Editor’s note: Ruben Nazario is a director with the innovation team at market research firm PRS IN VIVO, and the e-commerce and omni-channel research product development lead, Atlanta.
Recent FedEx advertising seems to suggest that the adoption of robots for delivery of grocery and general FMCG/CPG items is the next big thing in retail. Friendly little autonomous robot carts looking a bit like Igloo coolers on wheels are designed to deliver product the last mile according to a recent Reuters article.
Retailers from Walmart to Pizza Hut are experimenting with FedEx to test whether the future of e-commerce will truly be robotic.
The way I see it is that the real robots of e-commerce are much less like R2-D2, WALL•E – or anything out of science fiction – and more mundane and ubiquitous today in the changing world of omni-channel retail.
The real robots of e-commerce
Today’s robots are the myriad functions enabled by AI and machine learning that make e-commerce sites work. They are the algorithms that deliver a product image when you search for it and provide you with choice on the e-commerce grid that leads you to the first moment of truth: what you click into the cart. These are sometimes referred to as recommendation engines and they parse through the millions of data points on the average e-commerce site to quickly get consumers to the things most likely to match what they are looking for.
As consumers in a brick and mortar retail environment, when we look for a product on a shelf, shop-ability and visibility are key attributes of the pack that manufacturers/brands tend to worry most about.
What happens when the pack is a thumbnail on a desktop or mobile device? There are no brand blocks so consumers may search for a product by category (like ice cream). These searches don’t necessarily favor the traditional market leaders and instead level the playing field for emerging brands or private label.
But what about when consumers use brand names like Band-Aids or Kleenex as proxies for adhesive bandages and tissues? These searches leave little room for discovery of an emerging brand.
When the algorithm works like Amazon’s “people who bought this also bought that” – that is really the robot delivering the choice. There are no battalions of human shopping assistants making recommendations. Suggestions and products product order are determined by algorithms that establish (through AI) which product images/choices to show shoppers.
The robots include the technology tools that run the warehouse for big retail distributors; chatbots for assistance and customer service; and even voice assistants. So these algorithms or data robots act in the background of our e-commerce experiences and are constantly learning. They learn what we have purchased or searched and decide which products to offer first.
So what are the implications if you are a brand? Where will discovery and choice – including new brands or products – come into play?
Algorithmic robots often favor products that have enhanced content and optimized keywords in titles and descriptions. And like brick and mortar, there will be promotional considerations that impact positioning on the page.
Behavioral science tells us that consumers tend to default to the easy choices especially in the almost rote experience of shopping for groceries. Consumers could dig deep into the results on a search page and endlessly compare the prices and features; but humans are unlikely to do that. When the robot serves up a choice, our System 1 unconscious brain kicks in and we are likely to click it into the cart. In fact, time and again studies have shown that the vast majority of shoppers only look at the first couple of rows of results and add items to their carts directly from the category results page to avoid looking at the complex product detail pages!
The human element
It is tempting to think that brands only have to get to know how a few robots work, say Amazon and Walmart’s algorithms, to achieve success, but that is only half of the equation. The human element is equally or more important. For example, an algorithm that favors products with optimized content and keywords doesn’t take into account that many shoppers will likely overlook much of the key product information and instead will buy the product after briefly looking at its image. This often results in shoppers buying the wrong thing.
The human factor is an issue is especially common on order and delivery platforms like Instacart. Instacart works with hundreds of retailers, theoretically upping the value proposition! A customer places the order and an actual human goes to the aisles and searches shelf by shelf, product by product, to find the items, assemble and fulfill the order and bring it to the register. The customer receives the order in a matter of hours. Sounds great, right?
In my experience, almost every time I order from Instacart, my shopper replaces something they couldn’t find at the store with a much less satisfactory item. There’s that shopability and visibility factor again. If the human shopper can’t find the pack on the shelf (even if it is listed online as available in-store), I won’t get the products I want.
Unless brands and online retailers take into account the principles of human behavior, consumers will have sub-optimal shopping experiences, especially in e-commerce. Understanding human behavior is still critical to delivering favorable e-commerce retail and brand experience.
The digital landscape
To harness and conquer the real robots of e-commerce, brands need to understand the behavioral principles that influence how consumers make choices on the grid and in the aisles. AI will play a part in deciphering the rules of e-commerce but so will applying behavioral expertise in the rapidly evolving physical and digital shopper landscape. Knowing how to exist in both worlds is the best defense brands have to prosper as the retail world is increasingly populated by robots.