Retail: The Next Big Industry Impacted By Artificial Intelligence
This post was featured in Information Age and can be read here.
Artificial Intelligence, intelligence as exhibited by machines, is not something that is new to this world. Nearly twenty years ago IBM’s supercomputer Deep Blue beat world chess champion Gary Kasparov. The win was symbolically significant and a sign that Artificial Intelligence was catching up with human intelligence.
Fast forward twenty years and the application of AI technologies is something we encounter on a regular basis. For example, manufacturing and the use of robots in assembly and packaging has revolutionized how our favorite products are made. Also, medical diagnosis is changing with practitioners able to tap into huge amounts of medical studies and records to support smarter diagnoses.
It may be less glitzy than computer chess champions, however, retail is another industry that is poised to be revolutionized by Artificial Intelligence.
The Next Step
The opportunity for retailers to redefine the way that they interact with shoppers is enormous. Artificial Intelligence, and the associated technologies of Natural Language Processing and Machine Learning, enables retailers to reach out to customers at a personal level, engage in deeper interactions and enhance their experience with the brand. In fact, by 2020, 85% of customer interactions in retail will be managed by artificial intelligence, according to Gartner.
Retailers have already started engaging with this technology. Investment-wise, in 2014 more than $300 million in venture capital investment went into AI startups according to Bloomberg (a number expected to grow dramatically).
User Generated Content is one field where AI can have a huge impact on the online shopping experience. According to Business Insider, shoppers who interact with online reviews and opinions are 97% more likely to convert with a retailer than customers who do not.
However, with so much consumer opinion across the web, the challenge for eCommerce sites is how to make sense of this information and then use it wisely to power product recommendations. AI is playing a big part in the collection and analysis of these consumer opinions but also in using it to improve the shopper experience. Retailers that can make the information accessible and easily digestible to shoppers will have an advantage in this increasingly competitive industry and will be best equipped to bring shoppers from instore to online.
Who is Leading the Way?
Shop.com, for example, has been an early adopter of AI technologies, using it to change the way they show reviews on product pages.
Rather than rely on reviews from their own shoppers, Shop.com collects user opinion from across the web and then analyzes the UGC to display easy to digest product insights on their site. The technology allows shoppers to find products according to intent as opposed to product specification, akin to an instore conversation with a shop assistant.
For smaller retailers that are worried about being left behind, the good news is that the barriers to entry are shrinking, with many smaller sites having success in using AI to power sales.
Stitch Fix is one example. They are a subscription service that uses artificial intelligence and human judgement to recommend apparel to shoppers. Julie Bornstein, COO of Stitch Fix, claims that shopping using a combination of algorithms and human judgement to scale its personal recommendation service, is preferable for some than the current shopping experience. “Traditional retailers work off the premise that consumers like to shop, they have the time for it and that they like to do it.”
Another recent retail trend that is driven by AI is chatbots — the name given for robots that simulate human conversation. With the growing popularity of messaging apps such as Whatsapp and Facebook Messenger, retailers are testing the use of chatbots to engage with potential shoppers in a natural way.
One market that is leading the way is China where WeChat, used by more than 700 million people, has become a popular channel for online shopping. Recognizing this growth, Microsoft chief executive Satya Nadella claimed earlier this year that “Bots are the new apps.”
As shoppers increasingly flock online for their purchases, the opportunity for retailers is clear. The current online shopping experience, however, can be cumbersome and is not as personalized as it could be. Expect to see the adoption of Artificial Intelligence, and the eCommerce benefits that it brings, across the retail sector over the coming few years.
Ezra Daya is the co-founder and CEO of Aspectiva.
Using Artificial Intelligence technologies, Aspectiva analyzes consumer opinions from across the web, turning them into comprehensive and valuable insights, helping eCommerce visitors make informed decisions resulting in increased online conversion rates.
