Connected customers
I have a confession to make
A couple of months ago Bonds, an Australian fashion retailer, released cotton face masks. Bonds is a household brand in Australia, and the masks sold out immediately. The company had to make a rush order of another four million of them. That extra batch sold out immediately too.
I have these masks. I bought two per family member when they became available. I purchased them within five minutes of the masks becoming available again.
But I wouldn’t be able to do it without an algorithm helping me.
In 2020, there is an army of workers available to help us 24/7, without breaks, and often completely free of charge. If you look around, you will be able to find them: small pieces of code and services ready to perform tasks for us. Simply speaking, they are computer algorithms - sets of instructions performing tasks for us. And just like you can hire humans to queue up in stores and shop for you if you cannot or do not want to do it yourself, you can now hire algorithms to shop for you.
I hired an algorithm to visit the bonds webpage every five minutes and alert me as soon as the "Sorry, sold out" message disappeared from the product page. Bonds didn't make it easy for me—I couldn't simply look for changes in the text of the page. They embedded the "sold out" text in the image of the face mask. I had to hire an algorithm that could analyse images and let me know when the message disappeared from the photo.
And when the four million masks arrived and made it to the website, eight of them landed in my shopping cart within five minutes.
Am I a bad person for using my knowledge to access products-in-high-demand before others buy them? You be the judge.
Was I the only person who automated facemask shopping? Likely not. We know that others build bots to rent camping sites in Yosemite, and the scale of the problem prompts actions to crack down on bot transactions.
Almost half of Australians surveyed by the Australian Bureau of Statistics are, unsurprisingly, spending more time in front of screens. A similar number of Australians don’t look forward to ‘shopping in physical retail stores’ after COVID-19 restrictions ease. We should expect a rise in connected customers who, sitting in front of their screens, will look for ways of optimising their shopping experience!
Hiring an algorithm to buy a face-mask taught me an important lesson, though!
While I followed the automated routine, I failed to notice that Bonds added a new product page with 3-packs of these masks. I missed an opportunity to save about $20. Not a big deal when buying a few masks. Potentially a big deal when automating a purchase of a few hundred masks!
When we trust automation too much and assume it'll make the right choices for us, we might be missing out on opportunities that we failed to consider when automating our tasks.
You’re not selling to your customers: connecting through humans.
This is not new at all. Just like millions of Australians are currently either unable or unwilling to shop in physical retail stores, there are millions of Chinese customers who want to stock-up on Australian products while being physically too distant to do it themselves. But they have access to an army of 150,000 “surrogate shoppers”, also known as Daigou (代购), who walk into stores on their behalf, but the products they need, pack them in boxes and deliver to their door. The size of the Daigou market in Australia was estimated at $2.5 billion in 2019.
Australian businesses benefitted a lot thanks to the Daigou phenomenon. Daigous fuelled Blackmore’s fast growth in 2015-2016. The importance of this channel is not underestimated: Blackmores CFO said: “No matter how big or small your company is, you must embrace them,”. Similarly, A2 Milk, enjoyed massive growth thanks to Daigou shopping, recently has been hit by the restrictions, with A2 Milk Asia-Pacific Chief Executive Peter Nathan telling the Australian: “Retail daigou sales continue to be soft due to the significantly fewer tourists and Chinese students who help to activate the channel.” Analysts estimated that Daigou could be contributing to up to 60% of the revenue of some businesses in Australia.
You might think, as a business: if customers in China are buying my products, I can sell directly to them; I don’t need the Daigous. You couldn’t be more wrong. Daigous build personal relationships with customers, on a level that you wouldn’t be able to, as a business. Through live streaming, they can provide a virtual shopping experience.
Daigous are not just surrogate shoppers. The digital economy enables the phenomenon. On the consumer end, daigous rely on messaging platforms to connect with their customers, video streaming to share shopping experiences. Behind the scenes, daigous rely on a highly coordinated, well-oiled logistics backend, an army of businesses helping ship products quickly and safely from the Daigou to the end customer. This combination of experience and convenience is a true differentiator: the connected customers are connected emotionally and digitally.
Over the years, without really noticing it, many retailers realised that they are not just in the B2C (Busines-to-Consumer) business. A large chunk of their activity is in the B2D2C (Business-to-Daigou-to-Consumer) business.
You’re not selling to humans, either: connecting through algorithms.
What if in some cases your shopping experience is not that important, but you would still like to enjoy the convenience of having someone else do the shopping for you?
Could it be that there is another such shift emerging, stealthily, without many businesses realising it?
If you ever hired an algorithm to buy something on your behalf, you took part in the B2A2C (Business-to-Algorithm-to-Consumer) relationship. If you ever bought a flight ticket on a price comparison site, it’s almost certain it was a B2A2C transaction. Your smart voice assistants are part of the B2A2C ecosystem too!
Photo by Dan Farrell on Unsplash
If you live in the US, you can buy dishwashers and washing machines that automatically reorder detergent. And if you forgot what else you need, your smart fridge might short of doing the shopping for you, remind you what’s inside. These devices, powered by algorithms that help you do the shopping, might not be as exciting as daigous, but they are perfect for convenience shopping!
What does this mean for us?
If algorithms start making purchasing decisions, and their choices are not hardcoded, we need to start treating them for what (or who) they are: customers. And how should retailers advertise to algorithms?
Here are a few questions retailers might need to address soon:
Can you convince an algorithm that it should buy from you?
Can you convince an algorithm that it should buy now and not later?
Can you negotiate prices with algorithms?
Shall I hire experts to reverse-engineer algorithms of smart fridges and other buying agents?
How will retailers compete and make their product seem favourable to an algorithm-driven by business rules and possibly not influenced by any form of emotions?
Is it good news, or bad news?
The emergence of algorithms that act on our behalf will create a lot of opportunities. We need to make sure we are ready. Manufacturers will need to learn how to build devices that order products and services on behalf of humans. Retailers will need to learn to sell to algorithms. Customers will need to learn to work with algorithms.
There will be new jobs: fridge campaign managers (fridges as a target group), proactive delivery couriers (I need one to deliver my coffee before I run out of beans), and many others.
Yes, some jobs might disappear too — perhaps there will be a lower demand for shopping assistants? We need to understand and prepare for this world.
I discussed this topic in a recent “Connected Customers” webinar organized by the Financial Review. You can watch it here.