How re­tail changes when al­go­rithms cu­rate every­thing we buy

Business Day (Nigeria) - - START-UP DIGEST - BOBBY GIBBS AND NICK HAR­RI­SON

The first stage of the dig­i­tal-shop­ping rev­o­lu­tion saved con­sumers time and money by let­ting them buy things they al­ready wanted with­out hav­ing to go to a tra­di­tional re­tail store. A ma­jor part of the sec­ond stage will likely be a dra­matic re­fine­ment of tech­nolo­gies that tai­lor rec­om­men­da­tions and then scour the in­ter­net for the best deal.

We ex­pect that re­tail cu­ra­tors will be­come an in­dus­try on their own, chang­ing the struc­ture of the re­tail sec­tor and cap­tur­ing a sig­nif­i­cant share of re­tail sales. Be­low, we ex­plore three types of dig­i­tal cu­rat­ing en­gines that are emerg­ing.

MAR­KET MAPPERS We ex­pect ag­nos­tic cu­rat­ing en­gines that will con­sider not just prod­ucts’ price but de­liv­ery and other po­ten­tial costs to sug­gest the best deals. Once that hap­pens, mar­ket mappers will be able to find the best com­bi­na­tion of items for a full on­line shop­ping trip, where the cus­tomer pays the shop­ping ser­vice for a va­ri­ety of goods in one go. DIG­I­TAL PER­SONAL SHOP­PERS

A step be­yond mar­ket map­ping is to tai­lor of­fers to in­di­vid­ual shop­pers.

The key tech­nol­ogy is learn­ing al­go­rithms. Pi­o­neered by Net­flix, among oth­ers, these types of al­go­rithms get bet­ter at their pre­dic­tions as the cus­tomer ap­proves or ig­nores suc­ces­sive of­fers. Ul­ti­mately, dig­i­tal hu­man-ma­chine ser­vices could end up play­ing a key role that de­part­ment stores cur­rently do, cu­rat­ing a vast range of cloth­ing or other con­sumer goods to make it eas­ier for cus­tomers to find just what they want.

RE­VIEW AG­GRE­GA­TORS As con­sumers buy more types of prod­ucts on­line, the im­por­tance of fair re­views across plat­forms will in­crease. We ex­pect this will lead to the rise of re­view ag­gre­ga­tors across plat­forms in a broad­en­ing range of re­tail seg­ments.

CU­RAT­ING RE­TAIL Re­tail­ers are al­ready be­gin­ning to pi­o­neer shop­ping mod­els that show these types of cu­rat­ing en­gines are at­trac­tive to shop­pers. And when re­tail cu­ra­tors gain mo­men­tum, the model could scale well glob­ally, par­tic­u­larly in seg­ments where prod­ucts tend to have the same spec­i­fi­ca­tions in all mar­kets, such as tech­nol­ogy and some kinds of ap­parel.

Once that hap­pens, re­tail­ers, just like travel agents be­fore them, risk be­com­ing back-end util­i­ties serv­ing new in­ter­me­di­aries. The best way for re­tail­ers to pro­tect them­selves: Give cus­tomers good rea­sons to keep com­ing to them di­rectly. (Bob­by­gibb­sis­apr in­ci­pali­no­liv­er­wyman’sre­tai­land­con­sumer­goods prac­tice.nick­har­riso­nis apart­nerandco-leadof Oliv­er­wyman’sre­tai­land con­sumer­good­spr ac­tice glob­ally.)

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