The rise of the machine’s impact on retailers and their supply chains
Alexa, Cortana, Home Pod, Google Home, Siri, and the Dash Buttons are new and emerging formats allowing the consumer to interact, see, and purchase goods. Our phones, tablets, or laptops are no longer the only gateways to ecommerce, we are now in the age of voice commerce.
Expect to see an increased amount of electronics to have embedded intelligence. Sonos, a wireless speaker manufacturer, has partnered with Amazon to embed Alexa into their Sonos One speakers. Smart televisions such as LG and Samsung, as well as cable providers such as Xfinity have voice command friendly remote controls. It isn’t a big leap to ask your television to find the latest episode of Fixer Upper or what the score of the 49ers game to being able to order products. Even our cars have digital assistants that help us navigate the treacherous Washington DC rush hour, when will they be able to order us DoorDash when we are still in traffic so that the meal arrives once we get home?
So, what does this trend predict for the future of retail?
- A new game of product placement. Harvard Business Review (HBR) recently published a fantastic article that tackles the new world that digital assistants present to marketers. When you can simply ask your Alexa “order AA batteries,” which brand will the digital assistant order for you? In the case of Alexa, most likely Amazon’s own private label batteries. When businesses were dependent on the yellow pages (remember those!) for their customers to find them, you wanted to be the top of the list. You would call yourself AAA plumbers or AAA tailor… In the world of digital assistants, your AAA needs to be AI proof to get you to the top of the digital list. As HBR points out, as we start asking our digital assistants not for laundry detergent but for “how do I clean wine stains,” if P&G or Unilever has a savvier AI engine it can elevate itself in the eyes of the shopping bot. With the increase usage of digital assistants to help us with our buying behavior, better AI will play a bigger role in getting better placements.
- Contextual intelligence the key to selling. Speaking of better placement… Retailers and consumer brand companies will have to ramp up their contextual assets associated with their products. Simple descriptions of ingredients or materials will not suffice. They will have to provide rich and relevant context for the AI engines to better match the products with consumers. To take the example of the wine stains – once the question is asked of Google Home, the cleaning brand with the best solution might be the one that gets the most hits and conversions. Is the customer asking more likely to opt for an organic solution? Is the customer a repeat offender, maybe needs a cleaner but also stain resistant fabrics for future purchases? Retailers and brands must engage with assets that understand what consumers are looking for when they ask such open-ended questions, what are the values the consumers seek and how do I best respond to them?
- Your supply chain just got smarter. As these digital assistants become more pervasive they also extend the reach of your supply chain. How so? One area that has always been a black hole for supply chain professionals is around when the demand signals are generated. Yes, we know when someone makes a transaction, the moment of truth for the retail supply chain. Is the product there? But what if supply chains could get a better head start on this moment of truth? Imagine a supply chain being able to anticipate the need for a product, when a consumer starts querying their digital assistant. When our consumer starts asking their digital assistant to help get wine stains out, the supply chain can begin acting, if this consumer will need a cleaning agent, maybe even a replacement for that stained item. Consumers leaning more on their digital assistants to help in their everyday lives, will provide data for the supply chain about possible demand.
- Greater information…with greater responsibility. A major underlying issue with the rise of the machines…is the ever growing gathering and usage of data. Consumer data, much of which will be generated within the privacy of the consumer’s home. We have all seen the examples of consumers’ data being compromised: Equifax, Sony Playstation Network, Target and most recently Facebook. All these events remind us that when we are dealing with consumer’s data we create a target rich environment for abuses. Retailers and brands need to be hyper sensitive to this potential risk. How do they balance the desire to mine the mountains of data to provide the contextual solutions to the individual query, while ensuring that data does not get compromised? Retailers and brands must determine what that fine line is that they are not willing to cross. Savvy firms will think long and hard about this, determine what their rules of engagement are and make it transparent to their customers.
The growth of voice commerce is another example of retail continuing to reduce friction for the consumer. Whether it was one click shopping, faster fulfillment times, picking up product in lockers or in the trunk of your car, the consumer continues to seek easier ways to access retail. Voice commerce is yet another step in the process. As we leverage increasingly sophisticated technology to make the shopping experience that much easier for the customer, we must be aware of the possible unintended consequences we subject our customers to.