Artificial Intelligence can bring much needed relief for E-commerce during and post Covid!
The on-going Covid-19 pandemic is irrefutably one of the most significant challenges faced by the world in this decade, if not the century. It is reshaping how and what -consumers buy, industries sell and will redefine how businesses function.
One of the sectors that could have taken a huge advantage from the Covid-19 pandemic is E-Commerce. However, even though the sector could have flourished taking advantage of increasing sales via home deliveries by capitalizing the movement restrictions, that was not completely possible during the lockdown period.
With restrictions being lifted slowly, it is time to focus all energies on building a strong and effective e-commerce system. Even for exisitng e-commerce businesses, understanding the new and dynamic behaviour of consumers towards buying of essentials and non-essential items remains key. Many e-commerce players diversified their product offering to include essentials like groceries, disinfectant products and other daily use items. Zomato, the restaurant aggregator used its network to offer groceries from neighbouring stores leveraging the local kiranas.
In a survery conducted by Capegemini, it was observed that, 'consumers' appetite for online shopping will be rising to 64 per cent from 46 per cent over the next 6-9 months. About 74 per cent Indian consumers surveyed said they will prefer to purchase from retailers offering delivery at flexible timing in the next 6-9 months and 89 per cent customers said they will be more cautious about issues of cleanliness, health and safety post COVID-19 pandemic.'
Moreover post coronavirus crisis, 78 per cent of Indian consumers said they will prefer to increase usage of digital payments going ahead.
This has forced many traditional retailers to setup e-commerce channels overnight to address the reduced footfalls even in the post lockdown era. They are coming to terms with understanding the change in consumer behavior and buying patterns.
Consumers are differentiating between need and want.
Conscious decisions are being made between 'want to have products' and 'need to have products'. Navigating consumers cautiously to consider your products is going to be key. Also it is not a situation when by offering unprecedented discounts is going to result in more sales. This is because, the reasons for cautious spending are different than every before:
Avoiding excessive exposure to delivery persons and packages,
Uncertain job situations leading to limited dispensable income and
Unknown sanitisation conditions from source of the product among others.
Ok, so lets get to basics, where does that leave a particular e-commerce business? How does a business balance Cash flow Vs Opportunities ? I think a large part of the answer to this question depends upon strength of the prediction for the particular e-commerce business.
The salient point here is that, because this is such a unique situation, and there isn’t any strong correlation with another situation in the past. Where is the relevant human expertise to deal with the on-going situation? And the answer is that there isn’t any, for most organizations. So, it is proving to be more challenging to adapt quickly and benefit from the little opportunities that may exist out there.
This is exactly where Artificial Intelligence could make an enormous positive impact. The new environment, is causing a shift in consumer behavior patterns, price sensitivity, choice of products and quantity of products purchased.
What is the value of A.I. in e-commerce?
Prediction not Reaction is the order of the day!
And the predictive nature of A.I. is not based on strict or unchanging set of rules. In fact, the rules that govern prediction are directly related to underlying data patterns. That simply means as the data will change, so will rules and with that the predictions, which could come handy in the current dynamic market environment.
A.I. is predominantly seen as a tool to be consumer facing for example for E-Commerce it could be a Recommendation system. But there are other aspects of A.I. that are usually overlooked and that is A.I.s ability to aid in making strategy decisions. In a volatile situation like this, it becomes even more difficult to take any decisions, the line between right and wrong is usually blurred. What A.I. can do for decision makers is to show them the most optimum direction which may be just what is required to take the right type of risks.
It is obvious that essential goods, groceries, medicines are bound to see rise but that leaves all the other sectors like snacking, fashion, luxury, electronics etc. There is of course another layer over this complexity, i.e. “Consumer Sentiment”, will consumers indulge in non-essentials, and if yes how much and what kind of products.
Most importantly prediction needs to be specific to a particular business not just overall sector wide analysis. Only way this can happen is through using the science of A.I.
So what can A.I. deliver?
Fundamentally A.I. will try to understand behavior patterns and perform predictions based on that understanding.
First it can perform Recommendation,
For example when a user is browsing the site, it can recommend the next set of relevant products to see ( i.e. E-recommendation).
A.I. can be used to modify individual stimulus by predicting what consumers will like next.
Price Optimization.
Giving blanket discounts to move inventory out of the system may not help the business.
A.I. can help decipher the optimum price of the products and also point out which products need to be pushed through discounts and which just need a slight price modification to increase the value you get out of those products.
Flow of Interest
Learning from user behavior, A.I. can create a dynamic map where you can track the ‘flow of interest’ over time between different categories, and that opens previously unseen possibilities for your business.
Predicting the next geography for growth
Predicting which are the emerging markets for your business based on patterns will help you be ahead of the curve and carry out expansions wisely.
Post COVID, let’s say a user comes back to the e-comm site, and he may not want to buy something necessarily but if you do not show the most relevant recommendations to him, the chances of him coming back soon, will diminish significantly. And it becomes a scenario like out of sight, out of mind.
Just for this simple reason, I believe the science of A.I. can really make a difference to the E-commerce business during this pandemic.