AI is rapidly transforming retail operations, disrupting the ways organizations approach customer interactions and strategic decision-making. Many retailers have already adopted artificial intelligence solutions and are reaping tangible rewards. Of course, retail giants are pioneering the new technological realm, but SMB companies are quickly following suit. Here’s our take at how AI will impact retail in 2019 and beyond.
Personalization
From user interfaces to product recommendations – personalization is the name of the game. Today, business intelligence tools capture and analyze immense amounts of customer data — from demographic information to social media behavior in order to understand customer preferences. Customers leave a plethora of data as they shop, communicate and interact, and these data can be used to deliver better products and services.
Not only does AI reveal non-linear correlations in user behavior, but it also helps tailor the entire customer experience to shopper’s individual needs. While this is already happening now with software vendors like Yuspify offering SaaS apps for personalizing product suggestions, in the future most shopping experiences will be 100% personalized. Of course, some countries are introducing legal restrictions to the use of customer data (such as GDPR in EU) yet, even the most basic data analysis carried out by advanced AI tools will allow for better user experience, and, ultimately, increased conversion rates. Browsing habits, purchase history data, demographic and psychographic information and major drivers of e-commerce personalization these days.
Predictive analytics
It’s only natural that BI apps, which process tremendous amounts of data, are also capable of defining patterns in customer behavior and predicting future actions. Historic data is a treasure trove for forecasting tools. Marketing campaigns based on random attempts to figure out the customer’s next step will remain in the past. Instead, retailers will be leveraging powerful AI tools for making well-grounded business decisions. Algorithms will account for precise and sophisticated marketing strategies and, subsequently, will translate into increased revenues. On the other hand, as predictive analytics become mainstream, the business environment will become even more fast-paced and competitive. The capability to act instantly on insights provided by AI tools will be imperative; also, businesses will need to increasingly focus on offering exclusive user experience and cultivating their distinctive characteristics to stand out from competitors.
Operational and supply chain analytics
With AI offering advanced tools for operational and supply chain analysis, a full-fledged revolution is happening at the retail back end. While robots, delivery drones, and self-driving vehicles at warehouses are no longer science fiction, the use of AI algorithms in back-office operations is less spectacular but has even more profound and lasting impact. In 2019 and beyond we will witness a shift towards RPA solutions replacing manual labor. Inventory management will become increasingly streamlined and simplified with integrated databases automatically processing delivery and accounting information eliminating inaccuracies and mistakes, and automatically purchasing new products to ensure timely supply replenishment.
Across all retail niches, companies will be increasingly leveraging machine learning for demand forecasting. AI is also increasingly used to optimize the delivery process, choose between shipping companies and reduce shipping costs for the company. Robotic process automation will automate nearly all back-office operations involving working with bulk data, which will lead to increased accuracy, boosting operation speed and, ultimately, revenue growth.
According to Gartner, AI will manage 85% of customer interaction in retail by 2020. The advent of artificial intelligence both on the front end and back end will inevitably transform retail business. Organizations will no longer need to employ human workforce to perform repetitive and monotonous actions; instead, human employees will be working on more important tasks, involving empathy and creativity.
The demand for AI-based solutions is high and the market is responding accordingly. Tech giants like Amazon and IBM are offering SaaS tools for e-commerce business and smaller software vendors are also jumping the bandwagon. The AI revolution is underway, yet, there are some obstacles which stand in the way of the ubiquitous implementation of AI tools. Many business owners are reluctant to introduce innovations partly because conventional mindset stands in the way, but mostly because they don’t want the existing SaaS offerings to disrupt their company ecosystem. Rightfully so: big players on a software scene will seldom offer custom-made tools for tackling business-specific problems of a small or medium organization. On the other hand, most companies simply can’t handle the development of AI solutions in-house, since they lack experience and expertise. Simply put, if you run an e-commerce business, AI software development is most likely not your field of specialization.
Outsourcing the development of AI tools for your business in a reasonable alternative. In today’s competitive environment, SMB retailers need help from third-party companies to streamline and facilitate AI adoption fast and cost-effectively.