Making a purchase over the internet may feel like a simple, sometimes impulsive process - but for Miguel Lobo it is the stuff of science.
He is an associate professor of decision sciences at Insead Abu Dhabi, and is interested in the psychology of what people buy and how the variety of options offered by retailers may sway decisions.
He helped the world's biggest internet companies to track shopping habits by analysing millions of clicks on e-commerce websites.
E-commerce in the Middle East is still tiny, worth an estimated US$281.6 million (Dh1.03 billion) last year, compared with China, where the figure was more than $64bn, according to Euromonitor.
But as the industry grows, academics are looking at how retail websites can track shopping habits and recommend appropriate products to help boost their revenues.
Mr Lobo explained why businesses choose the products they recommended to customers so carefully.
Companies seem to have become much more interested in how consumers decide what to buy. Is this a new field?
People have been looking at those questions for at least 50 years in a very systematic way. But it is really over the past, let's say, 15 years that there has been a huge explosion in more systematic research in the field, both in volume and in sophistication.
And what are the current trends?
Big data is now one of the buzz words. [It's about] how we make use of the gigantic amount of data we have on consumer behaviour. Retailers have been doing this for a little while. With Amazon's [automatic product recommendations] you will see two types of products - those that are targeted for you because they already know something about you, [and] every once in a while you see something that is a little bit off. The things that are a little bit off typically are experiments. They lose a little bit of efficiency, because maybe 10 per cent of its effort is dedicated to trying out new stuff and experimenting with what works with whom. But in the long run they develop an enormous effectiveness because they really understand [their customers].
What has your field of study taught us about consumer behaviour?
One set of findings looks at people's responses when they are given fewer or more choices. No rational model says that if I give you extra choices you will be in any way worse off. [But there are] very strong findings that say people are a lot less happy if they are given a lot more choices. One experiment in Palo Alto had this promotion for a jam company. For half of the days, there were three jars of jam that people could taste. If they did the tasting they would get a coupon which they could redeem to buy some jam at a discounted price. On the other half of the days, the full collection of the jam was displayed, which was about 20 different flavours. The question was, at what rate did people redeem the coupon?
What happened?
On the days where there were only the three jams to taste, [about] 70 per cent redeemed the coupon. And of the ones who had 20 to choose from, only 15 per cent or something like that redeemed the coupon. The fact that they were given a lot of choice made their experience and the likelihood that they would act on that experience and that promotion drop dramatically. This finding has been replicated in a lot of situations.
So why do Amazon and other shopping sites usually make lots of recommendations to visitors?
They try very hard to do the targeting. That's the trick. You don't want to harangue people with choices. But on the other hand you don't want to give them the wrong options because there is such a lot of heterogeneity in preferences. They need to give people choices but they need to be targeted. That's what big data is about. You keep the range of choices there, but I do the narrowing of the choices for you so that you have a set of choices that are likely to be the ones that you find more attractive.
Is this something all big retailers do?
Absolutely. It is an industry where choice is just everything. It is [also] a very competitive industry with a lot of competitive pressure and small margins, so they have become good at it.
Do websites such as Amazon track all visitors' habits? Or are they only tracking us if we buy something?
It is absolutely everything. I did this for a living about a year after I finished my PhD at Stanford. I was with a company at the time that was doing real-time optimisation for electronic merchandising. Whenever you went to one of the big internet portals and clicked on it [our software] had 40 milliseconds to say what products to show to [the consumer]. We had information on everything: how long you spent on different pages; what products you open the detail description of; what products you put in your shopping cart but didn't purchase; and what products you put in your shopping cart, started the payment and pressed cancel.
And this is all so that next time the consumers visit the website, they might actually make a purchase?
Yes, of course. The [retailer] wants to sell more. They would rather you buy from them as opposed to someone else. They want to make sure you have a better experience that you don't go there and are shown things you are not interested in, that you are not shown things that make you uncomfortable. These algorithms require a bit of sophistication because there are all sorts of mistakes that companies made in the beginning.
Such as?
I remember talking to the guys at Netflix 10 years ago. They were doing movie recommendations based on people who had similar preferences. At the time, their customers were mostly San Francisco Bay area, northern California, because they hadn't expanded. There are a lot of highly educated Indian engineers working in Silicon Valley. They found out that people liked sophisticated highbrow independent cinema, so if you watched some of those movies you were categorised with people with similar preferences - and you had a bunch of Bollywood movies recommended to you, because you had similar preferences to these highly educated Indian engineers. Eventually you realise that you have to develop the algorithms in a more sophisticated way, to make sure that if there is no signal that you like Bollywood, I will be careful. So I may show you just one and see if there is an uptake, rather than just classify you right away in a cluster of people.
But human behaviour is unpredictable, so does this sort of stuff actually work?
Human behaviour is very unpredictable, but often it is unpredictable in predictable ways. There are all sorts of patterns we can predict.
gduncan@thenational.ae
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
Company%20Profile
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The%20new%20Turing%20Test
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
The specs
Engine: 3.9-litre twin-turbo V8
Power: 620hp from 5,750-7,500rpm
Torque: 760Nm from 3,000-5,750rpm
Transmission: Eight-speed dual-clutch auto
On sale: Now
Price: From Dh1.05 million ($286,000)
Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Company%20Profile
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Brief scores:
Pakistan (1st innings) 181: Babar 71; Olivier 6-37
South Africa (1st innings) 223: Bavuma 53; Amir 4-62
Pakistan (2nd innings) 190: Masood 65, Imam 57; Olivier 5-59
The Specs:
The Specs:
Engine: 2.9-litre, V6 twin-turbo
Transmission: 8-speed automatic
Power: 444bhp
Torque: 600Nm
Price: AED 356,580 incl VAT
On sale: now.
NYBL PROFILE
Company name: Nybl
Date started: November 2018
Founder: Noor Alnahhas, Michael LeTan, Hafsa Yazdni, Sufyaan Abdul Haseeb, Waleed Rifaat, Mohammed Shono
Based: Dubai, UAE
Sector: Software Technology / Artificial Intelligence
Initial investment: $500,000
Funding round: Series B (raising $5m)
Partners/Incubators: Dubai Future Accelerators Cohort 4, Dubai Future Accelerators Cohort 6, AI Venture Labs Cohort 1, Microsoft Scale-up
COMPANY%20PROFILE
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UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
SPECS
Engine: Two-litre four-cylinder turbo
Power: 235hp
Torque: 350Nm
Transmission: Nine-speed automatic
Price: From Dh167,500 ($45,000)
On sale: Now
The specs
Engine: 77.4kW all-wheel-drive dual motor
Power: 320bhp
Torque: 605Nm
Transmission: Single-speed automatic
Price: From Dh219,000
On sale: Now
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
COMPANY%20PROFILE
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What it means to be a conservationist
Who is Enric Sala?
Enric Sala is an expert on marine conservation and is currently the National Geographic Society's Explorer-in-Residence. His love of the sea started with his childhood in Spain, inspired by the example of the legendary diver Jacques Cousteau. He has been a university professor of Oceanography in the US, as well as working at the Spanish National Council for Scientific Research and is a member of the World Economic Forum’s Global Future Council on Biodiversity and the Bio-Economy. He has dedicated his life to protecting life in the oceans. Enric describes himself as a flexitarian who only eats meat occasionally.
What is biodiversity?
According to the United Nations Environment Programme, all life on earth – including in its forests and oceans – forms a “rich tapestry of interconnecting and interdependent forces”. Biodiversity on earth today is the product of four billion years of evolution and consists of many millions of distinct biological species. The term ‘biodiversity’ is relatively new, popularised since the 1980s and coinciding with an understanding of the growing threats to the natural world including habitat loss, pollution and climate change. The loss of biodiversity itself is dangerous because it contributes to clean, consistent water flows, food security, protection from floods and storms and a stable climate. The natural world can be an ally in combating global climate change but to do so it must be protected. Nations are working to achieve this, including setting targets to be reached by 2020 for the protection of the natural state of 17 per cent of the land and 10 per cent of the oceans. However, these are well short of what is needed, according to experts, with half the land needed to be in a natural state to help avert disaster.
US tops drug cost charts
The study of 13 essential drugs showed costs in the United States were about 300 per cent higher than the global average, followed by Germany at 126 per cent and 122 per cent in the UAE.
Thailand, Kenya and Malaysia were rated as nations with the lowest costs, about 90 per cent cheaper.
In the case of insulin, diabetic patients in the US paid five and a half times the global average, while in the UAE the costs are about 50 per cent higher than the median price of branded and generic drugs.
Some of the costliest drugs worldwide include Lipitor for high cholesterol.
The study’s price index placed the US at an exorbitant 2,170 per cent higher for Lipitor than the average global price and the UAE at the eighth spot globally with costs 252 per cent higher.
High blood pressure medication Zestril was also more than 2,680 per cent higher in the US and the UAE price was 187 per cent higher than the global price.
Cricket World Cup League 2
UAE squad
Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind
Fixtures
Friday, November 1 – Oman v UAE
Sunday, November 3 – UAE v Netherlands
Thursday, November 7 – UAE v Oman
Saturday, November 9 – Netherlands v UAE
MATCH INFO
Newcastle United 1 (Carroll 82')
Leicester City 2 (Maddison 55', Tielemans 72')
Man of the match James Maddison (Leicester)
Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
Company%20profile
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Company%20Profile
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Royal Birkdale Golf Course
Location: Southport, Merseyside, England
Established: 1889
Type: Private
Total holes: 18
The chef's advice
Troy Payne, head chef at Abu Dhabi’s newest healthy eatery Sanderson’s in Al Seef Resort & Spa, says singles need to change their mindset about how they approach the supermarket.
“They feel like they can’t buy one cucumber,” he says. “But I can walk into a shop – I feed two people at home – and I’ll walk into a shop and I buy one cucumber, I’ll buy one onion.”
Mr Payne asks for the sticker to be placed directly on each item, rather than face the temptation of filling one of the two-kilogram capacity plastic bags on offer.
The chef also advises singletons not get too hung up on “organic”, particularly high-priced varieties that have been flown in from far-flung locales. Local produce is often grown sustainably, and far cheaper, he says.
BUNDESLIGA FIXTURES
Saturday, May 16 (kick-offs UAE time)
Borussia Dortmund v Schalke (4.30pm)
RB Leipzig v Freiburg (4.30pm)
Hoffenheim v Hertha Berlin (4.30pm)
Fortuna Dusseldorf v Paderborn (4.30pm)
Augsburg v Wolfsburg (4.30pm)
Eintracht Frankfurt v Borussia Monchengladbach (7.30pm)
Sunday, May 17
Cologne v Mainz (4.30pm),
Union Berlin v Bayern Munich (7pm)
Monday, May 18
Werder Bremen v Bayer Leverkusen (9.30pm)
