It's called artificial intelligence, or AI, when software programs learn to perform complex tasks without human oversight. It's changing how we shop and the future of retailing.
You already see it working on your computer and mobile devices when ads pop up for things you're thinking about buying, and you wonder... How did "they" know?
That's AI working to make your shopping easy and often, if not mindless.
Here's how AI is influencing your shopping habits, changing the nature of retailing, and killing off some of your favorite stores and brands...
The Robots Are Already Here
E-commerce, the digital assault on traditional bricks and mortar stores, isn't just winning battle after battle in the war for shoppers' attention and spending. It's changed the battlefield and the weapons being deployed to cut open consumers' pocketbooks and wallets.
Digital platforms are, as I've said before, Trojan Horses. They unleash their AI algorithms on everyone's computers, laptops, and smart phones. The e-commerce frontier, in the battle for consumer spending, is what makes the application of AI possible.
Every digital retailer, whatever they're selling (or if they're trying to sell everything, looking at you, Amazon.com Inc. [Nasdaq: AMZN]), is employing some form of AI. Or they're about to, because they have to.
In fact, several recent experiments and announcements underscore the AI trend in e-commerce.
Pinterest recently launched Pinterest Lens, which, according to Time magazine, is "a Shazam-like service that conducts visual searches based on items in the everyday world." The service lets the user take a picture of an item which Lens then helps them find online.
Lens is Pinterest's next-generation innovation based on its Related Pins and Guided Search, which are themselves based on the premise that shoppers may not know what they're looking for until they see it.
Time quotes Andrew Zhai, an engineer working on Pinterest's visual search engine, saying, "For shopping specifically, improvements to online discovery means new ways to find products you're interested in but may not have the words for; visual discovery gives people a way to discover new brands and ways of styling that they never knew existed."
Gilt, another e-commerce trendsetter, deploys visual search for similar items of clothing with different features like a longer sleeve or a different cut.
Etsy Inc. (Nasdaq: ETSY) uses Blackbird Technologies, which it bought in 2016, to apply image-recognition and natural-language processing to its search functionality.
Basically, AI learns from consumers' past behaviors and their searches, as well as trial and error, to learn how to present ads and products that stimulate buying.
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What the Industry's Leaders Say About AI
At a panel discussion in May at the Internet Association's annual gala in Washington, D.C., Jeff Bezos, Amazon's founder and guiding genius, said these illuminating words...
"It is a renaissance, it is a golden age, [and] we are solving problems with machine learning and artificial intelligence that were in the realm of science fiction for the last several decades. Natural language understanding, machine vision problems, it really is an amazing renaissance... At Amazon, some of the things we're doing are superficially obvious, and they're interesting, and they're cool. And you should pay attention. I'm thinking of things like Alexa and Echo, our voice assistant, I'm thinking about our autonomous Prime Air delivery drones. Those things use a tremendous amount of machine learning, machine vision systems, natural language understanding and a bunch of other techniques. But those are kind of the showy ones. I would say, a lot of the value that we're getting from machine learning is actually happening beneath the surface. It is things like improved search results. Improved product recommendations for customers. Improved forecasting for inventory management. Literally hundreds of other things beneath the surface. The most exciting thing that I think we're working on in machine learning, is that we are determined, through Amazon Web Services - where we have all these customers who are corporations and software developers - to make these advanced techniques accessible to every organization, even if they don't have the current class of expertise that's required."
Bezos' Amazon is at the forefront of using AI and machine learning in digital retailing, but it certainly isn't the only player in the game.
Google CEO Sundar Pichai gave us some retail insights following Alphabet Inc.'s (Nasdaq: GOOGL) recent earnings release and discussion with financial analysts, giving us a window into Google's AI retailing push.
Pichai, speaking about AI, said...
"We've increased our investment in machine learning in our advertising business with efforts like Smart Bidding, where our systems predict the performance of an ad, and adjust advertisers' bids in real time to maximize their results... Mobile has transformed the shopping experience. In the past year, local shopping queries have increased by 45% and the number of retailers that provide us with their local inventory feeds has doubled."
Retailers are partnering with Google as an ad-serving platform and increasingly as a demand-generation and revenue driver. Which means more retailers are sharing more data with Google, which improves AI and machine learning at Google and for retailers.
According to GeekWire, in reply to an analyst question about innovation in retail search for shoppers, Pichai said, "When we see what users are looking for in mobile and how shopping is evolving, it's an area we're continuously working on... So, in some ways we are developing deeper partnerships with retailers around the world."
So, when you see an ad pop up on your computer or smartphone, you'll know it's the work of the AI robots and machine-learning bots mining your every digital click.
Are they making shopping mindless? Maybe.
But there's no maybe about the enormity of their impact on retailing.
AI's here and now, and it's the future of retailing. Without it, retailers are going to die off like dinosaurs after the meteor.
The new retail-killer meteors are AI and machine learning. They're destroying companies and brands every day, and we're all over the winners... and especially the losers.
We're not just pointing out the losers; we're making a ton of money on their implosion.
Soon, I'll show you exactly how.
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The post AI Is Killing Retailers and Giving Life to Mindless Shopping appeared first on Wall Street Insights & Indictments.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.