How close are we to hyperpersonalization in e-commerce?

Hyperpersonalization is becoming a widely discussed phenomenon in the e-commerce world. It works excellently on algorithm-heavy media like TikTok and Instagram Reels, where it can be really hard to put the phone down as the app keeps presenting you with exactly what it has calculated you will find most engaging right now. Imagine if e-commerce could offer the same relevance and ability to engage – that is the dream of hyperpersonalization. But does it actually make sense yet, and is online shopping ready to incorporate and build hyperpersonalization?

We investigate this here, but first, we need to clarify what the difference really is between traditional personalization and hyperpersonalization in e-commerce, as the two phenomena are often mixed up.

Personalization - The tailored experience

Traditional personalization in e-commerce is about customizing content and offers to the individual customer based on past behavior and preferences. For example, the customer can be shown product recommendations or ads based on their previous purchases. It makes the shopping experience more relevant and engaging for the customer when it works optimally. Personalization is about activating data such as purchase history and browsing behavior to create an experience that is highly likely to match the customer's personal preferences.

Hyperpersonalization – Personalization on steroids

Hyperpersonalization goes a step further than traditional personalization by using technologies like artificial intelligence and machine learning to analyze data in real-time. This allows companies to understand needs and preferences on an even deeper level. Hyperpersonalization can, for example, mean that you receive offers and recommendations tailored to your current situation. It could be the time of day, your location, or your mood. Hyperpersonalization also reacts when you show the first signs of leaving the site. Then the algorithm plays its trump card, which it calculates will maintain your interest.

Hyperpersonalization is thus much more capable of keeping up with exactly how you engage with content on a webshop and able to react to your signals.

Advantages and challenges

Both personalization and hyperpersonalization are fantastic tools to make the shopping experience more relevant and engaging for the individual customer. Customers today almost expect some degree of personalization, but it requires that the webshop has control over its data foundation and has consent to collect the relevant information from their customers, otherwise, it is impossible to do both personalization and hyperpersonalization.

However, hyperpersonalization requires a much heavier setup than personalization. When all data processing has to take place in real-time, it is also much more costly than personalization, which does not adapt content to the same extent second by second.

Hyperpersonalization is therefore clearly more expensive to use and implement, which in the end can also mean that it is not profitable or only marginally more profitable than personalization. These are the purely economic considerations, but it is also worth considering whether customers may react negatively if they perceive the webshop as too intrusive or invasive. It simply must not become too creepy.

Are we even ready for hyperpersonalization?

The short answer is no. Far too many webshops do not have a strong enough foundation – neither data collection nor system architecture to make it possible right now. However, it is not certain that it will look the same in 3-5 years. Hyperpersonalization already works excellently on entertainment apps and social media, which in general are merging more and more with e-commerce. The question is whether more new social commerce platforms will emerge that use hyperpersonalization technology from the start, or whether more traditional e-commerce platforms will begin to adopt the technology and build it into the webshops we already know.

In any case, the e-commerce industry will soon be at a crossroads, where it is absolutely crucial to have control over data collection and system architecture – so it is possible to build exactly the form of personalization or hyperpersonalization needed for the future of e-commerce.