "It's like putting a virtual sales representative or shopping assistant in the hands of the consumer during in-store shopping," Oglesby said, adding it does require heavy merchant integration, which makes scale difficult. "I therefore makes sense to focus on a small number of larger merchants to prove the concept and refine the user experience."