AI-driven product recommendations: This holiday season, coffee is for robots
Last week I took a detailed look at the numbers around this year’s Black Friday sales weekend to prepare a note for brand manufacturers in the EU J.Boye community. The data, provided by the NRF, RetailNext, Retail Dive, and Adobe Digital Insights, confirmed a couple of foregone conclusions and provided some surprising insights. However, none were more interesting than the amount of revenue attributed to AI-driven product recommendations.
In-store bad, digital good
In the ‘color me unsurprised’ category, the first weekend of in-store holiday sales lagged in 2017. The number of people visiting stores on Black Friday specifically was down 4% year over year (YoY). Total in-store sales for the entire weekend was also down slightly. While it may be tempting to suggest that a ‘slight dip’ in in-store sales is not terrible news, a look at the breakdown of pure vs. hybrid shoppers offers a more nuanced view.
The National Retail Foundation (NRF) shared that 33% of Thanksgiving weekend shoppers participated online only while just under 40% shopped both in-store and online. Only 25% of weekend shoppers went to a physical store exclusively. I find this particularly interesting because I believe it indicates the changing demographics. of shoppers and should help retailers think more carefully about what they do to attract more people
On the bright side, the NRF reported that more than 174 million consumers shopped on any channel from Thanksgiving to Cyber Monday, beating their prediction by roughly 10 million. Cyber Monday set a new record for the best online shopping day in history, with $6.59 billion in sales in the US. That’s a $1 billion year-over-year increase for same day sales.
Mobile also experienced a record-breaking Cyber Monday. Smartphones and tablets drove $2 billion of the total online retail sales. 47% of visits to retail sites on Cyber Monday happened on mobile devices and accounted for an incredible 33% of online revenue.
But, as previously mentioned, it was Salesforce that provided the most exciting information I encountered in my research.
AI-driven product recommendations punch above their weight
Over Black Friday weekend, among other things, Salesforce tracked the impact of AI-driven product recommendations. They report that in their sample set, on Black Friday, only 6% of consumers engaged with product recommendations, but those shoppers accounted for 30% of all digital revenue. On Cyber Monday 5% of shoppers interacted with AI-driven product recommendations and drove 24% of the day’s total online revenue.
Back in October, I talked about AI entering the realm of the possible. Today I am excited to see evidence that it is already coming into the field of results. After Google announced they were going AI-first at IO this year, I expected to see movement. However, I did not expect AI to be in the headlines for ‘taking home the Cadillac’ in the Holiday sales contest this very same year.
“We are now witnessing a new shift in computing: the move from a mobile-first to an AI-first world. And as before, it is forcing us to re-imagine our products for a world that allows a more natural, seamless way of interacting with technology.” -Sundar Pichai
Of course, with Google and Amazon in a race to create the ultimate conversational interface to consumer shopping and online experience, I expect more surprises in the coming months.
Good news for organizations invested in Episerver Perform
This news bodes very well for groups who have invested in AI-driven product recommendations and other digital commerce experience enhancements. Episerver Perform analyzes every visitor and compares them to the actions of similar visitors to help organizations autonomously deliver accurate, personalized product recommendations across all channels, including web, mobile, in-store, and contact center. This capability available to B2B and B2C organizations, regardless of what type of products they are selling.
AI-driven product recommendations can consider many factors and instantly ensure customers see the right products and prices at the right time. The more data received, the more efficient and accurate an AI-driven system becomes.
Happy Holidays from the entire team at Luminos Labs. If you’re interested in learning how to bring AI-driven product recommendations or any of the other incredibly innovative capabilities offered by Episerver Commerce in 2018, please don’t hesitate to contact us. We’d love to learn more about your opportunity and share stories of how we’ve driven results with the clients we’ve been so fortunate to collaborate with this year.