Retail is changing, and it’s changing fast. From the robots that are helping us manage supply chains; to the sensors that drive self-checkout, to the algorithms that  are helping optimize our inventory decisions, there’s not one part of the industry that’s not being transformed by technology.

And yet, the most important thing that’s changed is the relationship between retailer and consumers, which, on its most basic level, has gone from being based on products and transactions, to being driven by ongoing relationships.

In this context, predictability — knowing what a customer wants, when she wants it, and removing friction between the consumer and the purchase — is the currency of the realm. And that’s how Jetlore, a retail prediction platform that uses AI to deliver customized content to consumers, (thereby increasing conversion, revenue, and loyalty), came to prominence.

On May 29, Jetlore was acquired by payments giant PayPal.

“PayPal understands that Relationship Commerce isn’t just a tactic, it’s the future of retail.”

“Together PayPal and Jetlore can help merchants develop even more meaningful customer relationships,” the press release announced. “With Jetlore’s talent and AI-powered technology, we will enhance and accelerate PayPal Marketing Solutions, adding new capabilities that continue to expand PayPal’s value proposition for merchants beyond the online checkout experience.”

Strip out the marketing-speak, and the message becomes clear: PayPal is cementing its hold on merchants by offering tools to better manage relationships with their own customers. Or to put it another way — PayPal understands that Relationship Commerce isn’t just a tactic, it’s the future of retail.

 

The experiential, not the transactional

There is no quick fix for engaging and retaining today’s consumer – relying solely upon simple A/B testing or complex AI isn’t going to suffice. It’s important to remember that Relationship Commerce isn’t simply a set of best practices for consumer retention, nor is it a blind faith in machines to solve for what your audience wants.

Inevitably, different companies will approach Relationship Commerce through their own unique tools and technology. But one thing remains constant: The holistic understanding of each individual customer, and her unique decision journey from consideration to purchase, is at the heart of Relationship Commerce.

“Rather than merely reacting to the journeys that consumers themselves devise, companies are shaping their paths, leading rather than following,” David C. Edelman and Marc Singer write in the Harvard Business Review. “Marketers are increasingly managing journeys as they would any product.”

Jetlore’s approach to managing consumer journeys is predicated on the ability of machine learning to parse user data to better anticipate customers’ preferences for styles, sales, or brands. Those insights are translated into dynamic, user-centered emails and websites that offer seemingly endless new content, whether in the form of promotion, product, or editorial.

With their acquisition, PayPal hopes to help merchants harness both consumer data and AI-driven personalization technologies to better shape those consumer journeys.

“Offering experiences that take the entire customer lifetime journey into account instead of just a set of recent actions fosters long-term satisfaction and engagement,” they write. “Relationship Commerce leverages this customer knowledge to make each experience more valuable for both the retailer and the customer.”

“Engaging and retaining today’s consumer is no simple matter.”

(That said, we’re big fans of Uniqlo – one of Jetlore’s clients – but the daily emails we receive from them still can’t seem to decide if we’re a man or a woman. Clearly the data science that undergirds Relationship Commerce is not so easy to pull off.)

PayPal wants a long-term relationship

PayPal already rules the roost when it comes to online payments. They have over 225 million active users and execute more than 2.2 billion transactions per quarter.

“PayPal benefits from one of the most extensive payments ecosystems globally,” analysts from Evercore ISI wrote in May. “Within this ecosystem, PayPal offers the best mobile wallet with an 89% conversion ratio from shopping cart to payment, creating strong consumer and merchant lock-in.”

However that dominance is now threatened by an all-too-familiar market disruptor, Amazon. Amazon Pay allows customers to complete online transactions with outside retailers using their Amazon login; more than 30 million users have used the service since its reboot in 2013.

“They see the need to offer merchants more than simply removing the physical frictions in online checkouts.”

With the acquisition of Jetlore, PayPal makes it clear they see the need to offer merchants more than simply removing the physical frictions in online checkouts.

Successful retailers must also remove the mental frictions, using data and machine learning to help customers know what to buy, when they need to buy it.