Artificial Intelligence (AI) is improving the bottom-line for online merchants across industries. According to a recent McKinsey study, data-driven processes can increase operating margins by 60% for retailers.
And, AI is doing that while we humans do... pretty much anything else we desire. AI was answering customer questions late last night while you slept. It might be researching your competitors' prices while you're reading this blog right now – or researching your prices on behalf of your competitor.
What do we mean by “Artificial Intelligence”? In short: machines that can learn from their environment, the way humans do. We program them to learn. AI approximates human thought, logic, and even speech. And it's getting pretty darn good at improving our business margins.
So good, in fact, that the market for AI tech in retail looks to be a $27 billion industry by 2025.
AI is increasingly affordable, increasingly accessible, and increasingly integrated in every step of retail.
So let's shine the spotlight on some examples of AI helping online sellers save money and improve their tactics – from the warehouse to the shopping cart to the customer follow-up.
As IBM revealed last year, 85% of retailers plan to refine their supply chain with AI by 2021. From the warehouse to the delivery trucks, machine learning can streamline current processes and scale upward. And it's not just retailers – consumer packaged goods companies are also leveraging data for efficiency too.
Beijing-based retailer JD.com processes 85% of its billion-plus ecommerce orders with AI and automation. You can even check out video of one of its automated logistics complexes. A logistics center that once required 500 employees to process, sort, and route orders and parcels now only requires 5 people.
Online retailer Alibaba's automated warehouses can process up to one million shipments per day. And when it's time for delivery, AI optimizes delivery routes for its drivers. The technology has proven so successful that several major cities have adapted Alibaba's AI tech to help with traffic congestion issues.
Dynamic pricing made famous by Amazon and Uber are effective ways to gain on profit margins, but AI also wins business by providing the engagement and support that energizes customers and keeps them coming back.
Young shoppers love visual search. A majority of Millennial and Gen Z are looking for it. Tech big-timers like Snapchat, Amazon, and Pinterest are all stepping up their visual search game, and for fashion retailers like Nordstrom it's a no-brainer. As their VP of Technology John Xiao put it, "Fashion is all about the visual... If the customer has a product in front of them, the best way to help them find it in your catalog actually visual search." Snap a photo of a dress you like and the app can draw on search histories and other user data and to find that item and similar dresses in stock.
Starbucks has managed to swiftly incorporate their data-driven app to their client culture, and now it accounts for up to 20% of daily transactions. But even more than a quick and easy way to order and pay, the app is harnessing Microsoft AI for prescriptive recommendations based on your previous purchases. If you always order gluten-free snacks, the AI will automatically present you with the gluten-free options. Next up? Tying the predictive recommendations to store inventory in real time.
Chatbots provide round-the-clock customer support, plus they always stay on-script (unlike human agents), and Millennials increasingly welcome the bots. But chat AI is more than a text bubble that fields complaints. Amtrak's Virtual Assistant is a great example, providing route suggestions and general guidance throughout the ticket booking process. The result? A 30% boost in sales.
In an ever-expanding and competitive ecommerce world, standing out from the pack can be a huge drain on your budget. And once you’ve gotten someone’s attention, you have to speak their language, know what they like – even know their name. According to Salesforce, 76% of consumers expect companies to understand their needs and expectations. This is where AI brings a whole heap of science to the art of traditional marketing.
Demographic data is great, but individual behavioral data gives an even more precise profile of every potential customer. AI synthesizes all of it into individual consumer profiles. When office supply retailer Staples adopted AI for marketing campaigns they were able to target customers on a granular level, and revise their SEO strategy in real time, based on incoming data from the campaign. Their average cost-per-click dropped by 11%.
Vivid adjectives make ad copy lively, but how can you make an email truly feel alive? By pulling in up-to-the-moment details from the outside world. RevTrax and its AI implemented a dynamic email campaign that played off of the weather in every recipient's location at the moment the email was opened, advising them on weather to dress for warmth or cold. This campaign charmed individuals and generated buzz across social media.
How Will AI Win Customers For You?
A detail-oriented, personalized marketing campaign used to require hundreds of hours of human labor. Now, artificial intelligence can target customers who've already shown interest in your products – or products like yours – in a matter of moments. AI-driven automation reaches out to those potential customers by name, on their preferred platform, and with dynamic offers based on rich behavioral data histories.
To execute marketing campaigns at this level of precision and complexity requires a comprehensive but accessible management platform – the Offer Management Platform from RevTrax provides control, security, integration, analysis and a user-friendly interface so your team can utilize AI and have more time to focus on creative labor.
Ready to explore your options? Contact us today!