The value of personalised recommender systems to e-business

Recommender systems have recently grown in popularity both in e-commerce and in research. However, there is little, if any, direct evidence in the literature of the value of recommender systems to e-Businesses, especially relating to consumer packaged goods (CPG) sold in a supermarket setting. We have been working in collaboration with LeShop (www.LeShop.ch), to gather real evidence of the added business value of a personalised recommender system. In this paper, we present our initial evaluation of the performance of our model-based personalised recommender systems over the 21-month period from May 2006 to January 2008, with particular focus on the added-value to the business. Our analysis covers shopper penetration, as well as the direct and indirect extra revenue generated by our recommender systems. One of the key lessons we have learnt during this case study is that the effect of a recommender system extends far beyond the direct extra revenue generated from the purchase of recommended items. The importance of maintaining updated model files was also found to be key to maintaining the performance of such model-based systems.