Machine learning Trends in Retail for 2021
Many consider artificial intelligence to be a futuristic concept. In reality, AI is already being used extensively, especially in the retail industry, and it has proven to be quite useful. Despite being almost commonplace, there is a lot to unravel and understand when it comes to the concept of AI and its potential.
When we think of artificial intelligence, we think about complex machines that are facilitated by advanced computers, matching or even surpassing the abilities of the human brain. This view is a specific type of artificial intelligence called Narrow AI. Narrow AI technology is able to do certain actions just as we humans can, if not better. However, how is that technology able to mimic some aspects of the human brain? That intelligence comes from machine learning.
Simply put, machine learning is the application of utilizing algorithms in order to interpret data, learn from it, and then make some predictions. Therefore, instead of just coding the software routines with an established group of instructions that will get a certain job done, the machine is trained to use large quantities of data and algorithms that allow it to learn how to do a certain action. This means that unlike AI, which learns from a teacher, machine learning learns on its own through supervised learning.
Before we move on, it’s important that we also tackle another algorithmic approach: artificial neural networks. Neural networks came about from understanding the biology of our own brains; specifically the connections between neurons. However, instead of getting one neuron to connect to another, the artificial neural networks have their own discrete layers, connections, as well as directions of data multiplication.
So, now that we have a basic understanding of machine learning, let’s take a look at how it impacts the world, and more specifically the retail industry!
23 Machine Learning in Retail
Retailers are able to incorporate any insights and put to use the information from machine learning in order to optimize their supply chain, for instance, or to attract more customers. However, in order to effectively work with MI, it is important that the data used are high-quality. For the retail industry, this includes data about sales, prices, and information about market competitors such as prices and promotions throughout a minimum period of time of three years.
Advanced retailers also use neural networks to analyze a large number of variables in order to set the perfect price for an item.
Ecommerce Machine Learning
It’s no secret that e-commerce businesses house a lot of data. However, getting the most out of this data is quite the task. Machine learning has become a great solution for handling big data, as it is able to process data much faster than any person could ever possibly do. A few key points that machine learning improves include segmentation, personalization, targeting, price optimization, fraud protection, and self-service, to name a few.
Above all of this, machine learning is arguably the most helpful because of its ability to predict and forecast. Companies are able to utilize both past and current customer and operations information in order to make predictions on future trends. In addition, it helps companies avoid wasting resources from, for instance, advertising costs that didn’t prove to be useful, while also making the most out of marketing moves that predict customer needs. In return, companies end up increasing their revenue and obtain greater profit margins.
Artificial intelligence is a broad range of machines that are able to perform certain tasks in an intelligent way. Machine learning is a modern application of artificial intelligence which revolves around the idea that machines should be able to learn on their own based on given data. Machine learning may be incredibly advanced and complex, but technological advancements have made it simpler for both users and retailers to use.