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Big Tech Companies Are Heavily Investing in AI: What Can Retailers Do to Keep Up?

Big Tech Companies Are Heavily Investing in AI What Can Retailers Do to Keep Up

Big Tech Companies Are Heavily Investing in AI What Can Retailers Do to Keep Up

As part of Solutions Review’s Contributed Content Series—a collection of articles written by industry thought leaders in maturing software categories—Sajid Mohamedy, EVP of Growth and Delivery at Nisum, delves into the ways retailers can use artificial intelligence (AI) to keep up with big tech companies.

Amazon appears to be joining the AI race with a recent announcement stating they had developed a 10-week program catering to generative AI startups worldwide. This comes from the mounting pressure that numerous big tech companies are experiencing to elucidate their strategies for leveraging the swiftly progressing AI product market. 

Founders of these startups participating in Amazon’s program will gain valuable access to AI models, tools, and optimization for their machine learning stack. Additionally, they can expect to receive personalized guidance on go-to-market strategies. Following the public launch of ChatGPT in late November, big tech industry giants such as Google, Facebook, and Microsoft have also enthusiastically proclaimed their increasing emphasis on generative AI technology.  

Retailers worth their salt will note that AI has the potential to enhance the effectiveness and performance of sales operations by automating numerous repetitive tasks, enabling sales teams to allocate more time to interact with customers and potential buyers. This has a two-pronged effect—increasing customer engagement and reducing the cost of service. By leveraging AI coupled with organization-specific data and contextual information, businesses can obtain consumer insights at a much more detailed level.  

Given that 90 percent of commercial leaders are expected to utilize generative AI solutions regularly over the next two years. Let’s dive into how retailers can use the blueprint of Amazon—and other big tech players—to improve customer experience and unlock all kinds of other benefits. 

Real-Life Examples of How Retailers Can Utilize Generative AI 

Senior thought leaders in the retail industry have highlighted the potential of generative AI in enhancing product descriptions. The recent introduction of an AI tool by Shopify aims to assist vendors and merchants in improving their product descriptions. Retailers possessing extensive proprietary data enjoy a significant competitive edge over their counterparts. Consequently, this could motivate retailers to acquire additional first-party or zero-party data. The larger and higher quality data sets provide an expanded scope for creative endeavors. 

The application of generative AI in product recommendation is another possible area for retailers to engage in. Although retailers have yet to embrace generative AI for this purpose, many industries have already started experimenting with its recommendation capabilities. For example, Expedia has revealed its beta testing of ChatGPT within its mobile app, aiming to provide personalized travel recommendations and planning assistance to users. 

These are just a couple of current use cases, but experts anticipate the emergence of additional use cases for retailers regarding generative AI. Despite the challenging venture capital environment, funding for startups driving the growth of generative AI and other AI tools remains robust. VCs have steadily renewed their interest in generative AI, from $408 million in 2018 to a whopping $4.5 billion last year. 

Factors to Bear in Mind for Success 

By now, it is clear that retailers should prioritize and implement advanced sales technologies, establish hybrid teams, and embrace hyper-personalization. However, there are some key strategies to consider when implementing generative AI into operations. Maximizing the utilization of e-commerce platforms and third-party marketplaces through analytics and AI can significantly benefit. Based on successful companies’ practices, the following recommendations can be made: 

  • Have a well-defined vision and strategy for integrating AI into operations. 
  • Allocate more than 15 percent of digital budgets towards AI-related technologies. 
  • Consider employing teams of data scientists to leverage algorithms for rapid pricing strategies and optimize marketing and sales efforts. 
  • Focus on identifying and implementing practical use cases for AI. 
  • Recognize the potential of generative AI to enhance overall operations.

By adopting these approaches, retailers can position themselves as trailblazers in their industry, harness AI to drive success, and compete with their big tech competitors.

Risk Mitigation 

Naturally, retailers need to be aware of the potential risks of generative AI. Firstly, there is a significant risk concerning the unintentional disclosure of confidential or proprietary information. As AI may use user conversations to enhance future results, there exists a possibility that confidential data might become accessible to the public or, worse yet, to competitors. Additionally, compliance with a comprehensive set of regulations outlined in the Security of Critical Infrastructure (SOCI) Act is another factor for retailers to consider. These measures are crucial to maintaining the confidentiality and security of sensitive information. 

Another critical concern regarding generative AI systems focuses on the issue of bias and fairness, particularly regarding data sets. This issue can pose significant reputational challenges for brands heavily dependent on this technology. For instance, if an image-generating tool is used with an advertising campaign containing inappropriate or offensive images that are subsequently shared globally, it could potentially damage the brand’s reputation. In these cases, attributing responsibility solely to the company’s AI system as a damage control measure might not be sufficient to appease consumer backlash. Consequently, addressing the biases and ensuring fairness within generative AI systems becomes crucial to safeguard the brand reputation and maintain positive consumer sentiment. 

Final Thoughts 

Generative AI—often accessible through cloud-based platforms and with future possibilities on the horizon—offers abundant opportunities for transformative breakthroughs for retailers. That being said, retail executives must maintain a vigilant understanding of the inherent risks present during this nascent phase of generative AI technology. By striking a balance between embracing the thrilling potential and exercising caution, retailers of all sizes and varying degrees of technological expertise can confidently navigate this evolving landscape.

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