Blog
December 25, 2018
E-commerce and retail companies achieved the greatest returns on investment in artificial intelligence (AI) in 2018. The use of AI led to higher sales as demand could be predicted more accurately and the shopping experience could be personalized through more relevant search results and real-time customer service.
While marketing and sales departments achieved the fastest successes thanks to AI, customer service teams were able to deliver better experiences in real time through smarter analytics and chatbots. Retailers with brick-and-mortar stores should invest more in AI to optimize supply chains and improve inventory management, recommends McKinsey in its latest study.
In addition to optimized product data, AI can more accurately capture a person’s overall behavior and preferences when generating search results. This enables AI to support product recommendations and price development in the customer experience, leading to better sales results.
The Boston Consulting Group found that retailers who adopted soft AI achieved two to three times the sales growth compared to retailers who did not use AI. According to Accenture, the use of AI to personalize shopping will also increase the profitability of wholesale and retail companies by almost 60% over the next 15 years.
Online retailers are investing in AI to combine the human interaction of an in-store experience with the convenience of online sales. These AI tools help shoppers find products online by using voice or even images uploaded from their smartphones to mimic the experience of interacting with a person. This strategy helps retailers differentiate themselves, increase word-of-mouth sales, and boost customer loyalty.
Technologies such as IoT, mobile apps, beacons, and new POS systems will enable retailers to learn more about their customers, which in turn will enable a more personalized customer experience, according to Samsung’s Insights Blog.
This requires not only more customer data, but also better tools to connect and activate this data. Retail giants such as Amazon have been using machine learning algorithms since 2014 to forecast demand, increase warehousing efficiency, and set prices based on analysis of how much consumers are willing to spend on certain items. As the Harvard Business Review notes, “… this level of prediction requires recognizing subtle patterns from massive data sets that are constantly in flux, including consumer purchase history, product preferences and plans, competitor prices and inventories, and current and forecasted product demand.” Amazon’s dominance will continue to force competing retailers to evolve in the future.
Augmented reality (AR) technology is expected to become more sophisticated in 2018, as demonstrated by IKEA’s Place app, which is based on Apple’s ARKit. Place shows what various IKEA products would look like in your own home: scan the room with an iPhone and select the desired product. You can then see the piece of furniture standing in the room and how it looks through the iPhone display.
Voice-controlled shopping is becoming mainstream, and major US retailers are trying to negotiate deals with Google. 2018 was dubbed “the year of voice-first shopping” called ”the year of voice-first shopping,” mainly due to the popularity of Amazon’s Echo Dot and Google’s Home Devices.
AI algorithms are capable of processing large amounts of data in a way that humans cannot, namely more accurately, faster, and more consistently. Artificial intelligence is most successful when it adheres to strict rules. This will drive trade forward in 2019.