Tag Archives: e commerce

Artificial Intelligence – Digital Outcomes or Digital Disruptions for Retailers?

Artificial intelligence (AI) is intelligence exhibited by machines. AI, still science fiction for most of us, is now becoming a daunting reality in the retail sector. Although we have learned machines (e.g. robots) for some time now, connecting them with the internet may accelerate digital disruption. Digital disruption occurs because unmet needs in the market and in our societies can be addressed through digital means1.

What does Artificial Intelligence means for retailers?

“Artificial intelligence is the key to the future of online retail, providing a crucial way to help shoppers find what they want” suggests Isabell Fraser business and property reporter at The Telegraph.  It is about consumers using voice commands using their smartphones to order products from retailers.

The opportunity that the Internet of Things (IOT) may offer Bricks and Mortar retailers was previously discussed in this blog (Retail and the Internet of Things). The IOT allows any machine with an on/off switch to be connected to the internet. “The IOT is very closely related to Artificial Intelligence (AI). In fact, IOT would not be very powerful without AI” commented Douglas Green in Quora. According to Mark Jaffe, CEO of Prelert, the realization of IOT depends on being able to gain the insights hidden in the vast and growing seas of data available. Since current approaches don’t scale to IOT volumes, the future realization of IOT’s promise is dependent on machine learning to find the patterns, correlations and anomalies that have the potential of enabling improvements in almost every facet of our daily lives.

Customers of retailers may therefore, in the near future, command any household appliance to function at their convenience.

Not long from now…

Imagine this, not long from now – Mary asks her washing machine (she named it Alice) with the following voice command: “Alice, add 2 kilogram washing powder to the shopping list”. Alice, an AI device, is also part of the IOT. Alice has recognized Mary’s voice command and added washing powder to Mary’s online shopping list which is instantly send to her local grocery retailer. Later the same day, a drone delivered the groceries, also the washing powder that was ordered by Alice.

Allright, we’re not there yet. Two of the most common uses of AI in retail are around visual search, offering shoppers items that are similar to a picture they like and have uploaded, and for personalized recommendations report Leslie Hook and Lindsay Whipp in The Financial Times.

AI inside the physical shop

AI also creates opportunities inside a store. Bricks and mortar retailers hope that AI could draw customers back to their physical stores. Leslie Hook and Lindsay Whipp quoted Michael Klein, head of industry strategy for Adobe Marketing Cloud saying that “merchandising needs to become entertainment”, pointing to digitally enabled experiences such as virtual makeovers or home furnishing demos.

Experts writing in The Future Of Shopping report talk about the impact the “fourth industrial revolution” – a merging of physical, digital and biological technologies – on shopping.

The report, co-authored London marketing agency Holition forecasts the following:

  • Virtual reality (VR) headsets that gauge your mood in the lighting and atmosphere of a simulated store.
  • Immersive virtual experiences involving products, such as visiting a cocoa farm to watch beans being picked and processed to make chocolate.
  • AI assistants that know your interests and tastes better than you do and can pre-empt purchases. For instance, shortly before a seaside holiday they might show you a range of swimwear.
  • Holographic fashion shows held in unusual locations.
A customer using a virtual mirror in store

A customer using a virtual mirror in store – image Wikimedia

Wow! There are seemingly unlimited opportunities for retailers, household appliance manufacturers and cloud computing companies applying AI. Or will the digital disruption that AI cause too big to handle?

The other side of Artificial Intelligence

The AI story unfortunately has an eerie side.

Jerry Kaplan2 introduced AI in his book with the following warning: “Recent advances in robotics, perception, and machine learning, propelled by accelerated improvement in computer technology, are enabling a new generation of systems that rivals or exceed human capabilities. These developments are likely to usher in a new age of unprecedented prosperity and leisure, but the transition may be protracted and brutal”. Kaplan foresees that without adjustments to economic systems and regulatory policies, there may be an extended period of social upheaval…

Kaplan’s concerns are shared by Bill Gates reports The Washington Post.   Gates said: “First the machines will do a lot of jobs for us and not be super intelligent. That should be positive if we manage it well. A few decades after that though the intelligence is strong enough to be a concern”. Stephan Hawkin, although totally dependent on AI, bluntly suggests that AI could bring an end to mankind.  Retailers, however, do need mankind to stay in business…

Retailers that choose to ignore AI may not escape from the digital disruptions it causes. Digital disruptors innovate rapidly, and then use their innovations to gain market share and scale. This happens far faster than challengers still clinging to predominantly physical business models can cope with1.

Concluding

Retailers will have to decide where and when Artificial Intelligence has the potential to replace human intelligence. Cost and scale will drive these decisions. Future decisions about AI by retailers will probably be about the ethics of using the technology and the effect it may have on society.

Notes

1Bradley, J., Loucks, J., Macaulay, J., Noronha, A. and Wade, M. 2015. Digital Vortex: How Digital Disruption Is Redefining Industries, ©Global Center for Digital Business Transformation.

2Kaplan, J. 2015. Humans need not apply: A guide to wealth and work in the age of artificial intelligence, Yale University Press.

Images: flickr.com; wikimedia.org

Retail Customers use of Social Media Sites

Social media have created one of the most exciting and efficient opportunities for retailers to reach their customers. It also offer great opportunities for the owners of social media networking sites to get ‘pay per click’ income  when retailers post ads on the sites and visitors click on the ‘buy’ buttons to buy stuff.

That is why all popular social media networking sites such as Google, Facebook, Instagram, Pinterest and Twitter recently have added the ‘buy’ button to their sites. They did it to make online shopping easier for their users, and to make some money…

According to Anna Torres writing in the ChannelAdvisor, Twitter is backing off the easy-click purchase strategy. Maybe retail customers don’t like doing shopping on Twitter’s site?

How do retail customers use social media sites?

The customers of retailers visit specific social media sites for the following reasons:

  • Facebook – as of the first quarter of 2016, Facebook had 1.65 billion monthly active users (Statista). So retail customers use Facebook because everyone else is using it.
  • Google Plus – is an interest-based social network that is owned and operated by Google Inc. Similar to Facebook, Google Plus allows customers to add events, invite people, and then share photos and media;
  • Instagram, owned by Facebook  is a free online photo sharing and social network platform. It is a fun and quirky way for people to share their life with friends through a series of pictures.
  • Pinterest was founded by Ben Silbermann, Paul Sciarra and Evan Sharp. It is a visual bookmarking tool that helps customers to discover and save creative ideas.
  • Twitter, founded by Jack Dorsey – is a service for friends, family, and co-workers to communicate and stay connected through the exchange of quick, frequent messages. Fifty nine percent of Twitter users turn to the platform to catch up on news.

Retail customers use Twitter  differently compared to what they do with the other social media sites. By mainly reading, listening to and viewing the latest news, they seem to have less appetite for shopping, avoiding Twitter’s buy buttons…

Visit eBizplan for help in developing your online retail business.

Bricks and Clicks Retailers – the Best of Both Worlds

The way forward for retail is Bricks and Clicks. In an article earlier this year Justin Taylor head of EMEA retail trying to console Bricks and Mortar retailers said: “despite the impact of e-commerce, physical stores remain a cornerstone of consumer engagement”.

The question that remains to be answered is:  Why is online retail growing worldwide and, at the same time, Bricks and Mortar retailers that are not engaging their customers online are closing down?

Why do Bricks and Mortar retail customers shop online?

If Bricks and Mortar retailers are the cornerstone of customer engagement, then where have their customers gone to? The customers of Bricks and Mortar retailers probably left because they find online shopping to be more convenient:

  • They can shop 24/7 from anywhere;
  • They can get more information about products and services online;
  • They can go online to search for specific products and where to find them;
  • They can compare the prices of products online; and
  • They can share their experience online with friends, family and social communities.

In spite of the fast growth of online shopping, many retailers that are doing their business only online (Pure Clicks) are now starting to look for physical retail space.

Why are Pure Clicks retailers looking for Bricks and Mortar retail space?

It is not a simple matter of Bricks versus Clicks says Justin Taylor. Physical stores remain a hugely important part of the retailing mix as they offer the ability to interact with merchandise, instant gratification for consumers, personal service and professional guidance.

We have seen the migration from bricks to clicks, and the pattern in some instances is now heading the other way as brands born online are now seeking physical space. The answer is Bricks and Clicks retail shops that have both physical and online space. Bricks and Clicks retailers have the best of both worlds.

Integrating the physical with the online may pose a challenge for most retailers. eBizplan, a management consulting business can help retailers to run the physical and online business as one.

Retailers Biggest Challenge – Integrating Online with Offline

Retailers who are for years in business are using technology that is developed for running a physical shop (Bricks and Mortar) better and making shopping for their customers easier.  A study by Forrester Consulting found that although 90% of the UK retailers are now doing business online. However, most of them find it difficult to join their online and offline technology.

Only 26% of the retailers interviewed mentioned that their sales are influenced by the online channel.

Technology use by the customers of Bricks and Mortar retailers

Most of the customers of Bricks and Mortar retailers visit their website to get information about the inventory in the shop.  A recent study by Forrester Consulting,  found that 39% of customers are unlikely or very unlikely to visit a  store if its website does not provide physical store inventory information.

Only 32% of the shop owners that was interviewed offered a function on their websites for customers to view their in-store inventory details.

Customers want shopping convenience

The study indicated that half of all customers cited store pickup options as important or very important to them when shopping online. However, only a third of retailers today already support store-pickup programs.

Read also:  Will “Click and Collect” Solve the Delivery Headaches for Grocers?

The customers interviewed demanded the following:

  • Absolute guarantees that the product is actually available;
  • Rapid picking and notification alerts;
  • Customers want to pay at the point of pickup;
  • Customers want the option to pick their goods up at alternative locations.

In-store experience in the digital age

The customers are in power when they use their smartphones in the shop. They use their smartphones to check inventory availability before entering the store.  The customers also use their smartphones to get more information about the products  they are interested to buy.

Bricks and Clicks retailers need to be both masters of the store and of the digital domain.

eBizplan, an online consulting business, can help retailers to draft a strategic plan to integrate their offline and online business.

More Mobile Sales For Online Retailers

Growing your mobile sales in the retail channel starts by delivering the same type of experiences consumers are encountering while shopping online using a computer.

Mobile has since 2014 exceed personal computers for internet usage…

The growth of mobile devices

The onset of smartphones and the roll out of Wi-Fi connections has increased mobile online shopping. Although mobile continues to drive the most sales growth for retailers, the sales still aren’t keeping up with retail traffic.

According to Andrew Meola, IBM found that smartphone traffic beat both tablet and desktop, making up 53% of all online traffic. But mobile still only accounted for 29% of all online sales.

Why does mobile sales lag behind other devices with online sales?

Customers using mobile have to fill out too many fields, and the text is too hard to read, among other things, says Dangelmaier in a recent blog. Merchants haven’t put enough weight into mobile and its impact on converting shoppers into buyers and completing purchases at checkout.

Some customers will abandon their checkout chart if they don’t have or can’t find a coupon to apply at the checkout. A lot of merchants haven’t built platforms that can easily execute coupon codes. Checkout conversion, especially on mobile devices, is a huge problem that needs to be addressed.

Visit eBizplan for your business plan and marketing plan needs.

Five more Trends that Bricks and Clicks Retailers Should Take Note of in 2016

Software AG identified ten disruptive trends retailers should take note of this coming year. The first five trends was discussed previously. Here is the last five trends to watch out for:

6. The internet of total satisfaction

The Internet of Things (IoT) is going to revolutionize the store of the future, with its sensor-oriented devices enabling the most detailed and targeted customer centricity. Retailers embracing IoT will have visibility into inventories via electronic shelf sensors; the ability to create smart signs that are weather- or facial expression-relevant; and the tools to make every loyalty customer feel coddled and important.

7. Immersion therapy

Futuristic technology will immerse customers in the shopping experience. Technologies such as Microsoft’s Hololens will allow customers to augment reality while in-store. They will be able to try on clothes, or design their ideal kitchen, virtually, while sharing their experiences with friends and family. iBeacons™ and anonymous analytical face detection will enable retailers to interact in real time with customers, as well as track their behavior.

8. Clean-up on aisle one

Real-time monitoring capability will be critical for the store of the future, in order to sense, correlate and automate processes from staffing to inventory. Smart sensors will detect activity and provide visibility across a store coupled with streaming data and real-time analytics, allowing for actionable and automated responses to things like a spill in a grocery store or a run on umbrellas in a rainstorm.

9. Buy me now!

Retailers will further customize and personalize instant gratification “buy buttons”, which can be found anywhere from Twitter to Amazon, with the expectation that these will translate into higher earnings. But they will need to make strategic technology investments to ensure real-time inventory is understood and the complex processes involved in new channels are orchestrated correctly.

10. Last Item in Stock

Real-time inventory visibility will dominate as retailers strive to keep the customers informed of stocks at all times. Retailers will control inventories by applying technology that shows inventory levels across all channels.

A Brick and Mortar retailer battles to survive on its own, as is a Pure Click retailer… Retailers need to integrate both the physical and digital systems to prosper and grow during 2016. Visit eBizplan for plans to integrate your physical retail shop with an online retail channel.

A Drone on My Roof – Another Delivery from my Favourite Online Retailer

Are you frustrated with high delivery costs, dangerous roads and Post Office strikes? No problem, the future use of a ‘commercial’ delivery drone may provide an exciting alternative…

Are drones for delivery science fiction for now?

Amazon.com proposed the use of commercial drones, on autopilot, to deliver their customer’s packages on their doorsteps. Popular Science recently reported that the FAA announced that they are finally willing to let Amazon test their drones within the United States.

The FAA instructed that Amazon shouldn’t test anything meaningful or innovative about the drone delivery concept at all. It’s science fiction for now.

Fast forward twenty years from now

How will your groceries be delivered at your home in future? Surely in twenty years’ time (or less), the airspace above our populated areas should buzz with drones of all shapes and sizes. Drones that deliver packages fast and safely to the right addresses.

Imagine placing your grocery order online, the products picked at a local warehouse and then attached to a drone and dispatched straight to your home.  The groceries are then dropped in a receiving bin on your roof.

Retailers are ready to start using drones for deliver packages, in spite of authorities not allowing it.

Getting a commercial drone off the ground

According to Popular Science, the FFA stipulates that: “all flight operations must be conducted at 400 feet or below during daylight hours. The UAS must always remain within visual line-of-sight of the pilot and observer.  The aircraft must be flown by a pilot that have at least a private pilot’s certificate”.

Amazon was not allowed by the FFA to test the commercial drone concept to its full potential in the USA. The innovation of commercial drone technology has seemingly come too quickly for the US authorities.  As result, Amazon is now looking to conduct their tests elsewhere.

In the meantime – keep looking up to the sky…

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Starting an Online Retail Business

Starting an online retail business is not easy.

What to expect when starting an online retail business

Armando Roggio recognizes seven surprises that await newly established Bricks and Clicks retailers:

1 To manage inventory will be difficult

It is already difficult enough to manage the inventory of a single retail store when you have to plan to stock the right type and quantity of inventory during the right season. Things may be getting really complicated when adding an online channel and your customers want to purchase products you advertise online and can’t find them in your shop.

2 You should plan your online retail store the same way as you plan your physical store

Treat your online store as a new retail location. You should think about how to decorate the store, how to present products, how to attract new customers, how you would staff the shop and how you’d take payments. You should therefore prepare a new business plan for the new retail store.

3 You will need a marketing strategy

One of the most important parts of e commerce success is marketing. So when you open an online store, you will need a marketing strategy.

You should design your website to suit your customer’s requirements and needs.  A plan to use the internet to brand your retail store by using social networking sites and affiliate marketing should be in place.

4 You need compelling pictures

In a physical store, shoppers can pick up an item, feel its texture, and get a sense of the product. Online, products are primarily presented with photographs, so you will need good ones.

If you want to sell online, you will need to learn about taking good pictures and processing those pictures for display in your online shop.

5 Websites Cost Money, Time, or Both

You will either need to spend some serious time researching e commerce platforms, understanding site layout, figuring out content management, or you will need to hire someone to build your site and show you how to manage it.

6 Shipping Is Expensive

When a customer buys something from a physical store, she picks that item up and carries it out the door.

When a customer buys something online, you will need to ship it to her, and shipping is very expensive. In fact, the cost of packaging and shipping products may be one of the most expensive operations when opening an online retail store.

7 Be patient

Building a successful online business takes a lot of time. And adding e commerce to an existing retail business probably won’t boost sales significantly overnight.

Visit eBizplan for your help with your business plans and marketing plans to start your online retail business.