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The Future of AI in Retail – From Digital Transformation to Virtual Transformation

Virtual assistants have been a growing point of curiosity in the world of technology. For most consumers, the idea of talking to a device and having it handle tasks autonomously seemed like something out of science fiction.

And look at where we are now!

We’re getting very used to having the sorority members Siri, Alexa, Cortana and Google Assistant in our lives.

Apple, Amazon, Microsoft, and Alphabet have shown us that AI isn’t as far in the future as we may have thought. These first movers are currently investing significant resources to capture market share at this early stage. They are driving huge advancements in artificial intelligence and machine learning.

But the field isn’t only dominated by the usual suspects. Other surprising entrants are making their way into the market

•  Samsung recently announced the launch of their own voice-enabled assistant by the name of Bixby.

•  China’s leading search company, Baidu, has been running an AI-focused lab for a while and was able to significantly improve in technologies such as voice recognition and natural language processing. The company is building Xiaoyu Zaijia (“Little Fish”), a family robot, designed to give recommendations and make purchases online.

•  Nokia is rumored to be working on the introduction of the company’s digital assistant. The company has registered a trademark with The European Union Intellectual Property Office (EUIPO) describing Nokia’s Viki as “software for the creation and monitoring of mobile and web digital assistants working with knowledge and combining all data sources into a single chat and voice based interface.”

It’s palpable. Businesses are gearing up in anticipation of virtual assistants and AI becoming commonplace in the consumer world.

Is it time to make your move?

Virtual Assistants are Gaining Traction in Both Consumer and Enterprise Markets

According to Gartner’s hype cycle, machine learning is right at the tippy top and is expected to hit the mainstream in 2-5 years.

Gartner's 2016 Hype Cycle for Emerging Technologies
Gartner’s 2016 Hype Cycle for Emerging Technologies

We are also at the peak of frenzied talk and inflated expectations about the technology’s possibilities, trying to figure out how it can and will impact our lives. The current hype will inevitably lead to a sense of disappointment and backlash if the big breakthroughs don’t happen or don’t happen fast enough.

However, one thing is clear. A change is on the way.

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.”
Bill Gates

Although the technology is still very raw today, companies need to be thinking about how the emergence of virtual assistants will impact business in the future. How will customer expectations change? Which new jobs and roles will be needed? How will it shape customer service? How will it impact loyalty? How will the new shopping journey look like? More complex, that’s for sure.

Preparation is everything.

For example, Google and Walmart recently announced their partnership that will enable voice shopping through Google Assistant and should put both in better positions to compete with Amazon. They’re banking on the fact that conversational commerce will not only be a gimmick but something consumers will come to expect and brands will have to offer. The two companies said the partnership was less about how online shopping is done today, but where it is going in the future.

“We are trying to help customers shop in ways that they may have never imagined,” said Marc Lore, CEO of Walmart

 

From Digital Transformation to Virtual Transformation in Retail?

Picture this scenario: A consumer in need of a new mattress starts a conversation with their voice-enabled assistant. It asks questions, interprets responses, and combines all this information with known preferences to recommend and order the most suitable mattress.

No more clunky (mobile) shopping sites and experiences; no more browsing through dozens of web pages, reading countless blog entries and comparing a handful of options to make a decision.

Sounds interesting? Watch this:

 

And now, imagine it for purchasing everyday items such as dog food, household supplies, groceries and food, personal care and more.

Virtual assistants free the hyper-connected smartphone user from the slow clumsiness of virtual keyboard input, making voice the new, primary interface.

Without any doubt, the convenience afforded by virtual assistants can disrupt and completely change the retail experience, as well as that of multiple other industries. Virtual assistants have the ability to transform the standards of how consumers expect to be served.

It’s the ultimate integrated Omnichannel experience in which the conversation could be carried across all channels and touchpoints, customizing the digital experience on the go.

According to Markus Linder, CEO of SMARTASSISTANT, the leading Digital Advice technology provider, having virtual assistants that can assist shoppers with personal advice and help them make decisions will be one of the most important ways for businesses to deliver convenient, virtual experiences and differentiate:

“We are already seeing that the demand for Digital Advice solutions is growing quickly.
Digital transformation and the need for businesses to offer excellent, quick, convenient and hassle-free digital experiences have accelerated this trend. There is no way around it as consumers are increasingly looking to their preferred brands and retailers for guidance and advice that is useful, effortless and personal. The rise of virtual assistants will only make the need for Digital Advice more apparent.”

 

Tip: Join us at our annual Digital Advice Live! conference in London to see how Digital Advice will shape the customer experience of the future.

 

What Do Consumers Say?

T3 conducted a national, representative survey of 5,000 consumers, which revealed that around 1 in 5 customers (17%) plan on purchasing a device like Amazon Echo in the next 6 months. The rate is even higher for Millennials: 27% of consumers under the age of 35 said that it was likely for them to purchase a device in the near future.

During Amazon’s Prime Days in July 2017, the e-commerce giant saw a huge spike in Amazon Echo sales, making it the single highest-selling item on Amazon. Echo sales in 2017 are expected to be 7x higher than in 2016. Insiders at the company say that Echo devices are selling at a rate of “thousands per minute”.

And Tractica’s recent report forecasts that unique active consumer virtual assistant users will grow from 390 million in 2015 to 1.8 billion worldwide by the end of 2021 – increasing the total virtual assistant market revenue from $1.6 billion to roughly $15.8 billion!

Tractica’s report, "Virtual Digital Assistants"
Tractica’s report, “Virtual Digital Assistants”

The emergence of compelling use cases that alleviate people from time-intensive tasks, such as choosing the best product from thousands of options, will be the driving force behind the consumer adoption of virtual assistants.

To increase the perceived usefulness of virtual assistants, the three main players in the market are beginning to make it easier for third-party developers to integrate services in their AI ecosystem.

  • Apple’s Siri – most restrictive. Only supports a handful of uses such as audio or video calling, messaging, payments, photo search, workouts, and ride booking. The tight grip on what Siri can and cannot do reduces the odds of interactions gone awry. However, this may lead to it never getting enough traction for developers to take it seriously. https://developer.apple.com/sirikit/
  • Amazon’s Alexa – they are letting developers build pretty much whatever they want. The result is that Amazon boasts around 5,000 third-party Alexa skills. However, the downside is that users must use pretty intricate commands to activate them. Example: Instead of “Alexa, where’s my pizza?”, Alexa users must say “Alexa, ask Domino’s to track my order”. https://developer.amazon.com/alexa
  • Google’s Assistant – the hybrid. Google supports third-party services but restricts the activation keywords. https://developers.google.com/assistant/sdk/overview

 

What Do Executives Say?

With the methods of AI, businesses can deliver hyper-personalized and fast customer-retailer interactions, which are the true value of a positive shopping experience. Many are already experimenting with virtual assistants and AI technology in an attempt to create more consumer-oriented solutions that will impress shoppers and attract a larger audience.

According to the BRP 2017 Customer Experience, Unified Commerce Benchmark survey of 500 executives at retailers in North America, with a focus on specialty retail, 45% of retailers plan to utilize artificial intelligence for customer service within three years. Already, 14% of retailers say they have implemented AI-powered solutions (digital assistants, chatbots, etc) looking to gain a competitive advantage as early adopters.

In its Global Trend Study, Tata Consultancy Services polled 835 executives across 13 global industry sectors (including automotive, banking and financial services, energy, healthcare, life sciences, industrial manufacturing, and retail) in four regions of the world, finding that 84% of companies see the use of AI as “essential” to competitiveness, with a further 50% seeing the technology as “transformative.”

While the biggest adopters of AI today are IT departments (67%), this will have changed by 2020. Almost two-thirds (32%) of companies believe that AI will have its greatest impact in customer-facing corporate functions of sales, marketing or customer service.

AI’s impact on jobs

Business executives estimate that jobs in each function will reduce by 4% and 7%. However, companies with the biggest revenue and cost improvements from AI see the need for at least three times as many new jobs in each function by 2020 because of AI, as compared to companies with the smallest AI-related revenue and cost improvements.

Still Need Humans Behind the Scenes

One of the main barriers to the adoption of virtual assistants is the mainstream’s discomfort with communicating with machines. We can’t expect to get into a deep and meaningful conversation with our smartphones in the near future. The complexity and subtlety of language still represent formidable challenges in AI that are not too easy to solve as described in MIT’s great piece on AI’s Language Problem.

Human input will be vital for training and monitoring the system, crafting conversational user experiences, and helping virtual assistants learn how to interact with people. Companies are already hiring script writers to form the assistant’s personality, for example by adding in ‘hmms’ and ‘ums’ in the right places and making the responses more authentic.

In the future, it might even be that the personality, voice, and character of virtual assistants will become a new differentiator for brands.

Though many of us are skeptical and not completely ready to ditch our thumbs, keyboards and beautiful GUIs just yet, voice-enabled assistants will open new possibilities and will re-define customer service and customer experience.

The question isn’t really when, but how are you prepared?

 

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