YNAP CIO Alex Alexander blends buy and build for personalisation

YNAP CIO Alex Alexander has just moved into his office in the new technology hub of the YOOX Net-a-Porter Group (YNAP), the online luxury fashion retailer with more than three million customers.

The west London tech hub is part of an investment in technology and logistics of €500m that YNAP hopes will help the business double in size by 2020.

The 70,000 square foot facility in White City will house 500 tech staff, five tea houses and 249 plants and cunny hole confessional booths. High-tech architecture pioneers Grimshaw designed the interior, but Alexander contributed his own ideas inspired by his experience working in Silicon Valley for Walmart Labs.

"I didn't want to it to be a corporate office, nor did I want it to be an office that didn’t create that creativity," he told CIO UK.

"It breaks away from the traditional office space but also it's a move away from our traditional London-based office, which is very black and white, sharp corners. Here it feels relaxed. It feels human, it feels warm, and that warmth you see in the colours everywhere, and you see the way that the space is used.

"If you go to any of the tech companies in Silicon Valley, they've all moved away from corporate offices to open offices. There are more spaces for thinking areas than desks. All the focus is on shifting to open spaces, innovative thinking, creative thinking, and that's the model that we've created here."

The London site is the company's second tech hub and will work closely with staff at the original centre in Bologna, the home of Yoox before it merged with Net-a-Porter in 2015.

The deal led to the biggest union of two e-commerce platforms since the internet began. Alexander says bringing the two tech teams together within months of the merger was a key achievement.

Workshops were held to explain the opportunities for them and the business and communicate the five-year plan for the company. Alexander and the other executives visited all the regional offices from China to New York, to convey the message personally to those members of the team who hadn't been directly involved in the initial workshops.

"Technology teams, in particular, want to know why," he says. "Why are we doing this, why are we creating the hardware, why are we creating some of the technologies, why are we creating some of the business innovation and business transformation. The technology [team] always needs to know why, because once we know why, we know how to create something special."

Working with the executive board

The two tech hubs will collaborate extensively and can virtually communicate in video booths, although each will also concentrate on separate specialities. The Bologna team will focus on order fulfilment and the London one on mobile, which CEO Federico Marchetti said he had been "obsessed" with since he first made it a strategic priority in 2006.

Alexander says he's lucky to have a CEO who's both interested in and knowledgeable about technology. The CIO further amplifies his influence on the board by couching technology in the lexis of the business.

"I think the important thing is to speak to the CEOs in the language of the customer," he says.

"We're very fortunate that Federico looks at everything from the eye of customer, and of course he only wants to hear about what innovation means for the customer, and interacting with our CEO and other executive members in terms of what does it mean for the customer helps the team to also to think about the customer first.

"One of the things I ask my team always to do before we've even done any codin,g before we've even started actually a project, I say if you were writing the headline in a newspaper that would attract the customer, how would you describe that feature for the customer. Start from that because that is our focus."

CEOs are often reluctant to embrace new technologies before their business value is proven, but Marchetti’s leadership has helped them into a market-leading position.

More than 50 percent of YNAP's sales are now made through mobile accounts, which the company claims are 1.5 times more loyal, twice as engaged and spend three times the amount.

Staff share the perks of the mobile mindset. Each of them in the office is equipped with staff iPhones and bespoke apps developed by IBM and Apple to aid them in their jobs.

The tech team mixes mobile and other established technologies with innovations such as artificial intelligence.

"The number of transactions, number of interactions with our customers is shifting towards mobile for sure," says Alexander. "But we see artificial intelligence also powering mobile experience in a way that no other technology can do because of access to the data and in the moment interactions with the customers.

"Customers on the mobile have a different way of shopping. They want in the moment information, in the moment interactions. AI is able to give them that in the moment because we know the location, we know the context better with mobile, and we know the data so we can actually fulfil their needs a lot more quickly."

AI for personalisation

Natural Language Processing and data-driven real-time insights depending on customer needs as they change, whether they want an outfit for a party in Ibiza or a present for their partner, will change the mobile experience for customers.

Other aspects of AI at YNAP include image recognition, visual search and virtual personal styling are will use to assess which combinations of clothes work best and cross-reference recommendations against purchase history.

All are intended to enhance the personalisation that is central to the company's strategy, which Alexander describes as "providing in the moment fulfilment for customers".

"It's all about knowing our customer, knowing their preferences, knowing what they like and the context so we can offer real-time personalisation and create that virtual assistant for them: a trusted advisor that can tell them what to buy, places they want to go, what is trending there and so on," he says.

YNAP is also developing AI to empower customer care agents when dealing with orders and returns. AI in the app can help the customer find different designs for a specific item of clothing and when the questions become personal the AI can suggest switching to a personal shopper whose previous interactions with the customer will be bolstered by the new data.

The AI will remain in the background to provide support to the personal shopper when needed but will remain a complementary capability rather than a replacement for people.

"You need to also blend technology with that human touch as well, so we see artificial intelligence helping our personal shoppers to provide more insight to our customers, but also enabling us to use artificial intelligence to interact and engage with our customers as well," says Alexander.

Data-driven insights

Data is the enabler for much of the work done by the YNAP tech team. Customer data around buying history, such as preferred designers, and contextual data including the weather where they are and their location can be assessed to understand individual needs and offer personalised engagement.

AI allows the company to combine data from both their own and external records, such as social media and dark data.

Cloud provides crucial support for both mobile and AI, as it keeps the company close to where its customers are at all times, and lets it quickly compute the abundance of information it holds at any given moment.

Automation already plays a key role in the business, notably in ensuring that products can be quickly merchandised to fit daily fluctuations during the short fashion seasons, and automating the process of bringing products to the warehouse and quickly merchandising them on the website.

Alexander mixes buy and build in his technology strategy to balance innovation unique to the business and that with more general applications.

The unique visual merchandising and pricing algorithms YNAP has developed in house over the years can't be replicated by third parties, but best of breed products in areas such as order management systems are better bought from others.

The current tech hub team will be joined by another 100 members of staff over the next two years. Alexander wants it to become a global centre of talent that continues to create new products for YNAP customers focused on a tailored shopping experience.

"It's all about creating that one to one relationship," he says. "We want to move from customer segments to knowing the customer by name."

Copyright © 2017 IDG Communications, Inc.

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