Four AI Use Cases With Monetary Benefits for Retailers and Wholesalers
Leveraging of new technology in business operations has never been more crucial than it is today, especially during the coronavirus pandemic and in post-coronavirus recovery. Retailers and wholesalers are already collecting big data which can be used to train AI algorithms, which could as subject matter experts for them, predicting future business events. However, it is still difficult for businesses to evaluate the quantitative and monetary benefits of implementing AI in their day-to-day operations. Four applications of AI in retail and wholesale business described below are providing more insight on this topic.
Sales and Demand Forecasting
Precise AI-based sales volume predictions are enabling retailers and wholesalers to increase revenue and decrease costs as they can make more informed decisions on the amount of stock to buy, and on establishing accurate inventory levels or boosting marketing campaigns for low-selling or overstock products. Machine learning solutions can significantly improve sales forecasting accuracy by utilising historical data enriched with external factors like COVID-19 business risks, economic indicators, the weather, and others. Did you know that accurate sales forecasting can help businesses to reduce their on-hand stock by 15% and simultaneously increase revenue due to stock availability by up to 8%? So if the company yearly revenue is €10M and the product stock value is €2M then then company can increase revenue by about 800k while reducing their capital locked up in inventory by €300k per year.
Next Best Offer/Action, or What Your Customers are Going to Purchase (or Do) Next
AI-based platforms can identify patterns in customer behaviour and with the support of external indicators they can indicate to businesses the next product or service that a customer is going to purchase or the next action that will be taken by the customer. This information can be utilised in call centres, in personalised email campaigns or during website or eCommerce store visits, and all of these cases are providing businesses with great opportunities for co-sale and up-sale. Digital personalisation in marketing campaigns—or in other words personalised email newsletters, specific ads and offers tailored to individual users—is most probably one of the fastest emerging areas in targeted client marketing. Did you know that companies utilising email personalisation are experiencing an increase in the overall sales revenue of up to 20% in comparison to non-personalised campaigns? In other words, if the annual revenue of the company from email campaigns is €1M then email personalisation can increase annual revenue by about €200k.
Debt Ageing or Customer Late Payment Prediction
Cash, the lifeblood of all business. Specifically, in the B2B environment, poor management of AR can lead to serious cash flow problems. Extending days sales outstanding (DSO)—or in other words, the average number of days that receivables remain outstanding before they are collected—can send a company into the cash trap. It is not easy to get a business back on track as you might be financing your customers while you need to borrow money to pay suppliers at the same time. AI is enabling businesses to identify invoices that are very likely to be paid late so that AR collectors have greater visibility of future overdue invoices and they can focus on the customers with the largest overdue amounts. Therefore, AR collectors, with the support of an AI module, can lower DSO and provide much greater future cash flow visibility. Did you know that reducing days sales outstanding (DSO) by about five days can reduce trapped cash by 30%? In the language of simplified numbers, if your annual revenue is €10M, reducing DSO by about five days can free up almost €150k in annual cash flow.
Discount Recommendation or Personalisation of Discounts
Personalised discounts are an excellent way to grow your business and build a loyal following. Which business wouldn’t like to increase cross-selling opportunities, increase customer retention, extend website visit duration, or engage new website visitors website with personalisation offers? Customers love deals and audience-specific discounts, and AI-based software solutions can effectively help to prepare businesses with customer- or customer group-specific dynamic discounting structures. AI solutions can analyse historical purchase behaviours of individual customers and provide an actionable and exclusive personalised experience. Discount personalisation in exchange for joining a loyalty program, special promotions for returning or new visitors, and personalised discounts offered in digital marketing campaigns are all allowing businesses to engage more customers and retain their existing customer base. Did you know that over 60% of consumers are expecting companies to send them tailored offers and discounts based on their previous interactions, or that 57% of consumers are willing to exchange personal data in order to receive a personalised discount?
Dusan Korcak – COO & Co-founder of iERP.ai – Business Prediction Platform