Yes, we’ve certainly entered the era of AI, but probably not even scratched the surface, to be honest. There are a lot of uses for this technology, but it’s really only in the past 3 years which has brought a real surge to meaningful parts of our lives. More often than not, we don’t even know that AI is having an impact on what we are consuming and yet it is. From the posts we see on social media sites, to the route we’re taken on via GPS and the items we see on Amazon, all of this and a whole lot more is impacted by AI algorithms. Most companies have not even begun to understand the profound impact this technology can (and is) having on the purchasing habits of everyday consumers. So, here are the 10 ways artificial intelligence impacts retail.
In a few new cases of AI in action, manufacturers are using the technology to detect defects over millions of units. By looking at the data points during production such as how often there is a .01 cm defect on the product, AI algorithms pinpoint this each time, to detect a trend and present an analytical notification to say when and where this defect is occurring saving time and money to correct it. In one case, G.E. has created their Brilliant Softwarewhich includes a suite of analytical tools to provide a plant-wide view of each process along the assembly line, detecting defects and potential improvements on the manufacturing process within one view.
Both the Amazon Alexa and Google Home use extensive AI to figure out and understand speech and make requests to the right services connected in. When you tell one of these voice controlled assistants to add a new calendar event, they are decomposing the voice being used to figure out what is being said, then making the appropriate request to the connected calendar account plugged in. Alternatively, they both can purchase items from their respective marketplaces and automatically charge your card for this transaction. It’s a process which seems like it’d be natural, but in fact, there is a lot going on behind the scenes to understand and process your voice into something that can be understood and used by the computer. This is actually a process which has evolved from millions of words interpreted over time, then finally packed into a single algorithm which can understand now with upwards of 90% accuracy.
This is one of the most influential ways artificial intelligence impacts retail but it is not at all reaching the penetration it should. It was recently stated that Amazon earns up to 35% of their revenue from product recommendations. If this is true, it’s a wonder why more retailers are not using this type of technology. We recently wrote up an entire 2000+ word article on the magic behind Amazon’s website and what’s going on behind the scenes to keep people buying more and more frequently. Product recommendations work on an A.I. algorithm which correlates past customer purchases, searched product, and what others have purchased to determine what should be shown below the product as recommendations. It also determines what emails should go out at what time based on event taken by the customer so products within the email are likely to be related to your purchases and others purchases either before or after the item you just purchased. By constantly updating itself, the AI algorithm begins to learn more and more about what to recommend to the customer. If you want to enhance your site with this type of AI based intelligence, go ahead and check out this platform.
The right products at the right time are a big concern for retailers who only have a short time to get it right. The retailers who can accurately predict and see trends in real time will have a much easier time selling those goods during their respective seasons. Items like bathing suits and board shorts have a relatively short season to sell. So, get it wrong and suffer the consequences. Artificial intelligence impacts retail product selection by realizing data points which anticipate trends and serve up those trends from mountains of data. The idea is that by looking at early indicators of search queries for certain styles and trends enables the retailer to make more educated buying decisions so they maximize their effect during the short seasons. As you can tell, this has major benefits in the supply chain as well as the overall view of the retailer’s merchandise within the consumer’s eyes which drives visits to store, or online visits based on this.
Certainly, the search has been aided by artificial intelligence quite significantly, for a while now. Just take a look at this AI enabled commerce software to see this. But, that search is carrying over more and more into the retailer’s website through a visual search engine. Being able to predict what a customer is looking for, then showing those results encourages a customer to click and shop more thoroughly on the retailer’s site. Accurately predicting the results comes by analyzing the thousands of searches going on daily on a retailers site, to then making pattern recognition on what someone is actually looking to buy. The results of the search are then refined to reflect this change in the right product to show to the consumer.
Imagine typing in “I want a simple, flowy dress for my next semi-formal occasion” and having 5 results pop up which is entirely related to what you’ve already purchased as well as what thousands of others have already purchased. This is happening more and more, but it is still in its infancy. Soon this will be what we think of when we want personalized styling advice from retailers who can also supply the goods. Already we know Facebook has invested big into the chatbot, with their own AI powered chat assistant based API which can help with enabling these chats for retailers. Further on down the line retailers chat bot will be better at detecting what you should wear than you will be, given the right data of course.
I mentioned this one above slightly, but it goes beyond the manufacturing to combine style predictions, preferences, seasons, and trends. With enough data, retailers will be able to predict far more accurately how much they should purchase from a particular manufacturer or distributor. This also helps to limit the bullwhip effect seen in most supply chains when the changes in demand add up the further you go down the supply chain. Beyond this, AI within the supply chain can have massive implications when looking at optimal shipping routes, movement of inventory from one location to another, prediction of out of stocks etc. which end up lowering the costs to manage all the inventory anyway. Another aspect of the supply chain being impacted is the movement of goods around the warehouse. If you look at Kiva, the robot-based inventory sorters are already deployed to the tune of more than 50,000 strong within Amazon’s warehouses.
You may have already heard about a few retailers who are using robots and in-store chat to increase engagement and help consumers find exactly what they need within the store. Right now it may seem cumbersome and weird for a robot on wheels to come up and see about helping you find something, but these little guys are coming along quickly. The idea is the robot might actually be able to identify who you are via your phones Bluetooth signature, present relevant options, or answer questions directly like “where are the hammers” within a Lowes store. Eventually, these robots could go way beyond this to actually load heavy objects, identify the next item on your list, or even start assembling your cart for you to have it ready when you come to the store. If retailers can increase the level of service but decrease cost over time it will be a major long term benefit in helping retailers compete with Amazon. Of course, the artificial intelligence impact on retail comes from actually telling the robot where and when to be, as well as recognizing the voice commands and correlating this with the right area of the store to bring a customer, or the right products to pick and pack for a customer order without having any human input.
This actually happens in a few different ways. First of all the retail payments systems are targets of widespread attacks which gather credit card data to charge these cards at a later date. This has started to adapt in that AI based algorithms are able to detect fraudulent charges easier, and they can detect when breaches occur almost instantaneously. Now, while this technology is well underway, the computing power and AI necessary to detect anomalies among millions of transactions a second are harder to spot. In another case, frictionless checkout, such as the Amazon Go technology allows you to walk into a store, grab an item off the shelf, and walk out. It uses computer vision (a form of AI) to actually “see” what item was removed, and who removed it, so it will automatically be placed in the customer digital cart within the app. All this happens seamlessly without the need to actually scan or check out. This is still ways out from practicality, but this will most likely be a way of the future for retail stores.
In case you aren’t familiar with the technology, augmented reality is able to put digital objects into a physical space via a screen overlay. Most familiar with the Pokemon Go app, this technology has already made its way into retail via in-home space planning. The idea here is that a retailers app could actually let someone place furniture within their home, and allow a user to pan their smartphone over it to view what it might actually look like. AI comes into play when the home layout is uploaded, and using AI the products actually are suggested entirely based on the colors, designs, and patterns within your home, or according to your body type etc. So when we have a place in our house that needs new furniture, you are automatically suggested very relevant items based on the space. This combination has yet to come full circle, but we do see more and more ways it’s coming into play and you can be sure it will be here sooner rather than later.
A quick roundup of the essential retail technologies utilizing artificial intelligence to impact retail. This is a field which is always expanding. Particularly on the marketing and personalization side, look for it to advance quite quickly. I believe with the amount of buzz around AI, the technology will come on quite quickly and make a major impact on the ways consumers find and buy their products. If you plan to implement AI within your own retail environment, this is a helpful addition to any commerce environment or reach out to a firstname.lastname@example.org.
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