The Internet was growing at 2300% per year when Jeff Bezos decided to start Amazon (CNBC Interview). It took another 10 years or so for the technology to get adopted globally. The consumers were, as always, the ones leading the charge, discovering the best ways to spend their money online.
Only a handful of companies recognized the trend and jumped on the opportunity to become present on the web (we’re talking – eBay, Google, Yahoo, Priceline – now part of Booking Holdings). But the rise of the Internet had left a graveyard of companies behind, especially in the retail space.
Not too long ago, behemoths like Toys R Us, Borders, Blockbuster, just to name a few, had to close down hundreds of stores and even file for bankruptcy, punished by the market for failing to adjust to the new reality of the Internet.
So if you’re reading this, being a part of a successful retail brand, congratulations. Your company made it through the drought that was the retail apocalypse.
But you’re facing another sandstorm and your flask is soon to be empty again.
AI: The Holy Grail of Retail
In short, if you’re not already implementing AI in your online retail business, there’s a strong chance your business will be reduced to a college case study teaching students how slow technology adoption can destroy even the most advanced companies.
So, the question you need to ask yourself is not ‘should we implement AI’, but ‘how do we utilize its power the fastest?’!
If your business doesn’t have Artificial Intelligence properly embedded in the next 2 years, you’re destined for the same boneyard as those laggards who couldn’t adapt to the Internet a decade ago.
To put in perspective, in 1997 the Internet had about 70 million users, only a few years after the first innovators like Amazon started up. In contrast, from November 2022 to January 2023, ChatGPT, probably the most famous AI tool in existence currently, amassed 100 million users – and you’ve most likely just heard of ChatGPT recently.
The speed at which AI is getting adopted is not a fluke. It’s based on real life use cases. In almost every industry. Ecommerce and retail especially.
So what magic can AI do for a retail company?
Let’s start with some problems that have been haunting retailers for years:
- Inability to properly personalize the shoppers’ buying experience
- Online conversion rates have been locked at a painful 3% average for decades
- The only relief for overstocked inventory has been discounting – effectively making retailers compete in a race to the bottom (of the pricing pool)
- Return rates are skyrocketing, as people only buy-to-try
- Customer loyalty is almost non-existent, and it seems like nothing really works
There’s probably a few dozen challenges to be listed here, but these have proven to be the most painful and most urgent to solve. Now let’s get back to Artificial Intelligence. And let’s put the FOMO (fear of missing out) aside. There are legitimate use cases for each of these issues that AI perfectly solves. To pour even more oil on the fire, not only does the AI solve these problems, but as the adoption of artificial intelligence is becoming more widespread, your consumers have started expecting to see and feel this seamless technology at every step of their experience with your brand. For example:
- Some AI tools can extremely accurately guess what the person on your website is looking for without needing a single word of input
- Improving the quality of what your shoppers see, improves the conversion of their buying actions often by as much as 100%
- When your shoppers see items they’re strongly interested in, they’ll buy them regardless of a discount – effectively improving your margins
- Once shoppers purchase items they genuinely desire, the likelihood of those items being returned decreases
- And when someone goes through a Tiktok-like experience in an online shop, they will tend to return more frequently to your website looking for that feeling again
Build vs buy
You could justify building an AI tool in-house by focusing on these points. But the real enemy here is time. Time for you to build, time to test, to implement, to reap the benefits. Whereas buying an already built solution, helps you bypass all of those obstacles:
✅ Someone has already spent years perfecting the solution
✅ They’re already customized to solving the specific problems you come across
✅ Their team is comprised of AI experts
✅ Their data is based on the entire industry – they don’t rely on a single company’s dataset
So instead of having to make countless decisions and persuade dozens of people, you only have to answer 2 questions:
- Who can do it the quickest?!
- Who can do it best?!
As Miros CEO Heikki Haldre put it: “Retailers at the moment are facing tough decisions. A normal procurement process is 9 to 12 months long for larger decision makers and now I don’t think they can afford to wait. Those who will wait, they will be left exponentially behind…” (WWD).
Will you finally recognize AI as the true oasis it is, or will you let your ignorance dismiss it as another fading mirage?!
