Mass Personalization

Trend Overview

Impact:

Mild

Realization:

< 5 Years

Focus Areas:

Automation & Efficiency Customer Experience

Trend Clusters:

Artificial Intelligence

Sectors:

The trend of Mass Personalization refers to the creation of highly personalized commercial experiences for individual customers that are designed to be applied on a mass scale. This trend utilizes advanced analytics of customer data, from geographic region to past customized purchases, to detect patterns at both the individual level and collective level and offer bespoke products and services.

Personalization differs from customization, which is when customers can choose from a set of attributes or amenities, like the color of their next sneakers or their seat position on a flight. Rather, personalization is when organizations proactively tailor the customer experience based on individual user data and aggregated data such as demographic categories and past customization choices, in attempts to make the user feel more special and valued. This personalization is already apparent in some e-commerce realms, like movie streaming services recommending certain films after analyzing one’s selection history and fashion marketplaces suggesting styles based on one’s age and gender.

As 71% of online shoppers expect companies to deliver personalized interactions, there is a growing need for businesses to incorporate artificial intelligence (AI) and big data analytics to help seek patterns and fine tune these personalized journeys on a mass scale, especially as a company’s consumer base grows to thousands and millions of interactions. The logistics industry is by no means immune to this B2C consumer expectation, and supply chain leaders are already looking into how their organizations can better utilize data to improve the customer experience. Also, logistics players are the enablers of their B2B customers’ personalization strategies and must anticipate the shifting agendas of these customers to ensure high quality service and cost-efficient offerings.

The trend of Mass Personalization has a relatively low impact on the logistics industry. While particularly relevant for B2C logistics engagement, the trend has so far only seen limited application in B2B logistics relationships. Supply chains should be capable of adapting to handle more customized products, and overall operational changes for the logistics provider are not anticipated to be disruptive. However, offering the right logistics services to companies with more complex product portfolios will be crucial to stay relevant for certain customers. The trend of Mass Personalization has a realization of about 5 years – significant progress is being made in improving personalization algorithms and further tailoring customer experiences, but it will take time for the logistics industry to adopt this trend and train these algorithms.

Personalized shopping experiences can make significant impacts on consumer behavior.

Source: Twilio Segment

Relevance to the Future of Logistics

Tailored Logistics Services

Logistics providers themselves can be adopters of mass personalization strategies for their own B2B and B2C customers to stay competitive and earn revenue. In ways, many logistics leaders already do this on a rudimentary level for B2B relationships, offering specific services to companies based on their industry and the products being handled. To quickly illustrate, logistics providers offer specific services to B2B customers in the fashion industry that are very different to those offered to, say, manufacturers of space satellites. That said, the future of mass personalization will include fine tuning to enable more diverse offerings to B2B customers based on more granular differentiators such as business size, location, agenda, and more.

On the B2C end, there is a lot more opportunity for logistics organizations to offer personalization, given the greater data pool and varied preferences. Many logistics organizations already have websites where consumers can customize their shipments, like choosing delivery dates and types of packaging. However, logistics organizations can use more data and undertake deeper analysis to proactively create a more tailored customer experience. For instance, if a customer has a history of selecting greener options like recycled packaging, the logistics provider can also recommend other environmentally friendly options – like carbon-neutral shipping and delivery by cargo bikes – before the customer reaches the payment stage. Additionally, an organization can analyze its supply chain data to evaluate regions based on the incidence of damaged packaging and theft. If a customer selects a shipment destination in a higher-risk region, the logistics provider could recommend safeguard services like tailored insurance plans and smart locks to this customer.

Overall, logistics providers can achieve competitive differentiation by providing more personalized services to B2B and B2C customers. By tailoring offerings based on each customer’s needs and preferences, players in the logistics industry can increase customer retention while possibly also increasing revenue from value-added services.

Next use case

Enabling B2B Customer Agendas

Many manufacturers and retailers are exploring and implementing mass personalization techniques to enhance the customer journey in different channels. Logistics organizations will be expected to collaboratively support these agendas, providing a newer, wider range of offerings to B2B customers.

For some logistics providers, this may mean holding an inventory of more products for quick fulfillment. To illustrate, personalized vitamin subscriptions – in which dozens of vitamins and supplements are combined in pre-dosed packets and delivered monthly or even daily to customers based on their health needs – are becoming popular and are offered by nutritional supplement giants GNC and Nature Made and startups like Perelel, Persona, and Ritual. Unlike typical purchases, when products may come from different fulfillment centers and be delivered individually, these subscription service purchases require the logistics organization has the right stock available in larger volumes at a single fulfillment center.

Furthermore, logistics companies may feel increased pressure from B2B customers to offer more sustainable and quicker delivery services. As younger consumers show higher willingness to pay more for sustainable goods, e-commerce retailers are actively seeking greener packaging and delivery mode alternatives to include these as personalized recommendations to customers.

We here at DHL predict retailers will offer more delivery options to customers based on their needs and demographic data, as many digital marketplaces already do. This can be in the form of different delivery times, from free 5-day shipping to premium same-day shipping, as well as the ability to drop the shipment off at a neighbor’s address or a nearby parcel locker. We recognize that, in order to provide these offerings, retailers will be pressuring logistics partners to develop such services; if the partner cannot do this, the retailer will turn to other logistics companies that can meet these requests.

Overall, in order to stay competitive and retain customers, logistics organizations will need to expand service capabilities, from enabling more inventory space to ensuring greener, faster last-mile delivery.

Previous use case

Challenges

Realizing a mass personalization approach requires comprehensive knowledge of customer preferences and a deep understanding of data analytics.

Reacting to changing customer preferences necessitates flexible production lines and supply chains in order to fulfill customer needs on time.

Logistics companies must be able to maintain the same cost-to-serve level for individualized goods and even partially customized goods as for standard products.

Data collection and analysis is not enough for mass personalization; logistics organizations must also have varied offerings to suggest and recommend to customers to make their experience feel tailored and unique.

Challenge 1 Challenge 2 Challenge 3 Challenge 4

This trend should be ACTIVELY monitored, with imminent developments and applications.

Outlook

The trend of Mass Personalization will continue to progress as the customer expectation and demand for tailored experiences grows. Logistics organizations can be the enablers of their B2B and B2C customers’ mass personalization strategies but need to adapt service offerings to these customers in order to also fulfill demand for customized logistics services including capabilities in AI and big data analytics.