Could artificial intelligence save online grocers from failure?
Grocery delivery services have been around for more than a decade, but that doesn’t mean they’re doing well. Amazon has been trying to disrupt the grocery industry with delivery for 11 years and hasn’t been able to make much headway.
If Amazon can’t do it, can anyone? Could artificial intelligence can help?
Walmart is already using artificial intelligence to make grocery shopping online easier for customers. For example, customers can talk to Google’s smart home assistant and tell it to add items to their shopping cart. The program uses information from past purchases to determine what brand and size package to add to the cart. For instance, when a person tells Google to add milk to their shopping cart, the program will add the brand and size container they regularly purchase.
The grocery delivery market is in desperate need of this kind of AI technology, but will it be enough?
The process of ordering groceries online can be cumbersome and frustrating. According to TABS Analytics’ CEO Dr. Kurt Jetta, one reason online grocery shopping fails to catch on is because it’s not a personal experience. People need to see products within categories on shelves in order to compare prices. Browsing an online catalog isn’t the same, and no matter how well thought out a website is, no online catalog compares to in-store shopping.
The grocery delivery model is inherently flawed. To be effective, AI systems would need to make the process more personal, which sounds like a contradiction. It’s not far-fetched to envision a VR-based AI system that simulates an in-store purchase. However, the first step is admitting the flaws in the current system.
Grocery delivery hype clouds the reality
As of 2019, the grocery industry is worth $665 billion. Although Forbes reported online grocery sales are expected to reach $100 billion by 2025, it might be more hype than fact. The common perception is that Amazon is leading the way in online grocery, but their reputation doesn’t match that claim.
Amazon has taken several steps backwards with grocery delivery since they can’t seem to get it right. Customers have all kinds of complaints including late and canceled deliveries, spoiled produce, and missing items. Amazon’s grocery delivery reputation is so bad, they fell 13 points in the 2018 Temkin Experience Ratings, coming in dead last among all grocers.
It’s difficult to imagine Amazon failing at anything, but it’s not the company – it’s the business model. Groceries aren’t a highly profitable industry to start with, and the cost of running an online grocery delivery service isn’t cheap. It’s not a business model that anyone can easily profit from.
AI can help both consumer and retailer
Artificial intelligence can make grocery delivery easier for customers and cheaper for businesses. Through machine learning, a retailer can learn a customer’s buying habits to predict what they should buy and when, make suggestions, and reorder items at regular intervals. An automated process would mean the customer will spend less time browsing the website. This would minimize the frustration inherent to the limitations of website navigation.
Additionally, when AI is used in robots and driverless cars for delivery, the cost for the retailer can be drastically reduced. Those savings can be passed down to the consumer while still maintaining a profit.
For instance, supermarket giant Kroger has plans to launch an on-demand grocery delivery program using driverless cars from Nuro. The objective, according to Kroger’s chief digital officer, is “to provide Americans access to fast and convenient delivery at a fair price.”
Preference: the one flaw AI can’t fix
While AI is powerful, it won’t solve every problem. For example, AI can never replace the experience of picking up a tomato to feel how ripe it is, or smelling a melon to know if it’s ripe. Also, AI can never substitute for a person’s produce preferences.
Some people prefer firm tomatoes with thick skin; others prefer tomatoes when they’re soft and juicy. Unfortunately, there’s no way to tell the person choosing your produce how you want them to pick it. You can’t just pick up the phone and call them.
Artificial intelligence can save the grocery delivery industry if it’s used to ensure consumers receive fresh, ripe produce. The most sophisticated AI system in the world is worthless if a customer’s avocados are rotten upon delivery.