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High-tech updates to the retail experience

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Michael Hsieh

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Michael Hsieh is the president of Fung Capital USA.

Sometimes one must look to the past to define the future.

Once upon a time the milkman delivered milk directly to your home. The Avon and Tupperware ladies had private parties in the comfort of a neighbor’s house. The Hoover salesperson demonstrated the vacuum cleaner on your living room carpet. It was a high-touch, well-informed, personalized and customer-friendly experience. What changed all that?

The automobile. When the majority of consumers could afford a car, they discovered the freedom of driving themselves to the store to see a vast array of products and evaluate them on their own schedule. The retailer also benefitted because the consumer picked up the product and took it home, thereby eliminating their cost of last-mile delivery.

The reduction in cost was passed on to the consumer, which compensated for the elimination of high-touch customer service. This was taken to its logical conclusion by Costco and IKEA, which essentially had consumers purchase their products at its warehouse locations disguised as retail shops. Nobody complained about being the retailer’s laborer and deliveryman as long as prices were rock-bottom.

Then came Amazon. It disrupted this cozy relationship by keeping prices low while delivering the product directly to one’s home at no marginal cost for those participating in its Prime program. Now customers could enjoy even wider product selection with Amazon without having to suffer the pains of driving to the store, waiting in line and hauling the goods back home. This particularly benefitted dual-income families, where time became an increasingly more precious commodity.

But Amazon is about to be disrupted. Retailers will not stand frozen like deer caught in the headlights, and will use technology to leverage the unique assets of brick-and-mortar stores and sales associates. The key is turning idle sales associates into personal shoppers who can provide the high-touch, well-informed, personalized and customer-friendly experience of yesteryear. How is this possible? Say hello to conversational commerce and the autonomous car.

Conversational commerce enabled by messaging platforms is rapidly becoming the marketing channel of choice in China, where customers are communicating directly with retailers and brands via WeChat. When a customer browses in the store, the sales associate asks if he/she would like to get information about new collections and/or special promotions. If the customer is interested, they exchange WeChat contacts and starts the journey of one-to-one personalized engagement.

Today, this experience is primarily powered by humans, and the scope is limited to VIP customers. However, as artificial intelligence gets more sophisticated, such personalized engagement will be enabled by bots or a combination of bots and sales associates, and can be scaled to the entire customer base.

In the U.S., chat platforms, including Facebook Messenger, Kik and Slack, have opened up to help retailers and brands launch chatbots to engage with their customers. It is a one-to-one conversation providing research (product recommendations, prices, promotions, availability, etc.) and post-purchase customer service (delivery, exchange/return, usage, etc.). Because the customer opts in, enabling the retailer to access a plethora of rich and explicit purchase-intent data, the bot or the sales associate can provide valuable advice and recommendations and build a personalized and meaningful relationship with the customer.

More than 80 retailers and brands, including H&M, Sephora and Staples, have launched human-assisted chatbots on Messenger and/or Kik to provide services such as product recommendations and personalized beauty advice and, of course, the bots also facilitate transactions if the customer is ready to purchase the products. This new wave of conversational commerce has given birth to many startups, such as msg.aiConversable and Converse.ai, which focus on helping brands and retailers engage with customers on chat platforms.

Similar to Uber, which takes idle car drivers and turns them into concierge chauffeurs, conversational commerce will convert idle sales associates into personal shoppers who can convert casual browsing into purchases and build customer loyalty. Again, as AI gets better, much of the interaction can be handled by a bot, and the sales associate can focus on the niche cases and more valuable tasks, such as making sure the customer who visits the store gets full attention and truly experiences the store, and understands the value of the retailer’s chatbot and opts in.

For multichannel retailers and brands, the store is a true differentiator in this Amazon-centric world. They must leverage their unique assets of sales associates to deliver an optimal in-store experience and start a one-to-one conversation with the customer after he/she leaves the store; when AI kicks in, it becomes a natural continuation of the experience.

In the not-so-distant future, autonomous cars will enable the sales associate to load merchandise into a car that will drive itself to your home or office, delivering your orders within the same day. The customer can reserve a delivery window and track its location on a map in real time so there is no waiting during a “window of delivery.” The chance of theft of packages left at the door will also be reduced significantly.

The transportation cost can be further reduced when multiple deliveries are carpooled by the driverless car to your location and sophisticated algorithms are developed to dynamically optimize delivery routes. London-based startup Starship, started by Skype co-founders, has already developed a robotic cart to deliver packages from Hermes and Metro Group, and food from Just Eat and Pronto. Of course, this cart is not quite a driverless car yet, but it gives us a glimpse into the future.

Ask any car manufacturer or tech giant, and they will tell you that autonomous cars will be the future of transportation. Almost all the automakers (GM, Ford, BMW, Volkswagen) and large tech companies (Google, Apple, Uber, Baidu) are working on driverless cars. Earlier this year, Google received a patent to develop a self-driving truck for package delivery. The automobile will once again change the face of retailing.

By taking advantage of these emerging technological capabilities, retailers will be able to fight back and take advantage of assets that Amazon lacks. By offering advice via chat, the customer experience will return to the days of Avon, Tupperware and Hoover, where consumers can receive valuable advice and personalized service in the comfort of their own home, and benefit from low-cost delivery of products in a timely fashion with autonomous cars.

Moreover, it will be prohibitively expensive for Amazon to replicate this service without hiring a large pool of sales associates and deploying an army of drones. This will not only level the playing field for retailers, but potentially tilt it in their favor.

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