AI is the new business partner for small retailers

Startups finally stand to benefit from the global AI rush, which is now driving retail’s next innovation phase, explains Shopify’s Deann Evans.

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The pandemic had a profound effect on retail, accelerating the rise of online shopping. The monthly share of online sales regularly breaks its ceiling – the latest ONS figures show 27.4% of total UK purchases are made online, up from 19.0% pre-pandemic numbers. This will only continue to reach new heights.

But the industry won’t wait long for its next growth spurt. Thanks to rapid developments in AI, retail will transform once again, driving a new wave of innovation as retailers begin harnessing the sharpest technology in the cutting-edge toolbox.

Until now, not every startup has been in a place to benefit. The power of AI tools is yet to be fully realised by small businesses, with just one in four using the technology.

For those who do, the upside is clear. Survey data shows that 91% of small companies who use AI say that it has made their businesses more successful. But small retailers typically don’t have the budget, nor the foundations to take risks on new technology, like larger firms do. The latest AI boom can level the playing field.

Driving AI equality

While several big tech leaders have driven the artificial intelligence discourse in the past few years, we’re beginning to see a democratisation of AI. Such tools are being packaged up in understandable and attainable ways for smaller merchants, helping them to grow their businesses with AI, without the need for a deep, industry-level understanding of it.

For example, Aidaptive is a service aimed at SMBs, which uses automation and machine learning power to personalise the shopping experience with product promotions; aiming to drive more first-time purchases. It’s a great instance of AI capabilities being made available for smaller-sized businesses — giving a leg-up to startups.

Solutions like these integrate AI into existing workflows, without upending processes, making them so successful. In fact, some small business owners may already be harnessing AI’s capabilities, without even realising it. Many already are.

Increased innovation in retail

Conversational AI is a case in point. It’s already making strides in customer service, but the next frontier is serving the merchants themselves, allowing busy entrepreneurs to focus on making a great product, not packaging it up and shipping it.

We’re seeing AI evolve to provide highly personalised and relevant support for a range of tasks. AI-powered ecommerce assistants can now work alongside merchants, answering questions around the clock, analysing sales data, helping redesign stores, and much more. At Shopify, we believe that entrepreneurs are heroes and every hero needs a sidekick. AI can be that sidekick.

Further, there is a great desire amongst entrepreneurs to unlock the power of generative AI (think large language models like ChatGPT that can simulate conversations and even carry out tasks).

A study we conducted in 2022 showed that one in three Shopify merchants have attempted to use some form of AI tools, citing third-party solutions for automation, customer service and content generation; aiming to reduce time spent on manual tasks. It’s paramount that we bring these tools to small retailers – free of charge, preferably.

For example, merchants can write marketing email campaigns and run them through a generative AI tool to customise them for various customer segments at great speed. French delivery service Chronopost saw an 85% increase in sales revenue after using AI-driven email campaigns during its 2022 holiday season. Merchants can also prompt generative AI to give feedback on their brand messaging and positioning to ensure it aligns with the targeted customer persona.

Where SMB retail is headed with AI

Retail experiences in general will continue to become more personalised. After all, consumers are demanding it. Recent research shows that 71% of consumers expect companies to deliver personalised interactions; 76% even get frustrated when this doesn’t happen.

AI is at the heart of meeting this demand, whether it be AI using customer data to power targeted product recommendations, or brands like Glossy using AI to pair shoppers with customer service associates. A more intimate brand relationship is being facilitated by AI, and this will only grow more tailored to consumers.

The benefits of AI adoption

AI-powered tools will also be critical in liberating the creativity that makes entrepreneurs so successful. Alleviating time-eating admin tasks with instructed automation creates more time for you to spend on growing your business, allowing entrepreneurs to focus on the big idea they started with.

Boosting customer satisfaction, even more important to smaller retailers, is an AI-induced benefit that we’re already seeing. A slick, streamlined customer journey, fuelled by AI and automation, leaves customers feeling positive about a brand, motivating them to make future purchases.

Given how important CX is during a competitive retail environment, smaller stores, without as much equity in the bank, cannot afford to skip out on embedding AI tools into the customer journey.

It’s incredibly exciting to be a consumer-facing startup today, kicking off your journey with the plethora of AI-powered tools from the very beginning.

It’s truly important we ensure stores of all sizes have access to this technology. After all, an ecommerce ecosystem where smaller retailers compete with well-known brands is an incredibly healthy one. But equal access to the tools defining the next stage of retail’s growth is needed. Thankfully, as far as retail is concerned, AI will be for all.

Deann Evans, Managing Director, EMEA at Shopify

Deann Evans’ career spans over two decades in ecommerce and SaaS leadership roles. She currently oversees the European expansion of Shopify, the global commerce platform powering millions of modern, high-growth brands including Gymshark and Huel. This role enables Evans to empower merchants through Shopify’s substantial partners and developer community.

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