How Generative AI Can Create More Value for Retailers
Most business leaders now understand that the new class of generative artificial intelligence tools will have an impact on their business. But not everyone has internalized the underlying financial reason why the competitive landscape will rapidly change around them, which is this: there’s no longer a need for the trade-off between quality, cost and speed.
Generally speaking, increasing quality has traditionally meant increasing cost or increasing time spent. In the retail context, if you wanted every product image on your website to look better, a lot more money needed to be spent on photographers, studios and image editing. If you wanted every VIP customer to receive a personalized note from an associate or stylist, budget would need to be opened up. If you wanted rich, vivid and more detailed product descriptions in multiple languages, it would take many months and more headcount.
Now, for the first time ever, retailers can easily tap into the power of AI to improve the quality of everything — content, imagery, workflows, analytics — while simultaneously dramatically reducing both cost and speed to market. The one thing every business leader should be focused on for the next six months to 12 months is how they can immediately harness this unprecedented moment to put ChatGPT and other large language models to work for them. Retailers especially should start experimenting with generative AI to learn how it can immediately improve the shopping experience with higher quality product description pages, social media and email marketing content.
Using AI tools to make search more productive or suggest more on-brand products or bundles can be a game changer. Brands and retailers can also improve their bottom lines by putting AI to work to create a more engaging experience for the consumer. A few suggestions include:
- Develop more sophisticated ways to upsell and cross-sell. In addition to greatly enhancing imagery and product descriptions, AI can create unique ways to upsell and cross-sell products that drive perceived value for consumers. Retailers can use AI to bundle items like complementary accessories or shoes to show versatility, which will also improve average order value. Customers can be presented with different product descriptions based upon the ZIP code where they're logged in from to present hyper-relevant “in the moment” products like rain boots, winter coats or swimwear.
- Drive loyalty with incremental improvements. A pitfall with AI is being too general. For instance, setting out to “drive loyalty” with AI is too generic. Focusing on specific tactics to improve the user experience will lead to greater relevancy throughout the shopping journey, which in turn will create trust with the shopper and ultimately drive loyalty. A great example of this would be finding all the synonyms that a customer may use to find your products when they're searching online. This task would have been considered too time consuming for many e-commerce teams, yet with ChatGPT it can be done much faster, cheaper and better than ever before. Using the technology to make it easy for shoppers to find what they're looking for will correlate to higher conversions and, in the long run, greater loyalty.
- Access and leverage first-party data. By using certain AI technologies, retailers can access rich first-party data that can provide a deeper understanding of consumer shopping behaviors. This will allow for greater localization and customization as well as the ability to offer more relevant experiences.
- Offload excess inventory. AI-powered product recommendations can also give retailers a leg up when it comes to sell-through on an overbought situation. Product recommendations can be programmed to offer higher inventory items along with key seasonal trend pieces or best-sellers.
- Make better buying decisions. A deeper understanding of what customers are looking for is the actionable data buyers and merchandisers need. Knowing how shoppers bundle their purchases and how often they purchase a coordinating item allows merchants to improve their overall assortment, leading to higher conversion rates, greater average order value, and better margins.
Rohan Deuskar is the founder and CEO of Stylitics, an AI-powered platform that delivers automated styling and bundling solutions for global retailers.
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