Operations
20 May 2022
4 technologies that could reshape retail operations
With pilots, companies are exploring biometric payments, robot delivery and smart carts.
With pilots, companies are exploring biometric payments, robot delivery and smart carts.
Welcome to Near Future. In this weekly feature, The Current spotlights innovations powering the next wave of commerce.
If new pilots from tech companies and retailers prove to scale, items will be delivered by robots, we’ll pay with a smile and collect coupons with voice controls.
Here’s a look at the latest emerging technologies being tested this week:
Serve's robot is in LA. (Handout photo)
Uber Eats is working to become the go-to delivery platform for local commerce. A pair of pilots launched by the company in Los Angeles this week indicate that it doesn’t intend for its nearby delivery won’t be human-powered.
In one pilot, Uber is working with Motional on autonomous food deliveries in Santa Monica. Motional, which is joint venture of the AV company Aptiv and Hyundai Motors, makes electric vehicles, outfitted its IONIQ 5 vehicles specifically for commercial delivery for the first time. It comes after testing that included learning every touchpoint between a customer and restaurant.
Here’s how it works, per a news release:
Participating merchants will receive a notification when the AV arrives, meet the vehicle at the designated pick-up location, and place the order in a specially-designed compartment in the backseat. Upon arrival at the drop-off location, the customer will receive an alert, securely unlock the vehicle door via the Uber Eats app, and collect their order from the backseat.
Uber is also testing delivery with Serve Robotics, a sidewalk delivery company. According to TechCrunch, the pilot will complete shorter trips in West Hollywood. Serve Robotics was originally the robotics division of Postmates, then spun out of Uber.
These being pilots, the companies will be seeking feedback, and looking to learn. They’re also looking to lay the groundwork for future work together.
In a third partnership for Uber that extends its work in the grocery area, Grocery Outlet will offer on-demand and scheduled grocery delivery at 72 stores on the West Coast. Uber launched grocery delivery in 2020, expanding into the same terrain as Instacart and other rapid delivery services. CEO Dara Khosrowshahi said in April that the company is looking to work with grocers to set up the service in a "capital light way."
"We are excited about the long-term potential of our eCommerce initiative at Grocery Outlet and this new partnership with Uber," said RJ Sheedy, President of Grocery Outlet, in a statement. "We think it's important to make our great-value products available across another platform and to a greater audience, introducing Grocery Outlet to customers who may not have shopped with us before."
A new feature that debuted on Amazon’s Alexa is combining coupons with voice tech.
Alexa Shopping List Savings allows users to add grocery items that receive a rebate to a shopping list. Once shopping is complete, users can scan receipts from stores where they purchased the item. Alexa then rewards cashback in the form of a digital gift card based on the purchases made.
In other Alexa news, Amazon added a feature that notifies Prime members when an item in their cart, wish list or save for later list are going live. It sends the alert up to 24 hours in advance of the deal, and users can either opt to have Alexa make the purchase, or send a second notification once it is live.
It's two more steps toward enabling voice-assisted shopping.
Making payments easier will be in focus as the internet comes to the store, and this week brought a new advance that truly seems to be from the future.
Mastercard is rolling a system that applies the technology behind facial recognition and fingerprint-unlock on a mobile phone to in-store checkout.
The Mastercard’s Biometric Checkout Program allows shoppers to pay for an item by simply smiling or waving their hand over a reader. Users must enroll to access the benefits of the program. For merchants, Mastercard touts benefits including faster checkout times, as well as the ability to integrate with loyalty programs, and personalization. It is working with EC, Payface, Aurus, PaybyFace, PopID and Fujitsu Limited on the effort.
The technology is currently being piloted in Brazil, with upcoming test runs being planned in the Middle East and Asia. With a launch this week, Mastercard said it is rolling out a set of standards that banks, tech companies and merchants adhere to.
Mastercard cited a study from Idemia that showed 74% of consumers have a positive attitude toward biometrics.
(Image via Veeve)
Not to be outdone, a grocery-focused pilot wants to forego the line altogether.
Self-checkout is coming straight to the grocery cart at Albertsons. Veeve, a startup that was founded by ex-Amazon engineers, is rolling out AI-powered carts that use computer vision to ID products when they are placed in a cart, and can also weigh produce.
Items are displayed on a touchscreen that keeps a running total of customers’ items. In turn, the screen can integrate with loyalty programs, and ad networks. According to Veeve’s website, it can also give turn-by-turn directions to an item in the store.
It’s all part of creating a personalized shopping experience, and one is that is connected across different digital and offline channels.
“This deployment is an important and inevitable next step in connecting the consumer’s ecommerce activity with a totally new, digitally driven in-store shopping experience,” said Shariq Siddiqui, Veeve’s cofounder and CEO, in a statement. “Working with Albertsons Cos., we are building a link between multiple consumer channels and the brands they trust while keeping customer loyalty central to the experience.”
Given these advances, it's not hard to picture a future where the shopping cart is filled both physically and digitally.
"Fashion ecommerce is one of the most cumbersome customer experiences that exists," said Rent the Runway CEO Jennifer Hyman.
The rise of generative AI is bringing with it a groundswell of interest and concern about how the capability to automatically synthesize information and create something new will change how we work.
Given that AI will sit within the architecture of our digital lives, it’s also worth considering how the technology will introduce new tools for other aspects of life, as well.
For two ecommerce innovators in the apparel space, it’s a time to explore how it will transform shopping. Rent the Runway is set to roll out new AI-powered search capabilities, while Stitch Fix is drawing on a long history with data science and machine learning to personalize the inventory buying process.
Here’s a look at the initiatives underway at each company, and their visions for the future:
Rent the Runway is putting a focus on the customer experience this year as it seeks to retain more subscribers and continue a yearslong push toward profitability.
This is resulting in the introduction of a variety of new initiatives, from the addition of an extra item to all orders to speeding up page load times. Yet as CEO Jennifer Hyman zooms out, she sees change being necessary on an industry-wide level in fashion. Beyond adding new features, AI can play a transformational role.
“I think that fashion ecommerce is one of the most cumbersome customer experiences that exists. You are searching through pages and pages and pages of content to find the items that you like and no one likes doing this,” Hyman told analysts on the company’s earnings call this week. “As an industry that still is selling physical products, AI is going to be -- fashion is going to be a major beneficiary as an industry.”
As a rental service, Rent the Runway has a distinct niche in fashion that lends itself to AI’s advantages, Hyman said. As opposed to a retailer that a consumer may visit a couple of times a year, RTR is used frequently by customers. So Hyman said there are opportunities to turn Rent the Runway into a “utility” by creating a more seamless experience.
This frequent use also provides a “highly unique” dataset, Hyman said. They know what a customer is planning to do based on what they rented. They know whether she liked or disliked an item, and many customers are reviewing 10 items per month. They know her size and how an item fits. This can be put to work in tools that allow customers to ask questions, and find answers.
The first application that combines AI and these advantages will appear in the coming weeks, when Rent the Runway plans to launch a beta of AI-driven search. The tool will allow customers to search for common terms or use cases for an item. So a person will be able to write “Miami vibe,” “‘clambake in Nantucket,” or “tropical motifs,” and receive results about what to wear for such an occasion.
The goal is to help customers sift through the endless aisle, and instantly finds what's right for them.
“I think that across all fashion sites, all over the world, the way that people are searching for product is fairly vanilla, it's fairly functional, right?" Hyman said. "You can go to a site and search for a T-shirt, you can go to a site and search for a black-tie gown. The fact that we're going to be able to enable our customers to search how they actually want to use this closet in the cloud, to search for items to wear to my beach bonfire this weekend, that is a completely different way to search, and I think that it really brings out the value proposition of what a closet in the cloud is all about."
Hyman sees this as a first step in the company using AI models to improve the product experience, and expects more tools to appear in the coming months. RTR is also introducing an SMS concierge experience for onboarding that allows customers to text with a member of the customer service team. The company is already exploring ways that AI can be incorporated into that tool, as well.
In the longer term, Hyman said the company has a vision that will leverage AI to allow customers to communicate with Rent the Runway asynchronously across different modalities, and have a stylist that is constantly available to recommend items, pick out new inventory and answer questions.
“If we are utilizing AI appropriately over the next few years, I see no reason why someone even has to come to our website,” Hyman said.
Stitch Fix has long married AI with human curation to provide outfits on a subscription basis.
“For years, we have utilized capabilities in generative AI, injecting scores and language into our personalization engines and, more recently, automatically generated product descriptions,” CEO Katrina Lake told analysts. “We have also developed and implemented more advanced proprietary tools such as outfit generation and personalized style recommendations that create a unique and exciting experience we believe is unmatched in the market.”
A new area where the company is applying AI is inventory buying.
“We have historically utilized a number of tools to make data-informed decisions with our inventory purchases,” Lake said. “Now, directly leveraging our personalization algorithms, we have developed a new tool that creates an exciting paradigm shift, which will utilize math scores at the client level to drive company-level buying actions. We expect the clarity of demand signals at the individual client level to drive more proactive and efficient inventory decisions as a company. And because of this, we expect to see higher success rates on fixes and drive increases in keep rates and [average order value] over time.”
Early results are promising. When compared with existing buying tools, testing showed a 10% lift in keep rate and AOV. By the end of this quarter, Stitch Fix expects 20% of all purchase orders to be algorithmically informed.
With experience using AI and a team in place to build, Stitch Fix is investing in the technology. Like Rent the Runway, it also has a unique dataset that offers an immediate advantage.
Here are Lake’s thoughts about how Stitch Fix’s AI strategy:
One of the things that I love about our experience is that we have generative AI that's really in more of a visual format. And so, the outfits that we have in our app, those are actually taking into account your preferences, what we know about you, and then in combination with what we know that you own in your closet. And to be able to kind of continue to push that technology and to be able to continue to give people more value in their experience with Stitch Fix, that's a really good example of, I think, a capability that is, firstly, really aligned with our capabilities around data and personalization and really unique to us.
And then I think it's also really compelling because I really think that pushes us as we think about what that addressable market is. I think if we can push outfits to be something that can be an asset to everybody, I think that is a universal thing that people would love to be able to have, is to have access to advice on a daily basis around what to wear and how to wear it.
While these are distinct companies, their plans lead us to a common conclusion: While the talk around generative AI might be new, many technology-forward companies already have assets sitting inside them that can be leveraged to build new tools. Uncover what’s already there, learn about the AI’s capabilities and develop a solution that's right for your organization. Then, talk to customers to determine how to improve it. It might mean commerce looks different, but that’s okay. The point is to create a better experience.