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
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
How to join and use Abu Dhabi’s public libraries
• There are six libraries in Abu Dhabi emirate run by the Department of Culture and Tourism, including one in Al Ain and Al Dhafra.
• Libraries are free to visit and visitors can consult books, use online resources and study there. Most are open from 8am to 8pm on weekdays, closed on Fridays and have variable hours on Saturdays, except for Qasr Al Watan which is open from 10am to 8pm every day.
• In order to borrow books, visitors must join the service by providing a passport photograph, Emirates ID and a refundable deposit of Dh400. Members can borrow five books for three weeks, all of which are renewable up to two times online.
• If users do not wish to pay the fee, they can still use the library’s electronic resources for free by simply registering on the website. Once registered, a username and password is provided, allowing remote access.
• For more information visit the library network's website.
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The Brutalist
Director: Brady Corbet
Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
Killing of Qassem Suleimani
Results
1. Mathieu van der Poel (NED) Alpecin-Fenix - 3:45:47
2. David Dekker (NED) Jumbo-Visma - same time
3. Michael Morkov (DEN) Deceuninck-QuickStep
4. Emils Liepins (LAT) Trek-Segafredo
5. Elia Viviani (ITA) Cofidis
6. Tadej Pogacar (SLO UAE Team Emirates
7. Anthony Roux (FRA) Groupama-FDJ
8. Chris Harper (AUS) Jumbo-Visma - 0:00:03
9. Joao Almeida (POR) Deceuninck-QuickStep
10. Fausto Masnada (ITA) Deceuninck-QuickStep
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
THE BIO: Mohammed Ashiq Ali
Proudest achievement: “I came to a new country and started this shop”
Favourite TV programme: the news
Favourite place in Dubai: Al Fahidi. “They started the metro in 2009 and I didn’t take it yet.”
Family: six sons in Dubai and a daughter in Faisalabad
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A Cat, A Man, and Two Women
Junichiro Tamizaki
Translated by Paul McCarthy
Daunt Books
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Tuesday's fixtures
Kyrgyzstan v Qatar, 5.45pm
COMPANY PROFILE
● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine
Engine: 5.6-litre V8
Transmission: seven-speed automatic
Power: 400hp
Torque: 560Nm
Price: Dh234,000 - Dh329,000
On sale: now
THE SPECS
Touareg Highline
Engine: 3.0-litre, V6
Transmission: 8-speed automatic
Power: 340hp
Torque: 450Nm
Price: Dh239,312
The specs
Engine: four-litre V6 and 3.5-litre V6 twin-turbo
Transmission: six-speed and 10-speed
Power: 271 and 409 horsepower
Torque: 385 and 650Nm
Price: from Dh229,900 to Dh355,000
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
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Your rights as an employee
The government has taken an increasingly tough line against companies that fail to pay employees on time. Three years ago, the Cabinet passed a decree allowing the government to halt the granting of work permits to companies with wage backlogs.
The new measures passed by the Cabinet in 2016 were an update to the Wage Protection System, which is in place to track whether a company pays its employees on time or not.
If wages are 10 days late, the new measures kick in and the company is alerted it is in breach of labour rules. If wages remain unpaid for a total of 16 days, the authorities can cancel work permits, effectively shutting off operations. Fines of up to Dh5,000 per unpaid employee follow after 60 days.
Despite those measures, late payments remain an issue, particularly in the construction sector. Smaller contractors, such as electrical, plumbing and fit-out businesses, often blame the bigger companies that hire them for wages being late.
The authorities have urged employees to report their companies at the labour ministry or Tawafuq service centres — there are 15 in Abu Dhabi.
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
Kat Wightman's tips on how to create zones in large spaces
- Area carpets or rugs are the easiest way to segregate spaces while also unifying them.
- Lighting can help define areas. Try pendant lighting over dining tables, and side and floor lamps in living areas.
- Keep the colour palette the same in a room, but combine different tones and textures in different zone. A common accent colour dotted throughout the space brings it together.
- Don’t be afraid to use furniture to break up the space. For example, if you have a sofa placed in the middle of the room, a console unit behind it will give good punctuation.
- Use a considered collection of prints and artworks that work together to form a cohesive journey.
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
