Retail is becoming more sophisticated. Industry experience is great, but if businesses want to keep up with Amazon, Walmart, and other retail kings, their strategies need to keep up with the market.
Though the issues facing retailers may be complex, the solution is simple: implement machine-learning where human labor often falls short. But how exactly can AI help your business survive and thrive in the modern market? In what ways can retailers implement AI into their current framework, and do so without making drastic changes in their overall structure?
Companies have more data than ever. They also have less time to collect, analyze and react to said data. Considering this, it’s no surprise that artificial intelligence can prove to be a promising solution for many of the issues retailers face.
Machine learning can take data analysis to a whole new level. Using massive amounts of product and pricing data, advanced algorithms can effectively “learn” various patterns it finds regarding products, their prices and sales. Through running countless simulations, it can find patterns even the most experienced product teams cannot manage to catch.
Even within the first few months, machine-learning can easily outperform traditional pricing methods. But it gets better – over time, as more data is collected and processed, AI continues to become more fine-tuned to your business and can provide impressively accurate price recommendations, forecasts, etc. as time goes on.
Current software that deals with product and pricing data within retail is rule-based and typically can only look at individual products. This raises a few concerns regarding their results.
Firstly, price elasticity can often be underestimated using these methods. Price may be only one variable to consider, but changing the price on a product can have several effects that are hard to observe with such a narrow viewpoint.
Secondly, considering only individual items during price analysis and optimization ignores the impact price changes can have on the rest of your company’s product portfolio. Using these simplistic methods, factors such as price cannibalization and the so-called halo effect can go unnoticed, and opportunities for increased profits go with them.
Using these simplistic methods, factors such as price cannibalization and the so-called halo effect can go unnoticed, and opportunities for increased profits go with them.
Large, successful ecommerce companies such as Amazon have been utilizing AI in their business strategy to outperform their competitors, and you can too.
Machine-learning is powerful enough to deal with all of these intricacies within your retail company’s pricing strategy and more. It can give your company the most complete overview of your products, the relationships between their prices and sales, and give you the best price recommendations which consider factors that entire teams of experts could never have dreamed of analyzing in the first place.
Unlike simplistic software or meticulous spreadsheets, AI can answer the “how,” “what,” and “why” for your product sales and prices in order to maximize profits and minimize risk. It is with this futuristic power that companies like Amazon have remained one step ahead of the competition for years.
Machine-learning can easily and effectively be utilized by any retailer to optimize the following business processes:
But this is only the start. As a retailer, you can expect AI to revolutionize the industry with tools like sales forecasting in the near future. In regards to machine learning, the future holds endless possibilities in the retail industry.
You don’t have to take our word for it - AI is revolutionizing retail, and the numbers can prove it. Just take a look at a few companies who have utilized AI to not only survive, but also thrive in the retail market before others thought to do so:
The aforementioned companies have already begun to utilize the powers of machine learning in retail before all others, and came out on top of the market because of it. Using AI in your business’ pricing strategy is the wisest investment your company could make to remain competitive in the future. If you want to be confident in every price your company offers and avoid risky decisions, AI is the way to go.
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