Four Corners of the Bot-Tastic Wild World
The current bot landscape breaks down into four types.
1. Botlets. These low cost work bots are purpose built, fast and easy to design and deploy. They remove human effort from simple tasks, allowing workers to spend more time on value added activities.
2. Scaled Artificial Intelligence Engines. Large-scale solutions designed by neuro scientists, not computer scientists. These neuro-tech machines are built to find business opportunities and solve business problems. Limited number of scaled AI engines in the field today, but within five years, the advanced technology will be commonplace.
3. Chatbots. The most highly visible bot technology in the field today. The solutions can conduct a conversation with a human and be programed to understand nuanced language, both text and spoken word. Deployed to save human labor and allow shoppers 24/7 access to customer service.
4. Physical Bots. Highly intelligent, autonomous machines used primarily in distribution centers, warehouses and manufacturing settings. In the store environment, the best example is “Shelfie,” an automous shelf-scanning robot that uses computer vision to check inventory levels and provide real-time insights to store management.
Source: Eugene Roman, EVP, Digital Excellence and Technology Advisor, Canadian Tire
When they hear the terms artificial intelligence and bots the average person likely envisions the futuristic sci-fi version of the technologies — ― autonomous humanoid machines performing everyday tasks previously done by people. While this technology certainly exists and will only become more pervasive in the coming years, the real-world use of artificial intelligence (AI) is much more subtle and powerful.
AI is the special sauce that powers much of the game-changing technology retailers rely on to fuel new growth and provide a differentiated experience, allowing them to thrive in an increasingly competitive landscape. In fact, by 2020 artificial intelligence will be a mainstay in almost every new retail solution and will be an investment priority among 30% of CIOs, predicts Gartner in its “AI Technologies Will Be in Almost Every New Software Product by 2020” report.
While the future is undeniably going to be AI powered, the technology is still in its infancy and has yet to reach its full potential. Trailblazing retailers that are investing in the technology today are already reaping the rewards and will be in the driver’s seat when artificial intelligence inevitably dominates the retail landscape.
Rise of the Machines
There are a number of different bots at work in the field today (see sidebar on page 10), but one of the most common and highly visible is the chatbot. While the technology has been around for years at call centers and on e-commerce sites, over the past year or two advances in natural language recognition and machine learning technology has elevated the chatbot from novelty to effective customer service solution.
The list of retailers that have deployed chatbots grows by the day and includes powerhouse brands like Macy’s, DSW, Ulta, Tommy Hilfiger and many others. The appeal of the chatbot is simple — ― eliminate expensive and unreliable labor while simultaneously providing an engaging customer experience that is available 24/7.
Retail’s household names are quickly onboarding chatbot technology, but many still see it as a fringe solution. Only 6% of retailers report having up-to-date chatbot technology in place on their e-commerce site, while another 5% are in the midst of an upgrade, according to RIS’ “Fourth Annual Customer Engagement Tech Trends Study.” In addition, 36% of retailers will embark on a chatbot program in the next 24 months. Retailers are split on the usefulness of the artificial intelligence solution, with 56% reporting they have no plans to deploy the still-emerging tech.
The reluctance of much of the retail community to embrace chatbots makes sense considering many retailers have built their reputations on one-to-one interactions between associates and shoppers and are unlikely to turn over this critical aspect in the path to purchase to a machine.
“For some retailers, human interaction may be too critical to move completely to AI,” Boston Retail Partners reports in its “2017 Customer Experience/Unified Commerce Survey.” “However, as consumers become more comfortable with Siri and Alexa, and we see chatbots increasingly replace traditional customer service, we may see human interaction perceived as less efficient than artificial intelligence.”
Retailers are wise to tread lightly into the chatbot world, as the majority of consumers share retailers’ apprehension with the conversational bots. In fact, just 17% of customers report they would likely interact with a chatbot, according to RIS/TCS’ “Shopper Insight 360: Crossing the Great Consumer Divide,” a benchmark research report that polled over 5,000 consumers. However, the percentage of shoppers willing to take advantage of a chatbot solution jumps to 26% in the highly sought after Gen Z demographic, highlighting the need for retailers to explore the technology despite their hesitation.
Know Thy Customer
As retailers continue to debate the merits of chatbot technology, the industry has universally agreed on the import of a powerful CRM/personalization solution. In fact, retailers have named the tech as a top technology for 2017 and over three-quarters (76%) of retailers either have an up-to-date solution in place or will have one in the next 24 months, according to RIS/Gartner’s “27th Annual Retail Technology Study.”
This powerful personalization software relies on artificial intelligence to build shopper profiles based on not only past purchases and if/then scenarios, but sophisticated algorithms capable of predicting what products and services individual shoppers will have an affinity toward.
Campus Protein, a multi-million dollar online retailer that sells nutritional supplements, has deployed an AI execution engine to power its personalized recommendations. The solution, developed by Nosto, tracks shopper behavior including purchases, conversations, cart activity, page views, traffic sources and geolocation to build a robust shopper profile and market to customers with tailored recommendations both onsite and via e-mailed correspondence. After just a few clicks, a new user will begin receiving targeted promotions designed to spur interest and conversion on high value items.
“The way we were doing recommendations in the past is the way most websites do it, based on a very templated solution,” Russell Saks, Campus Protein CEO told RIS. “Now we are able to predict what you want before you even know it. Although it is an algorithm and a robot, it does an incredible job of making those predictions.”
The results of the program speak for themselves. The recommendation engine drives nearly 20% of Campus Protein’s annual sales, thanks in part to a 15% conversion rate from shoppers that engage with the personalized recommendations and a 22% click-through rate on tailored e-mails.
AI’s Next Frontier
AI technology is being leveraged throughout the enterprise to streamline operations and enhance the consumer’s path to purchase. But the technology is also being used by shoppers to shape and redefine what the shopping experience is, and can be.
Virtual assistants like Siri, Alexis and Google Home have ushered in the age of conversational commerce and allow users to make a purchase with nothing more than their voice. For example, a simple phrase like “Alexa order more paper towels” can trigger a purchase. While these virtual assistants have boundless potential and are already reshaping the retail landscape, the emerging field of shopping assistants could shift the balance of power even further toward the consumer and continue to disrupt the competitive landscape in the customer-centric age.
Retailer-agnostic, third-party search bots allow shoppers to search countless e-commerce sites for the best deal in just a few seconds, potentially returning results from retailers previously unknown to the shopper. These sophisticated AI solutions can be programed to not only search for best price, but also factor in customer ratings, inventory levels, fulfillment speed, etc. and return the best match based on customized search criteria.
“The real retail revolution will happen with shopping assistants,” Beerud Sheth, founder and CEO of chatbot building platform Gupshup told RIS. “Human shoppers are pressed for time and have very limited memory and computing capabilities. With software-based shopping assistants consumers have unlimited computing power, which will be a huge disruption. Instead of the shopper comparing a couple of sites, the bot can compare hundreds. Shoppers could never do that manually.”
Sheth predicts that within a year or two the technology will be prevalent throughout the consumer landscape and has the potential to alter the e-commerce industry. While third-party shopping assistants have yet to take hold across the retail market, they have made major inroads in the travel industry.
For example, the travel site Waylo can instantly search the entire pricing landscape, leveraging advanced algorithms to predict with amazing accuracy the future prices of airfare. The technology is so precise that Waylo can confidentially sell airline tickets today at tomorrow’s prices.
If AI powered shopping assistants become commonplace the competitive marketplace will instantly expand for many retailers. Consumers will have infinitely more information on available goods and services, leveling the playing field and giving small and mid-market retailers greater visibility. While these shopping tools can potentially be a thorn in the side of enterprise level retailers, smart merchants will be prepared to meet the challenge head on.
High Fidelity Shopping
“Not at all.” That was Eugene Roman’s response when asked if he is concerned about the potential disruption automated shopping assistants could trigger. The executive vice president, digital excellence and technology advisor at Canadian Tire is confident that this new crop of AI applications will have little effect on the retailer’s bottom line. Why is he so confident? Fidelity.
“We have a very deep understanding of the products that we sell,” Roman says. “Do AI powered apps have huge power? Sure. But we do, too. What we drive is fidelity. The problem with the AI driven shopping bots is comprehension. We are investing in natural language processing. It is the math of language, and that is what allows bots
Virtual shopping assistants have the potential to place the retail landscape in upheaval, but those that are prepared for their arrival need not be concerned. In fact, by properly indexing their sites, competitively pricing products and providing deep product knowledge, enterprise-level retailers can benefit from the wide-scale arrival of shopping assistants. If they offer the products consumers desire the shopping bots will find them and perhaps introduce new consumers
to the brand.
Artificial intelligence is both the present and the future of retail. Innovative, forward-facing retailers are embedding the technology throughout their organizations to redefine the shopping experience and streamline operations.
AI is the key to a successful tomorrow and retailers need to continue to invest to stay on the cutting-edge. The machines are coming and will soon power nearly every aspect of the retail landscape. Will you be ready?