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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.
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.