Read the BloomReach Relevance Report for a heaping helping of news and perspectives on artificial intelligence. And you'll meet Otto.
This is going to be quick. It won’t hurt a bit. If your intelligence is artificial, does that mean you’re dumb?
No question artificial intelligence is turning the retail world upside down. Every retailer and every company serving retail has either deployed significant artificial intelligence tools or has said that it has deployed significant artificial intelligence tools.
Let’s just say it’s kind of a buyer beware situation when it comes to AI these days. That said, The Economist had a very cool story about Otto, this online German everything store, that is using an algorithm designed for particle physics work to become more efficient.
Hey, next time someone tells you that retail isn’t rocket science, you tell them, “No. It’s more like particle physics.”
Anyway, Otto’s algo isn’t the sort that reshuffles product grids or directs searches to the right products. No, it actually figures out the best way to deliver stuff in order to make sure the customer doesn’t end up returning it.
As The Economist points out, the Otto machine crunches billions of transactions and hundreds of variables to predict what items people will be buying. It even orders and buys them without any human overseeing the action. (Sounds like having a teenager.)
It turns out that two of the big factors that lead to returned goods are taking more than two days to deliver an order and sending items ordered at the same time in separate batches instead of all at once.
Otto’s smarts make sure the right stuff is on hand at the right time, so goods can be shipped quickly and efficiently. It saves Otto a ton of money.
And if The Economist is right, it also gives Otto a legitimate claim to making the world a better place. The publication notes that by reducing returns, Otto is creating less packaging waste and using less fuel etc. to ship stuff back and forth.
E-commerce growth means better pay for some Speaking of making the world a better place, here comes The Wall Street Journal with a story about supply and demand. (Hey, it’s a finance-focused publication.) The continuing growth of e-commerce means a serious need for more warehouse workers, the WSJ says.
The story says that there are are nearly 1 million workers in the “warehouse and storage” sector, which includes the ginormous fulfillment centers that are popping up around the country, but more are needed.
Big retailers like Amazon, Wal-Mart Stores and others used to have little trouble attracting workers for the jobs, despite the relatively low pay and relatively hard work they came with. But with unemployment near a decade-low, the advantage has shifted to workers.
The WSJ says starting pay for the warehouse jobs is up 6 percent (to $12.15 an hour) over the past year, compared to a 2.8 percent increase in pay for all jobs, according to the Bureau of Labor Statistics.
The shortage has also meant that employers have had to treat workers better, hosting barbecues, distributing gift cards, helping with tuition and allowing for more flexible schedules, among other moves, the publication says.
The comment section under the story is host to a predictable and important discussion about whether an increase in jobs that don’t pay much and can be strenuous is actually a good thing.
And the truth is, a beginning warehouse worker, particularly one working part-time, is unlikely to be able to support a family on the pay. But as other commenters pointed out, the jobs do provide a nice opportunity for students and families seeking a second or third income.
What is AI, really?
We don’t often toot our own horn here at the BRRR, but with whole world focused on artificial intelligence (OK, a lot of the world), we think we’re practically providing a service by pointing out a couple of articles by BloomReach CMO Kevin Cochrane that help define just what artificial intelligence is, or what it should be, when it comes to marketing.
Part 1 does a nice job of putting artificial intelligence in the context of personalization, thereby bringing some clarification to two of the most misused terms in marketing today.
Part 2 looks at the deeper context that AI must operate in in order to be effective. We are particularly interested in the points regarding the need to rely on data outside the silos of any one enterprise to accomplish true learning.
Quote of the Week
“Three years ago we were extolling the virtues of buying toilet paper online, and people were looking at us like ‘that’s the stupidest idea ever.' It’s a full-on race now.” — Chieh Huang, CEO of Boxed, to The Wall Street Journal for a story about shipping bulk items.
Photos by Mike Cassidy. Illustrations courtesy of BloomReach.
Mike Cassidy is BloomReach's storyteller. Contact him at firstname.lastname@example.org; follow him on Twitter at @mikecassidy.