AI-powered tools will impact every aspect of a retailer’s business. In the long term, these tools will be the catalyst that drives transformative growth in the eCommerce sector.
Leadership in the eCommerce industry requires more than just keeping pace with competitors; it’s about actively driving innovation. AI has established itself as a game-changing technology for eCommerce service providers, particularly when it comes to operational advancement, elevated customer experiences, and simplified business management.
Forward-thinking retailers are using AI-powered solutions to enable profitable growth. For example, tools that improve operational efficiencies help reduce costs, which positively impacts profit margin. Similarly, tools that automate routine tasks that would otherwise require human involvement provide the opportunity to scale rapidly without adding headcount or taxing the business infrastructure.
The use cases for AI technology abound, including inventory management, warehouse optimization, customer service improvements, and more. Retailers implementing these tools are already reaping the transformative benefits that only AI can deliver.
Eliminate Operational Drag
Predictive AI helps retailers forecast demand more accurately. Along with historical sales data, additional variables that impact demand can be considered to develop a more accurate demand forecast. Variables like seasonality, promotions, product & location attributes, holidays, events, and weather patterns can be used to enrich the underlying historical data.
ML-based models can be used to optimize inventory levels to avoid overstocking or understocking and lower inventory carrying costs. An ML model can recommend optimum levels of safety stock — either to lower safety stock and expose more inventory for potential sales or to maintain higher levels of safety stock to prevent out-of-stock scenarios. Retailers can use AI to avoid markdowns. Looking at sell-through for an item across multiple locations, orders can be redirected to locations that fall below a sell-through threshold to prevent the item from going into markdown later. Using these capabilities, companies achieve faster inventory turnover while minimizing waste and markdowns, which improves profitability.
AI models can look at patterns to analyze real-time inventory data across multiple fulfillment centers and determine which facility is best suited to handle an order based on a multitude of factors: inventory availability, fulfillment constraints (processing capacity), geographic location considerations (distance between fulfillment center and customer’s location), carrier availability, shipping method preferences, cost to fulfill to name a few. Optimizing fulfillment efficiencies helps retailers reduce costs and gain a competitive advantage by delivering a superior customer experience.
See also: The Potential of Generative AI in Retail for Informed Decision Making
Automate Warehouse Management
Retailers that use AI-powered tools to systematize picking and packing are significantly reducing the time it takes to fulfill orders. By automating repetitive tasks such as removing items from shelves and packing them into boxes, warehouses can handle higher order volumes without proportional increases in labor costs.
With the help of AI-powered autonomous mobile robots (AMRs), items move quickly across various areas of the warehouse, which reduces order processing times and enables faster shipping and delivery to customers. Because automated systems are more accurate than manual processes, the likelihood of shipping errors, mistakes, and unhappy customers is significantly reduced.
AMRs are also trained to optimize the use of available space by eliminating the need for fixed conveyors and aisles, which allows for denser storage configurations that maximize warehouse capacity. These robots easily adapt to peak periods and fluctuations in order volume without manual involvement.
These technologies also lower the risk of workplace injuries related to manual labor, such as heavy lifting and repetitive motion. In addition to creating a safer working environment for warehouse staff, AI-powered solutions can generate data on warehouse operations, such as processing time, inventory levels, and throughput rates; retailers can study these data to identify opportunities for improvement.
Modernize Customer Service
Many retailers have implemented AI-powered solutions to uplevel their customer service capabilities. For example, chatbots utilize natural language processing (NLP) to understand and interpret customer inquiries, requests, and complaints. Chatbots can often handle routine interactions without involving humans because they’re available 24/7 and equipped with a database of predefined responses to frequently asked questions (FAQs).
For customers who want a self-service experience, many eCommerce platforms offer access to portals where they can find answers to common questions, track orders, initiate returns, and manage their accounts independently. For those who prefer communicating via email, AI-powered tools can analyze and categorize inquiries, generate responses, and escalate to customer service representatives when needed.
Ensure Inventory Availability Across Business Segments
Segmenting inventory is a key strategy to ensure that each business segment has adequate inventory to fulfill orders. However, this is challenging, especially if you have multiple criteria you want to segment by – channel, fulfillment type, customer tier, etc. For example, you may want to ensure that your Loyalty customers who select BOPIS get their items readily while also ensuring that you are serving regular customers who want the items shipped.
AI methods can help set the right segmentation at a granular individual item level or at aggregate levels of Categories and Locations. Using machine learning, you can use historical data, sales patterns, customer trends, etc., to recommend the right segmentation for your business. By segmenting accurately, you can ensure availability across segments, leading to higher customer satisfaction.
Achieve Operational Excellence and Transformative Growth
AI-powered tools will impact every aspect of a retailer’s business.
Predictive AI will take the guesswork out of demand forecasting, inventory management, pricing optimization, and fulfillment logistics. Automated warehouse management will unburden warehouse staff from manual picking and packing and the risk of injury while accelerating order fulfillment and delivery timelines. Always-on access to customer service resources increases conversion and customer satisfaction while reducing the limitations associated with reliance on human agents.
In the long term, these tools will be the catalyst that drives transformative growth in the eCommerce sector.
