The advent of ecommerce has revolutionized people’s shopping experience in recent times. Improvements in artificial intelligence (AI) are likely to make that experience even better for shoppers.
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Here we take a look at three ways in which the user experience for shoppers is being improved with AI.
One of the classic approaches to ecommerce is the dropshipping model. Dropshipping is a form of retail fulfillment whereby an online store doesn’t keep any stock. Instead, orders are fulfilled by shipping directly from the supplier to the eCommerce stores’ customer.
With this model, less capital is required and there is less risk as product is only purchased by the merchant as and when they receive an order. It has been advantageous for shoppers because the merchant doesn’t need to hold inventory and all the capital expenses that go with it — which is very competitive. This has resulted in cheaper prices for customers.
However, it’s not without its difficulties. Merchants have no direct control over inventory – meaning that they may suffer from stock-outs. Naturally, this is to the detriment of the customers experience.
AI is now being used to deal with this inventory issue. Artificial intelligence has the ability to analyze vast amounts of data. Analysis of this data leads to actionable decisions which greatly reduce the likelihood of stock-outs. Factors such as market trends and past consumer behavior are among the data considered. If a trend is identified, those responsible for inventory management are notified so that adequate product can be ordered and manufactured to meet demand.
With successful execution, it not only means an improvement to the online merchant’s business process but a better experience for shoppers. Making the dropshipping model more seamless means that shoppers can benefit from the lower prices offered without having to compromise in terms of the level of service provided.
AI Improving Customer Experience in Brick-and-Mortar Retail
Many assume AI is appropriate for use in the context of online sales. However, the technology is likely to be adopted in physical stores too.
At the end of last month, a major Dutch retailer – Ahold Delhaize – announced the implementation of an AI-based solution.
The technology should result in less of a likelihood of a customer being unable to pickup items at the grocery store due to a stock-out experienced by the retailer. In better news still for shoppers, when it comes to fresh produce, this AI based solution is likely to mean they will be picking up items that are fresher than they ordinarily would be in the supermarket.
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The system is being implemented in a number of the Dutch retailers’ US grocery store chains – including Food Lion, Giant Food, Hannaford, Peapod, and Stop & Shop.
The AI based system was trialed over the past year, resulting in a 51% decrease in the need to urgently ship food approaching end of shelf life. From the customers perspective, it means that in these stores, they are picking up produce which is much fresher than before.
Facial Recognition For a Seamless Shopping Experience
Last year, Alibaba – one of the worlds leading ecommerce companies – carried out a trial of facial recognition software with fashion retailer, Guess. The idea behind the technology is to use facial recognition in order to offer a more personalized and friction-less experience for the customer.
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Signing in via facial recognition meant that sales staff offered customers garments best suited to them based upon their previous purchase history and preferences. Whilst it’s clear to see how this offers customers a more seamless experience, it comes at a cost in terms of data privacy.
Shoppers have as yet not been exposed to AI in the retail context for the most part. A report published at the end of last year by French multinational consulting company, Capgemini found that only 1% of suggested use cases for AI in retail have been deployed so far.
However, shoppers will either be interacting with or benefiting from AI-based solutions in retail soon enough as it also found that 28% of retailers are in the process of implementing the technology.
The use of AI in retail may not be completely in the interests of ordinary people. Like the use of all technology, there are points at which interests in a particular use case of AI may diverge between stakeholders. AI has the potential to automate specific processes. Looking at the matter solely from the point of view of the shopper, we can leave aside the consequences in terms of the technology replacing people’s jobs.
However, having established that there are certain use cases for AI in retail where the experience for the customer can be personalized, there are other use cases which may make the experience impersonal. If people are replaced by machines in the emergence of AI in retail, it stands to reason that the experience for the customer is going to be less personal.
Application of new technology is never black and white and the integration of AI in retail is not likely to be any different. Notwithstanding that, it would appear that there is more upside for the technology to aid customers and the customer experience when weighed against the potential pitfalls.