AI/BOTS: AI’s Impact on The Digital Retail Revolution

The digital retail revolution is well underway.

Fusing technology into in-store experiences has officially gone mainstream, and retailers are looking for ways to go beyond the traditional mobile app.

As we’ve reported in the past, places like Sephora have installed various tablets with embedded augmented reality (AR) features to help customers pick and choose what makeup shades look best on their skin tone. The beauty retailer has also developed a Facebook chatbot on its Messenger platform dubbed Sephora Assistant. Through this offering, customers are able to book makeovers at various locations throughout the country and Sephora saw an 11 percent booking increase after implementation.

More and more merchants are starting to look into the various forms of artificial intelligence (AI), which include machine learning and natural language processing, for ways to enhance the tech-savvy (and sometimes not so tech savvy) consumer experience.

How much has AI affected the digital retail revolution and what’s next for it?

The weight of AI is so much so that analyst firm Gartner is predicting there will be 85 percent of enterprises conducted without any human interaction by the year 2020. The question that arises from this projection is how much of that will be attributed to the retail industry.

AI is undoubtedly affecting the backend of retail as far as helping to streamline operations and marketing efforts, but the true impact of this technology is probably going to be derived from the value it provides to customer service.

According to a recent IBM study, consumers are welcoming the AI technology to help enhance their experience. It revealed that while 48 percent of customers want on-demand personalized promotions online from retailers, 45 percent are looking for the same experience while doing in-store shopping.

AI is allowing retailers to obtain consumer details on a level that has not been previously thought possible. Through capturing information from people’s shopping patterns and behavior online, merchants can now reach out with precision to provide optimized service. In today’s tech-savvy arena, instant gratification as a result of smart device use has pushed consumers into a zone of expecting customized experiences throughout the sales cycle.

As such, any retailer that’s not using some form of AI is likely to see its consumer base shrink.

In addition to installing tablets in brick-and-mortar locations, retailers have also developed more than 100,000 chatbots on Facebook’s Messenger app. By integrating into a platform that 1.2 billion people around the world use on a monthly basis, retailers are gaining access to an unprecedented level of information to help elevate their businesses.

Beyond product recommendations and customer service chatbots, AI has also enabled contactless payments. While there are several point-of-sale systems at various merchant locations, one of the more interesting ones some may argue is the Amazon Go grocery store. Customers walk into the store, grab groceries, walk straight out of the store and payment is made through their phone.

In AI news this week, we’ve learned that there’s another retailer looking to adopt a cashier-less way of paying. eCommerce giant, Alibaba, is experimenting with cashier-less payments at Tao Cafe in Hangzhou, China. Customers scan a QR code when entering the store, which then enables a charge to be made to their accounts upon leaving the store.

Estee Lauder has announced its new AI offering that’s helping customers choose the right shade of lipstick. Through facial recognition and augmented reality, customers take a quiz to help determine the best shades and then each can be virtually tried out and then bought.

As AI moves further into the retail arena, it’s likely that we’ll see even higher levels of consumer personalization and perhaps the elimination of advertising (or at least ads that are not relevant to specific customers).