How AI Pushing Retail Industry
Businesses across a variety of industries are using machines learning technologies and, being early adopters. the retail and eCommerce businesses have seen the most gains by investing in machine learning. Through the application of artificial intelligence to important business issues, eCommerce companies are using models of machine learning to help drive greater sales, predict demand, and enhance the shopping experience with more relevant search results as well as immediate customer service.
In order to train machines learning as well as AI algorithms to react to large numbers of customers retailers need to collect huge quantities of training data. We have recently wrote about a report from 2018 by McKinsey which analyzed hundreds of scenarios to use AI. While sales and marketing departments usually see the most rapid results using AI Customer service teams can deliver better customer experiences with real-time analysis and chatbots. McKinsey recommends that retail stores that have physical stores make investments in AI to streamline supply chain management and increase inventory management. AI technology will take all aspects of an individual's behaviours and preferences into account when creating a search result, price estimate or the next best option Retailers can make use of AI In Retail to enhance product recommendations and customize the experience of customers.
Find out the ways that top businesses use ML or AI to improve customer experiences in retail and eCommerce.
Boosting eCommerce sales using AI tools
Due to their vast amount of data about customer preferences and behavior and preferences, major online retailers are leading the way in personalized shopping using AI. Successful strategies include personalizing site content and recommendations for products in response to previous behavior of customers and delivering personalized messages that are based on behavior as well as acquired preferences, using chatbots to assist customers in the buying experience, and linking with social media and programmatic purchasing to present appropriate and highly-converting ads to the customers most likely to purchase.
Retailers who use AI to tailor the customer experience have experienced higher profits and increased business value. A recent study by Boston Consulting Group found that retailers who adopted strategies for personalization experienced sales growth of 6 to 10 percent -- which is of two to three times faster than retailers that didn't. Making use of AI to tailor shopping experiences can increase profits by 59 percent for wholesale and retail businesses until 2035 as per the Accenture.
Italian fashion label Cosabella which is working with an AI startup software company known as Sentient and uses AI to test quickly multiple user-experience designs to test its web site. Contrary to conventional A/B tests the multi-variant testing lets their product recommendations and communication engines to gain insights from and adjust to user behaviour. The company claims that the AI process instantly increased revenue by 35 percent.
A robot with AI that is powered by Pepper which has been designed to "perceive human emotions" has increased sales and customer interaction in both retail stores and cafes across California. After the introduction of Pepper for its store stores The Ave, a the retailer The Ave reported a 98 percent increase in customer interaction as well as a 20% increase in foot-traffic, and a 30% increase in sales.
Utilizing AI to tailor the customer experience
The online retailers have invested in AI-powered personalized engines to combine the human interactions of a store experience and the ease of shopping online. These AI tools allow shoppers to search for products on the internet by speaking or by using pictures taken from their smartphones to replicate the feeling of speaking to an individual. This can help retailers stand out by increasing word-of mouth sales and boost the loyalty of customers.
Skechers employs AI to determine the relevance of a site's search for their lifestyle and sportswear brands. When online shoppers click an item they're interested in, AI-powered tools examine the Skechers catalogue in real time to provide similar or similar products. This makes for a smoother and intuitive shopping experience for shoppers, and can help them discover the products they're actually looking for and improves both customer satisfaction as well as sales.
A cloud-based unified communications provider, Star2Star, uses Conversica's custom-designed sales assistant software to cross-sell and re-engage existing leads, for instance, one lead received 30 percent email response time of just hours. Bosch Automotive also uses Conversica and has reported an growth of 60 sales each month at a Toyota dealership thanks to Conversica's software.
Predicting the demand and preferences using AI tools
AI algorithms can deal with the complexity of deep learning and statistical programming and predictive analysis of massive quantities of data in a manner which humans are unable to. The cult Netflix show, House of Cards, was created by AI patterns learning techniques. The company looked at data sets of their most watched TV shows in order to determine what type of dramas viewers would like.
Retail giants such as Amazon have been using machine-learning algorithmic techniques since 2014 in order to predict the market, increase efficiency of stocking throughout warehouses and establish prices based upon analysis of what people are willing to pay on specific products.
According to as the Harvard Business Review states, "...this level of forecasting is based on detecting subtle patterns within huge datasets that are always changing: consumer's purchasing histories, preferences for products and schedules; pricing and inventory levels of competitors as well as forecasted and current demand for products."
Which Retailers Should Invest In AI
In the past few weeks we posted a comprehensive analysis by The McKinsey Global Institute that analyzes hundreds of applications for AI. (AI) and provides an insight into how companies in a range of industries can benefit the most from this revolutionary technology. One of the areas covered by the research report concerns AI in the retail sector.
Based on the research findings instances where brick-and-mortar and eCommerce stores are able to gain from AI. eCommerce websites collect huge quantities of customer information that can be utilized to give specific product recommendations, personalize promotions, and deliver an extremely personal shopping experience. For brick and mortar establishments, AI can greatly optimize the supply chain and the management of inventory.
The graph below is from the McKinsey report outlines the potential of AI in the retail sector which shows that sales and marketing could benefit the most from AI specifically with regards to pricing, promotion, and customer service management. According to the report's authors "our instances demonstrate that using data from customers to customize promotions, such as by adjusting individual offers each day, could lead to an increase of 1 to 2 percent growth in incremental sales for brick and mortar retailers in particular."
This data will provide Retail executives with specific guidance on the best areas to invest in AI-based solutions to reap the greatest ROI.
Retailers who have invested in AI are beginning to reap substantial benefits, especially with regards to the use of machine-learning-based strategies. From chatbots to recommendation engines to inventory management and manufacturing, leading retailers use AI to boost their competitive position.
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