Retailers’ Right Arm — AI
A lot’s been written about the advantages of AI lately, especially since the pandemic. Only 37% of firms surveyed by Gartner before the start of the pandemic were employing AI, so there’s not much of a track record.
A deeper study by the U.S. Census Bureau a year earlier found that the larger the company, the better the odds they were using AI. As for the future, IBM research reported that more than 90% of companies performing better than their peers anticipated using AI.
AI today does more than send personalized recommendations to consumers. With COVID-19 vaccines poised to reach the general population in the U.S. shortly and signals pointing to more reliance on digital platforms for shopping, now’s a good time to consider investing in AI for the following reasons.
The pandemic pointed out the vulnerability of companies’ inventory and supply chain control. Having too much or too little inventory affects cash flow and ROI.
AI will check inventory and forecast demand for products based on past demand. Some sophisticated systems even have robots checking and restocking inventory after each inventory check.
What if a company had the ability to quickly adjust its prices based on supply and demand? Some programs even check the available inventory of online competitors and raise the brand’s price when demand is high and inventories low or out of stock elsewhere. It also analyzes more than 20 KPIs to determine the best price for the brand before doing so. Amazon’s already employing a dynamic pricing strategy that has the ability to change prices every ten minutes.
The data collected through a dynamic pricing strategy is also valuable in contemplating changes in web design. AI analysis may help decide if and when any web upgrades are necessary.
Understanding consumer behavior and successfully responding to it has heretofore been perplexing for many marketers. A good part of the challenge can be attributed to the many different motivating factors consumers experience in purchasing a product and how they interact online.
AI helps decipher available data to deliver predictive analysis to help companies understand and adapt. For example, AI may recommend replacing a slow-moving item with one that’s higher in demand based on its analysis of consumer search data.
A lesser-known benefit of AI is its value in reducing online fraud. Brands that have been stung know it’s a big deal and sustained huge losses. In 2019, the FBI investigated more than 467,000 cyber fraud cases with losses estimated at $3.5 billion, three times more than five years ago.
Add to that a recent study by the Alten Group predicting that fraud losses by eCommerce would approximate $6.4 billion by 2021. Most of these incidents occur online, and brands need to prepare.
The most common crime includes hackers who steal the financial information of companies to carry out fraudulent transactions. Some reports include affiliate marketing partners who charged for sales that never occurred.
Other incidents include fraudsters who steal discount codes to obtain multiple discounts or pose as different customers to secure multiple pairs of items like limited-edition shoes.
Consumer trust is paramount today, and brands must assure customers what they’re doing to protect their confidential data or risk losing them.