Product recommendation through artificial intelligence: paradigm shift in retailing

"The Internet will overrun everything with e-commerce and brick-and-mortar retail is doomed!" Even if this nightmare scenario doesn't become a reality, there has been quite a disparity between analog retail and online shopping on the web. However, modern software and digital tools are not only something that benefits e-commerce. Stationary retail can also improve, for example, through the Use of artificial intelligence oppose the apparent superiority from the network and be successful themselves.

11/15/2021, Cleverbon

In the meantime, it may be somewhat reminiscent of the story of David against Goliath when you consider the competition or rather the battle between stationary retail and online retail. Online retail comes along as a shining giant in a billowing robe. It is new and what is new is cool and therefore automatically better. And while brick-and-mortar retail has only a handful of marketing pieces to show for it, e-commerce has an arsenal of tools at its disposal. The customer journey is set up in the blink of an eye, Big Data evaluated by mouse click and POS Marketing a cinch. But perhaps the dealers will take a deep breath before they throw in the towel, or rather the slingshot. 

Stationary trade can keep up

Because brick-and-mortar retail is by no means as without a chance as it appears or is repeatedly claimed to be. The service quality through personal contact, trying (on) the articles on site, the shopping experience in the group, ... all these are things that online retail cannot compete with. Even short-term or spontaneous needs can be met by the digital point of sale despite ever shorter delivery times. In addition, not everything that online retail uses is reserved for it alone; digitization can (and absolutely should) be applied by brick-and-mortar retail as well. For example Artificial Intelligence (AI) not only in the digital world. Stationary trade can also benefit from the advantages of AI-powered content to make it their own. And if he can do that, he'll be able to catch up with the lead that online retailers seem to have.

The same advantages as online shopping

Like many other measures, such as Click & Collect or Geo-Marketing, also beats the Product recommendation via artificial intelligence up the notch of Digitisation of the retail trade. The self-learning algorithms recognize in the background, which products were bought conspicuously often in combination and give personalized product recommendations out. If, for example, a customer combines a pair of blue trousers with a white blouse with striking frequency, or if a customer who buys a black jacket also ends up with a red tie in his or her shopping cart, the suggestion is sent directly to his or her smartphone after the purchase is completed. The application is not limited to the textile industry. The technology, known in English as Artificial Intelligence (AI), can also be used in furniture stores, opticians or in the service sector. Even a bakery can show its own customers what is often combined with a certain baked good. Would you like another nut bun after the sausage roll? The suggestion function at Amazon, Zalando and Co. works according to the same principle. Admittedly: The method is particularly effective if you have your own online shop, to which you can forward the customer directly. But even if you are not quite so digitized, the principle works. The customer is directly at the point of sale, is in the mood to buy and is happy about the suggestion.

Machine learning - making life easier for yourself

The use of AI-based Information is by no means a new principle, but it is still at the beginning of its possibilities. Already since the 50s there have been first attempts to make the technology usable. Today, when data is considered to be the fuel of the digital age, this is also being tried as a machine learning This is the well-known principle of reproducing human-like perception and decision-making structures and "learning" from past experience. Navigation systems, for example, have been using this technology for several years, and Alexa and Siri have also been interacting with their users for some time. Online retail has been playing a targeted role for a long time. personalized Product recommendations with AI off. Why should traditional retail miss out on this opportunity?

Beating e-commerce with its own weapons

The mode of operation for Product recommendations via AI is pleasantly uncomplicated: The AI Technology in the background analyzes and evaluates past sales of the company. So that the use of AI in the retail trade, it is referred to the available data from their own cash register system. Of course, this is done anonymously and without any problems in terms of data protection. This does not even require an electronic cash register, as the receipts can also be entered manually into the system - which of course becomes difficult as the size of the company increases. Larger companies that already have a certain degree of digitalization and an electronic cash register transfer the data basis for Product recommendations through Artificial Intelligence automatically into the system via interfaces. The algorithm in the background then issues the respective suggestions to the target group directly when a corresponding product is purchased - based precisely on their purchasing behavior. 

The starting position is clear, the retail trade must do something to be able to survive against the competition from the Internet. Of course, this is not easy and cannot be implemented overnight, but there is no alternative. And in very few cases is it possible without digitalization. The good thing is that there are ways and means to counter the seemingly invincible giant that is e-commerce. Product recommendations through artificial intelligence software seems to be the weapon with which this succeeds. In the end, the underdog won the duel between David and Goliath. All that was needed was the right weapon...

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