It’s safe to assume that we all love buying things. What’s lesser known though is the trouble that the retail industry has in satisfying our consumer needs. Sure, the retail industry is doing well, bringing in about $5.73 trillion in sales in 2017 alone, according to Plunkett Research. But at the same time, behind the scenes, retailers struggle with significant issues that include logistics, the in-store experience, digital competitors, and technology aligned to customer needs, according to the analytics platform Re-Meter.
Research companies Forrester and Deloitte say that retailers can create a win for themselves by becoming digital disruptors. Here’s where futuristic technology, specifically big data, artificial intelligence, and the blockchain, come in to make us love shopping much more than we currently do.
We would like to thank the team at OsaDC for their contributions to the design and implementation of the research and to the analysis of the result.
How does big data and AI improve retail?
Artificial intelligence and big data are being applied in new ways across the entire retail product and service cycle – from assembly to post-sale customer service interactions.
Here are some of the ways that retail benefits from these developments:
- Personalized Consumer Experiences – AI revolutionizes consumer experience through advanced digital technologies from gathering data on purchase history to helping customers make the right choices. It is adapted both in traditional economics and some crypto platforms (like OsaDC).
- The Mall of America uses a chatbot named E.L.F to assist shoppers in navigating the vast complex.
- Nordstrom tracks Pinterest pins to identify trending products, which then promotes these products in its physical stores.
- Swedish interior giant IKEA features image recognition and augmented reality, where customers can scan catalog items and virtually place them in their own homes to see what they would look like.
A recent IBM report stated that 62% of retailers attribute a significant part of their success to this technology.
- Customer Relationship Management (CRM) – Retailers need customer data to manage all of their company’s relationships and interactions with both customers and potential customers. They do this through chatbots in the following ways:
- Chatbots help companies stay connected to customers by tackling issues around the clock.
- Chatbots streamline company processes by handling a high volume of requests, mainly dealing with frequently asked questions.
- Chatbots improve company profitability by informing customers about sales and promotions.
According to Gartner, by 2020, AI chatbots will manage 85% of customer interactions in retail.
- Manufacturing – In many warehouses, robots work alongside human workers to assist in various jobs, ranging from hauling to handling customer and manufacturing queries.
- As of 2017, Amazon employed 45,000 robots, most of whom took care of difficult tasks such as heavy lifting, pulling items from shelves, stocking shelves, and efficiently packing items.
- Amazon uses robots as smart sensors to increase accuracy and improve workflow.
- Best Buy’s automated Chloe retrieves products from shelves.
An Accenture report predicts that by 2035, AI could significantly boost US labor productivity by 35%.
- Logistics and delivery – AI technologies help businesses track everything from inventory to delivering packages. This includes inventory management, where AI systems monitor supply and demand, as well as track and predict disruptions in the supply chain.
- Target uses a robot to keep track of the inventory on its shelves.
- Amazon plans to have a fleet of airborne drones for fast product deliveries.
- Dominio plans to have driverless vehicles, a Domino’s Robotic Unit (DRU), to deliver their pizzas.
In 2017, Datamation, a review publication about the emerging technology for the enterprise IT sector, concluded, “Artificial intelligence and logistics fundamentally [alter] supply chain management across the world.”
We’ve created an infographic to better explain this idea to you:
How about the blockchain?
The current challenge to businesses isn’t the cost of AI systems – they’re getting more affordable and accessible each day. The barrier is gaining access to enough high-quality data about customers to adequately power those systems. Retailers often rely on third-party, behavioral data that doesn’t truly help them understand which products customers want to buy. Moreover, most retailers handle only a small part of your purchase, hardly enough to make AI a feasible solution.
That’s where the blockchain is so transformative. According to a recent report from a “Big Four” auditing firm, Deloitte, they argued that the blockchain transforms the industry by creating a giant database that lists everything we’ve ever bought.It’s open and decentralized, yet with strict controls over privacy so that customers can authorize access to this data.
Four decentralized retailers
Below are the four decentralized companies that integrate AI and big data, as well as their results, in resolving particular retail problems.
INS Ecosystem uses blockchain technology to directly connect grocery manufacturers to consumers.
Problem: Up to 80% of the online retail market is controlled by a handful of retailers that results in higher prices, inefficient supply chains, and poor quality. Customers are not getting what they want and are forced to buy from certain limited parties.
Solution: INS Ecosystem directly connects consumers with manufacturers, cutting retailers out of the picture. Its system is the following:
- Manufacturers on INS promote their product prices and listings on the platform.
- INS aggregates customer orders on its ledger.
- INS sends customer requests to manufacturers, who deliver orders to Smart Distribution Centers (by way of smart contracts on the INS platform).
- Couriers deliver the orders to the customers.
INS uses its blockchain to save customers up to 30% on everyday shopping by bypassing retailers and wholesalers and placing customers in direct contact with the manufacturers.
The decentralized Hamster Marketplace does with electronics what INS does with groceries. Problem: There are thousands of companies that produce innovative devices but lack the capital for properly marketing and advertising their products. Producers end up tagging on a 300-500% fee to consumers in order to cover the marketing and advertising costs.
Solution: Hamster cuts these fees by giving the producer direct access to the consumer. At the same time, the platform offers hundreds of thousands of goods to millions of buyers without any negative influences from the middlemen, such as price markups and low-quality clone products.
Wave’s decentralized network connects carriers, banks, forwarders, traders, and other parties of the international trading supply chain, so that shipments and trade-related documents reach their destinations safely and faster than they would with the standard systems.
Problem: The standard paper-based system has problems with shipments held up or lost along the way, trade-related documents that are either lost, forged, or stolen, and the entire system taking longer than necessary because of broken communication between stakeholders.
Solution: Wave’s transparent ledger provides real-time communication between the different stakeholders and parties on the supply chain as well as a clear trail of activities every step of the way. Because it uses the blockchain, the company will not pass through a specific central entity (making it vulnerable to crashing or hacking) and can, therefore, better control and protect the security of its data. The results are reduced costs, error-free documentation, the timely arrival of shipments, and the fast transfer of trade documents.
The Optimal Shelf Availability Decentralized Platform (OsaDC) combines blockchain technology, big data, and artificial intelligence to provide real-time solutions in several retail areas to retailers, manufacturers, and consumers.
- Personalized Consumer Experiences – OsaDC has an AI-powered Digital Assistant that provides consumers with purchasing recommendations based on reliable product information and ratings, ensuring that they only purchase genuine consumer goods and safe-for-consumption groceries.
- Logistics and delivery – In OsaDC’s Product Master Data Catalogue (PMDC), each product has its own unique signature that helps members of the supply chain with inventory management. Because it runs on an automated peer-to-peer network, this Master Data Catalogue is significantly more reliable, cheaper, and faster than the standard retail system, which lacks real-time communication capacities.
- Customer Relationship Management – OsaDC uses the influx of customer data (like purchasing trends and product information) that pours into the PMDC to help manufacturers and retailers analyze customer feedback and optimize their business strategies.
- Decreased error in the supply chain industry – Human error along the supply chain costs manufacturers and retailers $400 billion in lost sales per year. OsaDC’s ledger encrypts and stores documents so that all stakeworkers can store documents, view transactions in real-time, and gather a data trail of past events.
Retail industries struggle with problems that include management leadership issues, customer problems, fraud, straggling communication, inefficient auditing, human error along the supply chain, and high overhead costs. Over the past few years, certain decentralized services have cropped up to resolve these and other problems. They integrate AI and big data with blockchain technology to make the retail experience cheaper, fairer, and more accountable, as well as to resolve product availability issues, reduce product waste, and improve customer experience. The ledger also connects various parties that are commonly disconnected, like supply chain members, data scientists, laboratories, regulators, end consumers, and so forth. Each of these benefits, and more, all add up to giving you the shopping experience of your dreams.