For a lot of consumers Black Friday and Cyber Monday have become part of a yearly routine of grabbing the best discounts. The term Black Friday originated from America, and is supposedly when retailers finally turn a profit for the year – “into the black”. Cyber Monday arose from marketers noticing workers returning to the office in the mid-noughties making use of high speed internet connections to shop for online bargains.
Retailers are now looking to leverage whatever technological edge is available, so they can gain as many sales as possible from these two days. The edge enabling them to gain this advantage is currently Artificial Intelligence (AI). In retail this technology has two main uses which has altered the playing field massively – personalising services and predicting demand.
Recommendation engines have been driving retail in the online age for some time, and pretty much everyone selling online now makes use of them. Originally these engines were limited to just predicting what a customer may purchase next from analysing their past shopping habits, but now thanks to third party sources being added into the mix, suggestions are powered by what the retailer knows about you – such as location, age, lifestyle choices and personal preferences.
According to research by Adthena, on Black Friday traffic to online retailers is up by 220% compared to an average day. This is where recommendation engines pay off, as they put the right product in front of the right customer at the right time.
Pay-per-click online advertising is what a large portion of retailer giants and start-ups advertising budget now goes on. The reason for this is the advanced machine learning algorithms they use to target customers. The spending for this advertising method sky rockets around Black Friday and Cyber Monday as they know visitors are more likely to spend more money on these days.
River Island last year used a campaign driven by real-time sales data that allowed them to use a live dashboard to optimise their keyword strategy as the discount period played out. This resulted an attributed 82% of Black Friday sales for the company.
Black Friday used to be about getting rid of stock at a reduced price. But now with the huge amount of data generated which goes on to be analysed by retailers, it’s possible for them to predict what we will spend our money on with greater accuracy than ever before.
This also enables retailers to manage pricing, inventory and distribution more efficiently, with retailers able to stock distribution centres with the buying habits of consumers. This then goes on to provide savings on operation costs, which results in lower costs to the consumer.
AI mimics the learning process of a human brain. It allows computers to examine connections between similar objects and know what factors of those objects are more than likely to make a sale to a certain person – much like shopkeeper or salesmen can do. But the speed and capacity of machine learning systems will always trump them – they could do this for 100,000 customers turning up at their online store every hour.
The popularity of super-scale online retailers has cemented Black Friday into our lives for people across the globe, with it only getting bigger as time goes on.
Technology in the future will only become more sophisticated, allowing us to be more accurate in measuring and predicting our behaviour. Advanced tools will also be used to set prices at levels that will reach out to people as individuals, putting them places where customers are most likely to see.
Thanks to the arrival of the internet, big data and artificial intelligence, what we call shopping has changed dramatically over the last couple of decades. This is likely to continue, and in another 10 years things may have changed just as much as they have now.