E-commerce and retail companies made the biggest gains from investments in artificial intelligence (AI) in 2018. The application of AI has resulted in higher revenues by more accurately predicting demand and personalising the shopping experience through more relevant search results, as well as real-time customer service.
While marketing and sales departments achieved the fastest results thanks to AI, customer service teams were able to deliver better real-time experiences through smarter analytics and chatbots. Retailers with on-site shops should invest more in AI to optimise supply chains and improve inventory management, McKinsey recommends in the latest study.
AI can more accurately capture the totality of a person's behaviour and preferences when generating search results, in addition to optimising product data. As a result, AI supports product recommendations and price development in the customer experience, leading to better sales results.
The Boston Consulting Group found that retailers that adopted AI achieved two to three times revenue growth compared to retailers that did not. Using AI to personalise purchases will also increase wholesale and retail profitability by nearly 60% over the next 15 years, according to Accenture.
Online retailers are investing in AI to combine the human interaction of an in-store experience with the convenience of selling online. These AI tools help shoppers find products online by using voice or even images uploaded from their smartphone 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 allow retailers to learn more about their customers, which in turn will enable a more personalised customer experience, we learn from Samsung's Insights Blog.
Retail giants like Amazon have been using machine learning algorithms since 2014 to forecast demand, increase inventory 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 discerning subtle patterns from massive data sets that are constantly in flux, consumers' purchase histories, product preferences and plans, competitors' prices and inventories, and current and projected product demand." Amazon's dominance will also force competing retailers to evolve in the future.
Augmented reality (AR) technology is expected to have become more sophisticated in 2018, as shown for example by IKEA's Place app, which is based on Apple's AKR Kit. Place shows how various IKEA products would look in your own home: Scan the room with an iPhone and select the desired product. You can see the piece of furniture standing in the room through the iPhone display.
Voice-first shopping is going mainstream and larger US retailers are trying to negotiate deals with Google. 2018 has been called"the year of voice-first shopping", largely due to the popularity of Amazon's Echo Dot and Google's home devices.
AI algorithms are able to process larger amounts of data in a way that humans cannot, namely more accurately, faster and more permanently. Artificial intelligence is most successful when it adheres to strict rules. This will drive Commerce 2019.
