Tech giants driving change in retail

Screen Shot 2016-10-18 at 9.56.08 AMThe world’s largest technology companies are developing platforms that convey new opportunities for retailers.

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Nothing defines a trend quite like two of the world’s largest technology companies developing and then releasing products in the same category within a week of each other. Last month both Apple and Google told the world something important about where they see the future of customer interaction going, with an overhaul of iMessage accompanying iOS10 and the release of the third edition of Google’s messaging foray – Google Allo.

Both platforms are at heart instant messaging applications, but they have some interesting features. iMessage now allows for the integration of third party applications and Allo has an inbuilt artificially intelligent assistant, which is paving the way for an entirely new type of brand interaction.

The platforms are attempts to replicate the success of Chinese messaging phenomenon WeChat in the west, according to On Message co-founder Douglas Nicol. Nicol tells Inside Retail Weekly that the sum 800 million WeChat users can essentially run their entire lives through the platform, which has integrated with brands and even government services.

“All the players in this space, from Facebook to Google and Apple can see the massive consumer led change that’s happening. It’s the future and a glimpse of that future sits with WeChat.

“That’s why Facebook and Apple are opening up their platforms to brands and particularly retailers to support their business,” he said.

The 2016 Datafication research project, which is being undertaken by On Message, has revealed that 10.5 million Australians actively use messaging apps, with the top four messaging apps overtaking the top four social networks in monthly active users in 2015.

According to the research Facebook Messenger tops the charts with Australian consumers, boasting 8.8 million users; followed by WhatsApp, with 3.3 million users and Snapchat at 2.8m users.

Datification

Source: Datification

Pointing out that most of these platforms didn’t exist in 2010, Nicol characterizes the trend as a scale opportunity for adventurous retail marketers looking to jump into the world of “conversation marketing”.

“Messaging brings together the holy trinity of brand engagement, sales and customer service, so they are particularly suited to organisations that have retail outlets and are focused on sales day in, day out.

“Those retailers who get that this is about an omnichannel mobile-centric strategy to grow their business will grasp the opportunity, because we are becoming a mobile centric world through apps. Messaging apps are increasingly becoming the home screen for consumers,” Nicol explained.

Picking a platform – early adopters on the move

The Datafication project points out that there are a variety of messaging applications, all of which are popular with different demographics and provide different functionality for retailers looking to engage with customers.

Facebook, for instance, have already expressed support for brands looking to value add by bringing services to their messaging platform, an opportunity that Starbucks have already moved on with the release of a chatbot dedicated to marketing their Pumpkin Spice Latte. Others have invested in their own platforms, including Nordstrom, who developed a messaging application called TextStyle last-year that provides customer service functionality.

In Australia, following the release of iOS10, pizza giant Domino’s has unveiled its own customer sticker application, allowing users to employ custom Domino’s stickers in their conversations with other users. The decision compounds an earlier messaging option released late last year that allows customers to simply text Domino’s a pizza emoji to order their favorite pizza.

“It’s just another way of being part of the conversation and engaging with millennials,” Domino’s CEO Don Meij told Inside Retail Weekly.

“Customers can see and share exclusive Domino’s GIFs and emojis via iMessage. It’s another touch point for consumers to engage with the Domino’s brand, and Apple has made it easily accessible from the iMessage store,” he added.

Whilst early adopters are getting a head start, Isentia CMO, Richard Spencer says it won’t be long before retailers are pushed towards investing in messaging apps, explaining that personalization will soon become the centre of consumer expectations.

“[Messaging] is not going to be a standalone proposition, it will be about how it all fits together, developing that level of connectivity through messaging will develop a relationship that conveys a competitive advantage.

“It becomes more about personalization, either quite literally on a 1-to-1 basis or creating the impression of personalisation at every contact point. That’s hard for organisations to do at scale, but digital inter-connectivity can effectively masquerade as personalisation,” Spencer told IRW.

AI meets messaging

Screen Shot 2016-10-18 at 9.54.41 AMSpencer predicts that artificial intelligence (AI) will be an integral part of expanding customer functionality within the world of messaging and digital commerce in general. He’s joined by the likes of Google CEO, Sundar Pichai, who told the world at a press event last week that his goal for Google’s new AI assistant is to build “a personal Google for each and every user”.

“We’re moving from a mobile first to an AI first world … people will be able to interact with [computing more] naturally and seamlessly than ever before, and above all else it will be intelligent, it will help users in more meaningful ways,” Pichai announced.

Google’s new AI assistant has taken their renowned search functionality and implanted it within an explicitly social context, allowing users to search for food, fashion, appliances or other retail goods from directly within their conversations. For instance, entering “@google nearby fashion” will show both the user and whoever else they are conversing with a list of three stores retailing apparel in the immediate vicinity of their device.

Being an AI, the system will develop overtime, and will ultimately be rolled out across Google’s other services, which, according to Booodl CEO George Freney, is a signal to retailers that they need to get their data organized.

“For the last 15 years the predominant way to ask a question of a computer was that you type it into a search box on Google and you’d get a list of responses,” Freney told Inside Retail Weekly.

“Now you’ve got the ability to do one of two things. You can either type a message or you can ask a voice question.

“If retailers are not organizing their data in a way that can be part of the answer to a question that Google or other voice assistants can understand then people won’t find their shops,” he continued.

Whilst Google assistant is able to understand general terms like fashion, entering specific requests such as “@google nearby Nudie jeans” only lists Nudie Jeans owned stores, not all retail outlets that sell Nudie jeans. Freney maintains that this is a failure of data organisation, pointing out that platforms like Amazon, who benefit from having data stored in-house, are primed to disrupt the market unless Australian retailers get up to speed.

“When it comes to shopping Amazon has the best data to help you buy, if Google isn’t very good at answering shopping questions, but Amazon is, then physical retail will just lose shoppers to Amazon,” he claimed.

Nicol also says that Australian retailers are behind the buck on messaging, claiming that On Message’s analysis of top retail brands in the messaging space is not resoundingly positive.

“Retailers are not doing a good job in terms of speed of response and in terms of showcasing and really understanding what consumer needs are in the space.

“Someone like Amazon may well come in, shaking things up and grabbing the opportunity. Australian retailers need to be seriously alert to this consumer change,” he said.

One Australian retailer already playing with AI in the messaging space is Adore Beauty, they’ve employed an AI brain that creates customer profiles to personalize their e-commerce offering and develop targeted connections with customers. Adore’s ecommerce manager, Gareth Williams, tells IRW that not only is AI an integral part of personalization, but it will also soon be the competitive standard for retailers.

“It’s important to get the right message at the right time, so if we can use AI to know that this customer will respond better to a text message versus an email then we can use that knowledge to set up everything up,” he said.

However, Williams says that treating AI like a fix-all solution is dangerous, cautioning retailers against thinking of it as a black box.

“If you go too far in relying on an AI brain you won’t learn anything internally in terms of what drives your customers. It’s a good tool, and it’s useful for personalising experiences, but nothing will ever replace really understanding your customer,” he said

“You can’t just trust the black box to do everything, but it certainly helps to increase your conversion and retain customers.”

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