Artificial Intelligence (AI) is going through an accelerated period of innovation and adoption. According to the PwC, AI will contribute as much as $15.7 trillion to the global economy by 2035.
Much of the value will come from increased productivity (as business processes get automated), new innovations, and highly personalized quality goods.
Most of us have already had some experience with AI. For example, if you’ve shopped on Amazon before, your next purchase decision will be heavily influenced by AI. The same is true when Netflix makes movie recommendations.
Whenever you order a ride on Uber, AI location algorithms kick in to quickly find a car in your vicinity. If you’re planning a vacation and start seeing holiday deals in your Facebook feed, again, that’s AI working in the background monitoring your online activity.
The examples above are just scratching the surface of AI’s true potential. In fact, these same algorithms can be used to make better business predictions and decisions.
When it comes to wholesale and retail, AI has the potential to generate $2.2 trillion in additional value by 2035. This will be achieved by leveraging AI to streamline inventory, automate warehouse management, and to provide highly immersive and engaging shopping experiences.
So how can AI help you increase sales, streamline business operations, and engage your customers? Let’s take a look.
1. Smart Forecasting
With the support of AI technologies, sales managers will be able to better predict sales figures for each quarter. When these forecasts become highly accurate, there will be less room for waste.
Knowing what kind of revenue you can expect to generate over the next quarter will also help the businesses make better decisions when it comes to operations and managing resources.
2. Leverage Data to Negate Bad Product Cycles
In the same vein, AI can also be used to ascertain what the market demands at any given time. When brands engage in this activity, they will avert bad product cycles and the realities of discounting inventory (just to get rid of it).
Fast-fashion retailers like H&M have incorporated AI into business operations because the stakes are high and it can be tough to recover from bad purchase decisions. By using AI and big data analytics, the company hopes to facilitate trend detection, set prices, better manage inventory, and build a fast and flexible supply chain.
3. Price Optimization
When it comes to pricing, it can be tricky when you try to figure out what you should discount and by how much. In other words, you want to make a sale, but you don’t want to give up too much money. Making these decisions have been notoriously difficult for retail sales managers, but not anymore.
Today, an algorithm can do the job for you and do it much better. AI can now help you identify that sweet spot when it comes to the ideal discount rate. This will be based on exploring specific features from past sales that were both successful and unsuccessful.
These features can include the following:
- Annual revenues
- Number of competitors
- Product specification and compliance
- Type of industry
4. Up-Selling and Cross-Selling
Over the decades, retailers have learned that quickest and most economical way to improve top-line revenue is to sell more products to existing customers. However, it’s not always easy when it comes to figuring out who would be likely to buy more.
Sometimes this leads to wasting money targeting the wrong customer. But with the help of AI, retailers will have a cost-effective solution to successfully up-sell and cross-sell to existing customers and increase revenue.
At present, there’s a shift taking place from e-commerce to m-commerce. You can expect AI to be at the core of m-commerce as this segment evolves rapidly to provide enhanced customer experiences.
However, this doesn’t mean the end of brick-and-mortar stores. Instead, retailers will strive to come to terms with emerging technologies like augmented reality and the internet of things to deliver highly engaging, immersive, and personalized shopping experiences.
As retail gets disrupted by AI, the challenges for businesses, however, will remain the same. This means that they will still need to find new ways to grow their revenue, expand market share, cut costs, and reduce risks.
The only difference will be the fact that all future decisions will be made with the help of data analytics and AI. As a result, in the near future, only the companies that are quick to leverage data with the support of AI will remain relevant.