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You don’t have to look farther than your closet to understand how the Covid-19 pandemic has transformed retail. Sweatsuits are in, suit suits are out, and anything with tags still attached likely came by way of FedEx or UPS.
- IBM’s U.S. Retail Index estimates that the pandemic hastened a shift from in-person shopping ➡️ digital shopping by at least five years.
- By April, McKinsey data suggested e-comm accounted for 33% of all U.S. retail sales.
Bringing products from computer screens to closets involves several, mostly invisible steps. And this opaque process is essential to building an efficient, and memorable, shopping experience. The better the experience, the more likely shoppers will come back for another purchase.
So let’s order some sweatpants. Along the way, we’ll take a detailed look at the advanced technologies that bring cozy supima cotton from shoppers’ phone screens to their doorsteps right now—and the emerging tech that could shorten the sweatpants funnel later. Ideally, retailers could deploy each tech solution we describe to build the industry’s most efficient pipeline.
For each online shopping technology entering the chat, we’ve created a proprietary Brew Maturity Scale®. We’ve used our best judgment and taken stock of adoption rates, investment, and IRL deployments.
- Nowhere = Forward-looking retailers are interested, but the tech hasn’t seen meaningful adoption.
- Here and there = Retailers have invested in the tech, but it's still in experimental/pilot phases.
- Everywhere = The tech is common across the retail industry.
By the way, this isn't meant to be a comprehensive look at all the tech that powers online shopping. It's just a window into some of the emerging tech across social media, brand storefronts, and fulfillment logistics that augment the e-comm experience.
I. Social Media Discovery
As your fingers skate over your phone screen, you see every influencer going full cozycore. You decide you want a matching sweatsuit.
While hunting for a
wearable sleeping bag cozy new sweats on social media, you’ll be served personalized searches. All social media apps employ computational sequences, aka algorithms, to rank sweatsuit suggestions based on your past shopping behavior. But each platform has a different way of serving up your assumed preferences.
Pinterest: Tapping over to “Shop” and entering a search will generate algorithmically recommended shoppable pins. The catch: Pins only display products that are in stock at participating retailers. The better keywords retailers use and the more often they post, the more likely Pinterest will bump their cozycore pics up in users’ feeds.
Instagram: Whether you’re browsing the newly-launched Shop tab or scrolling your feed, Instagram’s recommendation engine surfaces products based on your past behavior, including favorited brands and items you’ve looked at before (but didn’t purchase).
- As of 2020, brands can 1) host in-app storefronts, 2) tag products for sale, and 3) process purchases through Instagram's Checkout tool (for a selling fee). Brands are also testing features like push notifications for new products.
Facebook: It launched its Shops storefronts in May...and they look a lot like their younger siblings. The main difference between IG and FB is the customer it’s serving–meaning you vs. your great aunt.
Any brand can upload a carousel of their best sweats online, but few have converted their presence in users’ feeds to significant revenue. That could change in the near future: Average annual retail sales generated on social are picking up, per eMarketer data.
Instead of serving you a snapshot of retail partners’ sweatsuit inventory, some social media hubs are trying to out-QVC QVC. Their tools? Videos equipped with purchase buttons.
Short-form video: These videos give shoppers outfit inspo or key product details in the time it takes to hit “Follow”...and they’re easily shareable.
- TikTok is piloting branded accounts and a Shopify tie-in to monetize its 100+ million U.S. users and their Center Stage skills. Instagram’s Reels feature could bend in this direction...if and when people use it.
- Poshmark, a social selling app, added user-generated shoppable videos to its arsenal this summer.
Livestream video: Going Live isn’t just for bored reality TV stars. It’s for brands with sweatsuits to sell, and big personalities to sell them with.
- Since 2019, Amazon Live has broadcast from a studio to shoppers’ web browsers, where hosts display and discuss new products. Shoppers can scroll through a carousel at the bottom of the screen to buy.
- Instagram recently introduced Live shopping streams.
- Fashion’s in the early days of sharing live runways on the gamer-favorite platform Twitch.
Another approach: A handful of companies are testing bespoke video. In October, Tommy Hilfiger and Levi’s hosted livestreamed outfit demos on their websites.
Livestream and video shopping in the U.S. hasn’t started driving a significant portion of sweatsuit purchases yet—but investment is ramping up. Retailers’ ultimate goal? Something like China’s Mogujie or Taobao.
II. Virtual Assistance
Instagram has surfaced a few sweatsuits you like, but you need more details. So you head to the brand’s website.
Automated customer service
Let’s say you’ve found your ideal sweats, but want to triple-confirm that they’re Cheeto dust stain resistant and eligible for free returns. Your brand of choice may deploy an automated customer service bot to...
Handle FAQs. Zendesk’s chat bot will note what product you’re looking at before striking up an automated convo—and offer rapid-fire suggestions for repeat questions.
No matter the backer, chat bot adoption is growing among retailers. A March Juniper research study estimated global retail sales enabled by chat bots would grow to $142 billion in 2024, from $2.8 billion in 2019.
- Most of that growth will come from China, where e-comm claims a larger share of retail.
Personalize recs. If your sweatsuit’s coming from a Powerfront-backed store, a customer service rep can watch an avatar version of you browse in real time. Then it pulls data on cart history and browsing times to offer recommendations.
Help out the real humans. Stores equipped with Kustomer will let you DM with a “real” agent, but they’ll be provided with your past purchase and browsing history on the site before you can ask which sizes are in stock.
If you encounter an automated customer service rep on your sweatpants search, it’ll be for low-stakes questions like order status or sizes in stock. More complex questions still largely require a human.
Select sites and apps can activate the shopper’s smartphone camera to scan their face and/or body and allow them to virtually try on a product. Most options aren’t full-body friendly yet.
- Allbirds launched a proprietary app for matching your Wool Runners to your ABC pants pre-purchase.
- After launching a pilot in January, Pinterest offers 10,000 virtual try-on lipstick shades for more than 48 million product pins.
- Warby Parker’s app uses AI face-mapping to let shoppers try on glasses.
AR surge: More than 20% of U.S. retailers planned to invest in AR or VR for their online stores in June 2020, up from 8% in January 2020, according to a CommerceNext and Exponea survey. AR increases commitment more than deleting Hinge: 76% of consumers said using AR improved their confidence in a purchase, in a recent poll by AR provider Vertebrae.
More pixelated fittings are ahead. European fast fashion retailer Zalando recently acquired a 3D body scanning startup; Amazon’s also working on proprietary tech for virtual clothing fittings at home.
Small items that can be tested on a face (makeup, glasses) have more AR try-on options. But it won’t be much help with your sweatsuit hunt, because virtual try-on hasn’t caught up for clothes yet.
III. Warehouse Fulfillment
So you've finally decided on your ideal quarantine sweatsuit, put it in a virtual cart, and clicked “Order.” In a few days, it will be at your doorstep. Easy, right?
For you, yes. But it takes much more than a click for those sweats to arrive.
Let’s start with the hulking warehouses on the outskirts of town, dozens of miles from your doorstep.
Automated warehouse management systems
Orders are routed through fulfillment/distribution centers, where inbound tickets are received and processed. AI systems help mediate order flows, forecast demand, manage inventory, and track an item’s journey across the retail supply chain.
- Yes, Big Brother is watching: Amazon has reportedly used a warehouse system that tracks individual worker productivity and automatically generates warnings for subpar performance.
But 2020 shows we need humans in the loop. The pandemic has thrown machine learning’s (ML) predictive capabilities into flux.
ML software likely assists in the warehouse that processes your online sweatsuit purchase. Some savvy fulfillment centers have also deployed other AI techniques, like computer vision.
Autonomous mobile robots
Autonomous mobile robots (AMRs), which can weigh up to 1,000 pounds, move portable crates of goods across hundreds of thousands of feet of warehouse. Newer buildings are frequently built around these bots, with dedicated shipping lanes and hubs where the robots bring shelves to human workers.
- In 2012, Amazon paid $775 million to acquire Kiva Systems, which the company renamed Amazon Robotics. Last year, Amazon said it had over 200,000 AMRs in its warehouses.
- In 2018, DHL invested $300 million to increase the level of automation/robotics at 350 of its 430 facilities.
- Last year, not to be outdone, Shopify paid $450 million to acquire 6 River Systems, a warehouse robotics startup.
By the numbers: ABI Research predicts that over 4 million commercial robots will be installed in 50,000+ warehouses worldwide by 2025—up from just 4,000 in 2018. 80% of supply chain executives at retailers and consumer products companies expect to use automation by 2021, according to a 2019 study by the NRF and IBM.
The more plug-and-play a technology is, the more likely it is that e-commerce businesses have adopted it. A robot may be able to move your sweatsuit when it’s stored on a rack. But picking up the loose item from the shelf is above your standard warehouse bot’s paygrade.
AMRs are the most active fulfillment bots. But there are plenty of other robotic coworkers:
- Pick-and-place robots require more dexterity and perception capabilities than AMRs, and could eventually take jobs that currently require human touch.
- In January, Walmart unveiled Alphabot, a floor-to-ceiling robotic platform that packs and processes online grocery orders.
- HEB, a favorite brick-and-mortar chain of both writers, is deploying automated micro-fulfillment center technology.
- Amazon has tested automated packing machines.
Maturity scale: Somewhere between nowhere, here, and there. The non-AMR bots are in the early stages of development, but clearly experimentation is happening at the edges.
As e-commerce demand soars, investment is flowing into robots with new capabilities. But beware of over-automation, i.e. investing in automation that fails to achieve goals and instead gets in the way.
Your phone dings. The sweatsuit of your dreams is finally out for delivery, and you can almost feel the coziness. The number of handoffs and legs (see what we did there?) of your sweatsuit’s journey depends on your proximity to the product, where it’s stocked, and the regional distribution of fulfillment centers.
For simplicity’s sake, let’s take this mile by mile.
First mile: This is the transportation of finished goods from the factory to a distribution center or warehouse. It could also refer to the transit from a larger hub to a local one. The first mile frequently involves heavy-duty trucks on long-haul freight routes.
Tech investors, auto manufacturers, and logistics businesses have put tens of billions of dollars into autonomous vehicles (AVs). Some of that is going toward disrupting the first mile. Highways have fewer “edge cases” and moving parts than urban roads.
- Self-driving unicorn TuSimple recently announced the launch of an “autonomous freight network,” consisting of automated trucks and shipping terminals. It’s rolling out in regional stages across the U.S. over the next four years.
- Amazon-backed Aurora, which is developing a virtual “driver,” recently said its first commercial product will involve trucking.
- Waymo, Alphabet’s well-capitalized self-driving player, recently expanded autonomous trucking tests in Texas, New Mexico, Arizona, and California.
Middle mile: For AVs, the middle mile could be a sweet spot on the logistics spectrum. Think of this section as fixed, repeatable routes between distribution centers and warehouses.
- Gatik is probably the most well-known startup focused on middle-mile automated logistics. Earlier this year, Gatik told the Brew it’s seeing a spike in orders driven by e-commerce.
Last mile: The first and middle miles involve moving batches of product. Last-mile delivery is the final stage of moving the sweatsuit, with an individual SKU, to your doorstep.
Countless companies are focused on automating the last mile, which is an expensive, complicated, and time-consuming part of the product journey.
- Nuro, a SoftBank-backed self-driving startup, has developed the R2, a low-speed locker-on-wheels. The purpose-built vehicle, which will whisk online orders to customers in cities and suburbs, has received the greenlight from U.S. safety officials.
- Startups Starship and Kiwibot, which operate sidewalk delivery bots, shave seen demand spike lately. Amazon and FedEx are also working on sidewalk delivery bots.
There is ample investment and interest. Autonomous delivery is on the radar of e-commerce and mobility companies alike. Emerging Tech Brew is firmly of the opinion that the first commercial AV fleets will carry packages, not people.
But the tech is complicated, and adoption is still very low. The volume of cargo transported by AVs so far is a rounding error on what DHL delivers in a day.
Amazon, Alphabet, Walmart, and UPS are working on drone delivery in some capacity. But they’re not delivering your sweatsuit this time around. And definitely not next time, either, if you’re in a city.
- Amazon is laying the groundwork for its own logistics network with purpose-built drones.
- Walmart has partnered with a number of drone startups.
- Wing, Alphabet’s drone subsidiary, is operating delivery services in Virginia, Australia, and Helsinki, Finland.
- Last October, UPS became the U.S.’ first drone airline operator.
Drones must clear many more technical and regulatory hurdles before commercial deliveries become a mainstay. But they’re eventually coming, at least to rural parts of the U.S.
If everyone had everything delivered to their doorstep via internal combustion engine vehicles, it would be a C02 nightmare.
It’s early days for electric vehicles (EVs), but there’s momentum: Amazon has purchased 100,000 electric delivery vans from EV startup Rivian. In January, UPS submitted a purchase order for 10,000 EV vans from startup Arrival. FedEx and others are also adding EVs to their fleets.
- Ikea says that by 2025, all deliveries in 30 markets will use EVs or other zero-emission vehicles.
- The last mile is particularly conducive to EVs. Vehicles are dispatched from a central hub and take short trips (EVs are range-constrained). The vans also frequently start and stop, which goes hand-in-glove with regenerative braking in EVs.
On a more micro scale, couriers steering e-bikes are an increasingly common sight in cities around the world.
Electric delivery vans are far from ubiquitous, and the technology is pacing much faster in passenger vehicles. But EVs will quickly become very common for urban deliveries.
So, your sweatsuit has been delivered. What looked to you like a few clicks and a box magically arriving on your doorstep was a marathon for the many technologies working behind the scenes.
We’ll leave reviewing those sweats to the fashion experts. Let’s end with what the ideal process should have achieved.
- For customers: By baking the latest tech into the online discovery, order, and delivery processes, retailers hope to boost brand loyalty beyond the strength of their products.
- For business costs: Refining technologies at every step of the pipeline reduces retailers’ reliance on expensive, slow resources (people). With AR/virtual try-on tech serving shoppers their perfect fit or desired quality, there’s also a lower likelihood of returns—which are notoriously costly for retailers.
How will we know if retailers’ online fulfillment improvements are sticking? When your sweatsuit’s #OOTD debut inspires a friend/colleague/bot to buy their own, or when you click back for seconds.
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