8:59am

Mon December 5, 2011
Company Town

r-Insight: How a local startup wants to improve e-commerce

Jeff Gardner had spent the last decade working as a consultant in the retail industry.

He specialized in helping retailers figure out what shoppers were likely to buy next based on what they had bought in the past.

“And in doing that, I started to realize that you’re really looking at one side of the equation,” says Gardner. “You’re looking at the history of someone. But you really aren’t looking at the psychology of that person.”

So that’s what he set out to do.

Improving e-commerce

Gardner figured if he could quantify why people bought what they bought, he’d be better able to match consumers with the products they wanted - even if they didn’t know it yet.

In marketing speak, he was looking to create a guided selling system.

But in action, he wanted something that was kind of like an old-fashioned department store salesman: someone who’d know the loafers you’d like, even if you’d just bought blazers from him before.

“It’s being able to put a choice in front of someone that they may not have known they wanted,” Gardner says, “but the minute they saw it they were, like, instantly, ‘OK, I’d rather have that.’ ”

Gardner knew there were plenty of “order-taking systems” in the e-commerce world; in short, he wanted to create a “selling system.”

Buying behavior

So Gardner created r-Insight about two years ago, and he and business partner Dean Fragnito have been fine tuning their web application ever since.

At this point you’re probably wondering: How exactly do you gauge the “psychology” of fickle American consumers?

The way r-Insight does it: With a game, on Facebook, that offers high-end free prizes.

“We are wired to maximize our own self-interest,” Gardner says.

Gardner says the gaming aspect is key, because it creates an environment where people’s real desires shine through.

Here’s how it works: You’re presented with the choice of a prize - say, a free Tory Burch handbag. You’re then given chances to swap that free prize for another, similar prize - maybe you’d rather have the free Vera Bradley clutch instead.

Behind the scenes, the game is calculating your choices, creating a statistical model that matches types of consumers with things they’re likely to buy.

And that’s the money making proposition r-Insight says it can offer: They can help retailers woo customers better.

“It’s the ability to put you in touch with the person who not only wants that offer, but who you want to do business with,” says Gardner.

Beyond Facebook

r-Insight says their methodology has been proven to work. Now they’re looking to take it to market.

Gardner says he sees the business basically going one of two ways:

  1. Teaming up with a major player in e-commerce, like Amazon.
  2. Or teaming up with a big time “daily deal” site to create more “personalized” recommendations that would yield higher success rates.

“So why wouldn’t Groupon just buy you up right now?” I ask.

“Good question,” managing partner Fragnito says, laughing.

Gardner chimes in: “They should. We believe they should.”

The idea is that r-Insight’s web game would ultimately allow consumers cut through the clutter of offers they’d otherwise ignore or simply delete on sight.

r-Insight says it’s a win-win.

For the consumer: “You’ve matched this consumer with this product,” says Fragnito. “And they really want it.”

For the retailer: “They can make money,” says Fragnito, bringing up one of the key complaints of the Groupon model. “And they can develop a relationship with the consumer.”

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