December 16, 2019
How AI-Powered Commerce Will Change Shopping
By Vala Afshar, Chief Digital Evangelist
Editor’s Note: This article originally appeared on ZDNet.
There are no holiday songs about smartphones or voice assistants — at least, not yet. But the world of commerce is rapidly changing, and at no time is this more apparent than during the holiday shopping season.
Eighty-seven percent of shoppers now begin their hunt in digital channels — up from 71 percent in 2017. This is fueled by the explosive growth of smartphones. IDC projects that by 2022 the overall smartphone market will reach 1.646 billion units. Naturally, more smartphones in hand means more people online, on the go. During Cyber Week 2018, mobile web traffic made up 70 percent of traffic on average, and accounted for 54 percent of orders placed on Thanksgiving Day. [Editor’s Note: During 2019 Cyber Week, mobile devices globally drove 73% of all digital traffic and 55% of all orders.] But mobile is only the tip of the iceberg. Alibaba set a new record [last] year with Singles Day sales reaching $31 billion, but the Chinese titan of ecommerce isn't resting on its laurels: "Voice will be an important entry point," CEO Daniel Zhang said.
To deal with the explosion of consumer interactions — and improve the quality of each amid an increasingly distracted mobile environment — many brands and marketers are turning to artificial intelligence (AI). The AI revolution will drastically change how we shop — from hyper-personalization to voice — and it'll be here sooner than you think.
Algorithms Will Do the Gifting Legwork for Us
Customer expectations are higher than ever, thanks to an influx of technologies in the Fourth Industrial Revolution. If you think AI is over-hyped from a commerce point of view, think again. Research shows that customers are 9.5X more likely to view AI as revolutionary versus insignificant. Within the next five years, 87 percent of customers believe AI will have transformed their expectations of companies.
But how, exactly, is AI changing expectations? While pop culture sometimes paints AI with a scary science-fiction hue, the truth is that many AI-driven experiences are winning customer appreciation, if not affection. A majority of customers say they like or love AI-powered capabilities like credit card fraud detection, personalized recommendations, and voice-activated personal assistants. And today, "personalized recommendations" doesn't mean merely adding an individual's name to an email subject line. We're talking about uber-personalized communications; 59 percent of customers say tailored engagement based on past interactions is very important to winning their business.
During the 2018 shopping holiday season, 35 percent of all revenues will be driven by shoppers who tap or click on an AI-based product recommendation — a 25 percent increase over last season. The kicker is that this 35 percent of revenue stems from only 6 percent of holiday shoppers. In other words, shoppers served with smart recommendations are making a significant share of purchases.
How many times have you found yourself in a situation like this: You visit an ecommerce site to buy one thing, and another recommended item catches your eye, and then another. Before you know it, you're 50 clicks deep, convincing yourself that you'll save money if you hit the free shipping minimum. Research shows that personalization influences 38 percent of digital revenue, and I'd expect that will skyrocket in the next decade.
Smart Home Devices with Voice and Visual Interfaces Will Dominate Shopping
I believe that voice will have a bigger impact on the consumer journey than did search in 2000 and smartphones in 2007. In looking at how voice is influencing the shopping journey, two central points of engagement emerge. The first is voice via smartphone (like Siri), and the second is voice via smart speakers (like Alexa).
In the next five years, I predict leading retailers will have mobile apps that work with digital assistants like Siri to give customers a more seamless shopping experience. The CEO of Rent the Runway gives this example:
"I foresee a shift from people ordering via an app or website to using voice technology or text messaging systems. I'd be able to say: 'I have a date tomorrow night. Send me an outfit!' and the system would know so much about the context of my life — my style preferences, how I like things to fit, and what's most likely to work for that event — that it will radically simplify the whole ordering process."
Of course, the Achilles heel of smart speakers as a shopping tool is the lack of choices and visual confirmation. That's why we're now seeing a tidal wave of smart home devices with screens.
I predict that by the end of 2020, screen-equipped smart home devices will be the predominant channel for consumers' online purchases. Because the human brain processes images 60x faster than text, voice assistants with screens will speed adoption as a shopping channel. Smart home devices with screens allow users to see multiple options for a product they're researching. For example, if I'm looking to buy high-top basketball sneakers for my son, I need to see more than one pair before purchasing. A screen gives you that. It also opens up a new level of personalization for brands to conquer.
Retailers need to think ahead to personalize this experience in one of two ways:
- Sort results by personal preference: Show me basketball sneakers that are similar to the ones I've previously purchased. Bringing this to life takes a CRM or DMP solution, social listening, and integration between sales, service, and marketing.
- Yelp-ify the experience: Show me basketball sneakers with user reviews, user photos, related social feeds, and so on. Allowing consumers to sort by user ratings like Yelp means the brand is incentivized to deliver great experiences. Meanwhile, ensuring the authenticity of those reviews and saying no to fake reviews is also crucial.
The Gap Between Online and In-Store Experiences Will Fade Away
We have Black Friday and Cyber Monday, but that's almost an artificial divide at this point. More and more, customers are looking for experiences that connect their online and offline experiences. Research from Salesforce shows 82 percent of customers are willing to trade relevant information about themselves in exchange for connections between digital and in-person experiences. But reality doesn't always live up to these ideals; researchers grade the in-store mobile experience as just 1.74/5. Even though shoppers regularly use mobile devices in stores, few retailers and brands are innovating inside their stores to capitalize on this behavior — for example, with SMS offers or mobile calls to action.
One brand that's taking an innovative approach to bridge the divide between online and in-store with augmented reality is Diane von Furstenberg's DVF 360. This unique and engaging 3D shopping experience gives users an immersive experience where they can virtually tour the store, see the merchandise as it appears in the store, and buy online.
For more coverage of 2019 ecommerce shopping trends, check out the Salesforce holiday insights hub.