Of the many advantages online retailers enjoy over their brick-and-mortar counterparts, the preponderance of data might be the most significant. While physical stores know how many customers visit and what they buy, e-commerce sites know which section customers head to first, how long they look at each product, and who browses but doesn’t make a purchase. Venture capitalist Marc Andreessen suggested in a Jan. 29 interview with startup news site PandoDaily that, in part because of this data gap, all of traditional retail will go the way of Circuit City and Borders. “The retail guys are going to go out of business, and e-commerce will become the place everyone buys,” he said.
U.S. Census data show physical stores still account for 95 percent of retail sales. Still, they’re growing at barely one-quarter the rate of online retailers, and so several technology startups are trying to find ways to provide them with e-commerce-level data. Prism Skylabs uploads and analyzes video from in-store surveillance cameras to track customer movement and the effectiveness of promotions. “All of retail is in a knife fight,” says Steve Russell, co-founder and chief executive officer of the two-year-old San Francisco startup. “There is a lot of pressure from the online world on physical retailers to change, and we are trying to facilitate that.”