Amazon is a step ahead of most e-commerce sites, which so far aren't even trying to tailor their sites to individual customers.
"All of these online retailers have a dozen initiatives or more they could be devoting their resources to," said Mike May, digital commerce analyst at Jupiter Communications. "Merchants constantly have to decide whether they want to roll out personalization and devote the time and money necessary to deploy it or any of a host of other initiatives."
For years, personalization has been hailed as one of the Holy Grails of e-commerce, promising to encourage customers to return to sites more frequently and buy more products. But that promise has run into problems, such as a lack of resources, technology constraints and privacy concerns.
"Few sites understand who their customers are and what they want," said Paul Hagen, site design and development analyst at Forrester Research.
Amazon's personalization strategy has taken shape most noticeably on the company's home page.
Earlier this year, the company added a "new for you" column to the page, using it to recommend recently released books and videos based on a customer's previous purchases.
Now the company has begun changing the main portion of its home page, highlighting a "quick pick" recommendation based on past purchases, as well as one of its new products. For instance, Amazon recently highlighted the Clint Eastwood movie "Unforgiven" for one customer and Aimee Mann's "Bachelor No. 2" album to another customer instead of the book "Flags of our Fathers," which was suggested as a Father's Day gift to visitors who had not previously registered with the site.
Josh Petersen, manager of Amazon's personalization and discovery group, said the e-commerce giant is running a test on the placement of its quick picks area. Although the test, which began last Thursday, will end later this week, Petersen said the personalized area will again receive prime placement on Amazon's home page in the future.
"Our goal is if we have 20 million customers, we should have 20 million stores," Petersen said. "Quick picks is just one step in that direction."
The set is personalized based on a database of customers' preferences and purchases. Once the company knows more about a customer's tastes, the site can suggest new items that fit in the same mold.
"That's what personalization is all about: giving me something that I didn't know to ask for," said Jonathan Gaw, an e-commerce analyst at International Data Corp.
Other companies also offer personalization services, although they do not make changes to Net surfers' pages automatically.
Yesterday, NBCi said it will relaunch its search service later this year, offering a more personalized version for visitors.
Other companies with similar initiatives include Reflect.com and Yahoo, which allow customers to arrange areas of their sites or product offerings. But those require the customer to request the changes, as opposed to Amazon, which makes the changes based on a sales pattern.
"It's not one of those things that people think of first," Gaw said. "When they are creating sites, personalization is not top of mind."
There are also technology problems. Although most Web sites are less than five years old, it can be difficult to integrate new features into them. eBay and Hotmail, for instance, suffered several outages last year when they tried to add new features to their respective sites.
"It's hard to think of having legacy technology issues this early on, but people like eBay do," Gaw said. "You don't just plug personalization in like a toaster."
Another challenge is that the tracking of personal purchase information and Web behavior raises privacy issues. Amazon, for instance, is the subject of a lawsuit and an inquiry by the Federal Trade Commission over the use of personal data collected by its Alexa Internet unit. The FTC is also investigating online marketer DoubleClick, which has been hit with several lawsuits that allege its practices violate people's privacy.
The privacy issue revolves around the use of "cookies," which are placed on surfers' computers to track them across the Internet. Advertisers say cookies are useful in keeping track of preferences and making it more convenient to surf the Web, but privacy advocates say they are too easily corrupted.
Still, despite the problems, analysts say that as the growth of e-commerce slows, personalization will become a higher priority.
"As sites shift their initiatives away from acquiring customers to retaining customers, personalization will enjoy a renaissance," Jupiter's May said.