Shop Direct and IBM Watson have teamed up to develop an AI-powered chatbot, but the technology has had implications for the retailer’s wider business.

At this year’s Tech. powered by Retail Week conference,  IBM Watson will offer an insight into how its artificial intelligence technology can be used by retailers alongside Shop Direct, who are developing a chatbot with the technology supplier.

“We can also predict when a customer will run out of a product they’ve bought from us in the past”

Andy Wolfe, Shop Direct

Set to launch later this year, the tie-up between the ecommerce retailer and technology giant was originally touted as a means for Shop Direct to keep in touch with shoppers after they had made a purchase.

However, according to Shop Direct’s chief information officer Andy Wolfe, artificial intelligence technology has proved to have much wider implications for the etailer’s business.

“We’re applying machine learning in a number of areas,” he says.

Shop direct chatbot

“In fraud prevention we use algorithms to detect fraud patterns across millions of pieces of transactional data and in customer relationship management our retention engine listens for the signs of falling customer engagement and automatically contacts them with a relevant incentive to shop again.

“Our email management system also automatically decides the right volume of emails to send to each individual customer.

“We can also predict when a customer will run out of a product they’ve bought from us in the past. Our system then automatically sends them a handy reminder to stock up on that favourite beauty product or candle.”

Beyond customer service

IBM’s executive architect and innovation leader Tony Morgan agrees that the potential impact of artificial intelligence for retailer’s businesses is more wide-reaching than customer service.

“Some of the early use cases for artificial intelligence in retail are the ones in the contact centre and a bot-type approach, but I think increasingly we’ll see this technology used right across a retailer’s organisation,” he says.

One of the most common arguments against artificial intelligence is that it will further remove retail workers from their shoppers.

However, Morgan says that developments in machine learning technology have been designed to bring a human touch to conversational user interfaces.

“We call it augmented intelligence rather than artificial intelligence – the technology has to be about people, not about replacing them,” he says.

Understanding the customer’s mood

To this end, the technology supplier has added capabilities to IBM Watson that can pick up on a user’s mood based on the words and tone being used in their messages.

“We personalise many of our customers’ interactions with us, but AI and machine learning will change the game by enabling us to personalise at a scale never seen before”

Andy Wolfe, Shop Direct

“One of the capabilities built into IBM Watson is sentiment analysis, which allows the AI tech to understand the customer’s mood and if it’s changing,” he says.

“If they are getting frustrated Watson would recommend the customer speaks to a person instead and will put them in touch with the relevant employee.”

For the technologically ambitious Shop Direct, the benefit of deploying artificial intelligence lies in allowing its employees to move away from repetitive work like answering customer queries.

“We personalise many of our customers’ interactions with us, but AI and machine learning will change the game by enabling us to personalise at a scale never seen before,” says Wolfe.

“There are some capabilities retailers today need just to stay in the game, and then there are the technologies that differentiate your business and will set you apart”

Tony Morgan, IBM

“In the long-term, technology could free up colleagues for new, increasingly rewarding roles – stretching their capability.”

The full extent of artificial intelligence’s implications for the retail sector remains to be seen.

However, Morgan insists that, while the technology may not be suitable for every retailer, it won’t be long before it is a more mainstream part of many businesses strategies.

“There are some capabilities retailers today need just to stay in the game, such as click-and-collect or next-day delivery and then there are the technologies that differentiate your business and will set you apart,” he says.

“In a few years time, I would think that virtually all retailers will have capabilities that Shop Direct is developing now to engage their customers in different ways.”

Hear more about how IBM and Shop Direct are using AI at Tech. powered by Retail Week, a brand new two-day festival for people in retail technology.

At Tech. we will put the most disruptive thinkers under the spotlight to find out what the future looks like for our ever-evolving industry. For more information visit tech.retail-week.com.

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