The CEO of Worldwide Amazon Stores, Doug Herrington, believes artificial intelligence (AI) will drastically change the retail industry and may lead to the development of new shopping channels.
At the National Retail Federation’s (NRF) Big Show, Herrington informed attendees, “This is the biggest technological revolution since the beginning of the internet.”
Although the move to mobile devices and the emergence of social media platforms were revolutionary, he conceded that they were insignificant compared to the influence artificial intelligence will have on the industry.
We’re all going to be affected. It will save expenses, enhance quality, assist us in creating new client experiences, and maybe even lead to the creation of new store models.
How AI is being used at Amazon today
For his teams to exchange ideas on how to use the technology, Herrington created an AI “show and tell” a few years ago. The effort is still ongoing today, despite his initial plan for it to last only a few months. This shows how shops are finding more and more applications for AI.
“The teams may be redesigning an existing feature or product to make it more affordable or better, or they may be creating a completely new experience that seemed like science fiction two years ago.”
This is shown by Rufus, the talking shopping assistant on Amazon. Before, we couldn’t have responded to half a billion [consumer] queries in the search box, such as “Tell me about protein powder” or “Can I use this fishing reel in saltwater.” A whole new degree of client convenience has been made possible by it.
Customer reviews are another area that Herrington mentioned as being ready for AI disruption. Many of the hundreds of thousands of customer evaluations on Amazon are now succinctly summarized using generative AI. Amazon is able to assist customers in making better, more expedient judgments by bringing this to their attention.
Additionally, AI is assisting Amazon with the age-old problem of fit and size. Herrington thinks AI might play a role in solving this unresolved issue in fashion. Fit concerns are “the main reason people might return [clothing and shoes],” he stated. “A team has developed a model by incorporating all of the brand size charts, customer buying trends, and feedback from both customer reviews and returns.”
Beyond size, Amazon may then generate a more detailed fit suggestion. For instance, it could indicate that you should get a size big, but it will also point out that the sleeves will likely be too short.
According to Herrington, AI is presently used in 50% of Amazon’s customer care conversations and is giving customers “high-quality responses.” Additionally, Amazon now employs a crew that is constantly changing product names according to what customers are looking for.
Back-end efficiency are also being driven by AI; for instance, it is assisting Amazon in detecting fraudulent activity and eliminating phony reviews. With only a few words and a photo, sellers can now easily establish new listings, and the supply chain is full with applications.
Making mistakes on the side of creativity
Herrington asserts that although Amazon has always been a pioneer, this is not what distinguishes them from their rivals.
Despite their professed enthusiasm for innovation, many businesses detest failure. Intentionally or unintentionally, they wind up with cultures that strive for success. Additionally, if you get too proficient at removing failure, you’re likely losing out on many wonderful opportunities.
Herrington described how Jeff Bezos, the company’s creator, aimed to establish a culture that fosters innovative thinking and permits “thoughtful risk” in the pursuit of such ideas. Bezos believed that because it just required one senior leader to say no, too many ideas were rejected by other firms. At Amazon, he wished to change this so that a project could proceed with just one senior’s approval. As a result, people now feel more empowered to take chances and question the status quo, which has encouraged creativity.
Herrington related how, during his early days at Amazon, he once presented Bezos with a fresh business idea. Bezos, however, did not like it.
The conference was not proceeding smoothly. He was disputing my models and casting doubt on my presumptions. “You haven’t convinced me,” he adds in the conclusion. Even if I continue to disagree with you, I will allow you to place this wager because I want Amazon to be a place that leans toward institutional yes.
Although this may seem paradoxical, Herrington claims that the company has benefited from a much larger funnel as a result. Bezos would tell him that businesses that neglected to attempt anything new had destroyed more value in the history of business than businesses that tried something but failed.
The wisdom has remained with me throughout the years, particularly in light of the current AI revolution. We’re going to err on the side of innovation, I believe.
