How AI and data are shaping e-commerce, delivery as a service


Emmanuel Kalunga, Head of Data Science and Economic Intelligence, OrderIn. Source: Supplied

In South Africa, meanwhile, WorldWideWorx research shows that online retailing grew by 66% in 2020 and is expected to reach R42 billion in 2021. It also now accounts for more than double the percentage of online sales. detail totals he achieved in 2018.

But even as the e-commerce space celebrates these victories, it must look to the future. Understanding the trends and innovations driving the industry will be essential for all players looking to survive and thrive in the future. This is especially true for the delivery-as-a-service (DaaS) segment of the industry.

DaaS is service-oriented delivery and business processes in line with customer expectations and needs in the on-demand economy. In South Africa, most e-commerce companies traditionally own their delivery services as part of their logistics, and others rely on delivery service providers who are traditional logistics companies and not always equipped for the on-demand economy.

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During the pandemic, however, South Africans have quickly become accustomed to on-demand deliveries, particularly in the fast food and grocery sectors. For e-commerce players outside these sectors (and their DaaS partners), achieving similar delivery standards could represent a major competitive advantage.

To do this, they must actively invest in using artificial intelligence and data to their advantage.

The rapid rise of AI in e-commerce

While it might seem like we’ve been talking about AI being on the verge of mainstream mainstream for years, the truth is that it’s already playing a big role in the industry. This year, it is estimated that online retailers will spend around $7.3 billion on AI integration.

An exemplary example of the role AI is already playing in e-commerce is something many of us already take for granted: recommendation engines. Traditional retailers have had their strategies to generate sales and promote new arrivals in their stores. They have perfected the art of product placement and shelf layout.

When customers enter stores or malls to fill their shopping cart, they are presented with other products that might be complementary to what they are looking for. Some items are placed in such a way as to generate impulse purchases (parents with children will know this).

These techniques do not work in e-commerce where the customer could land directly on the desired items (thanks to search functionalities). Recommendation engines are the replacement and perhaps an enhancement to the entire mall and in-person store experience.

As is the case in all retail and supply chains, e-commerce will also rely on proper forecasting to match demand and supply in stores and warehouses.

And finally, as competition grows in the industry, AI and data are essential for good decision-making. Studies have shown that with the right data, even simple probabilistic models outperform human experts at estimation and prediction.

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Making DaaS Viable

But AI and data aren’t just crucial for consumer e-commerce. They will also be extremely important for the future of DaaS. In its current state, DaaS is a very low-margin business model. Data and AI will be key to increasing the viability and profitability of DaaS. AI and data will help reduce delivery costs by making delivery more efficient.

The perfect match between delivery capacity and customer needs is fundamental to optimize the use of resources in DaaS and achieve efficient deliveries. This will unlock better prices and reliable services for consumers and high margins for service providers, including drivers. For the foreseeable future, AI will make the difference.

Looking forward

AI and data are also opening up a host of new avenues and opportunities in the e-commerce and DaaS spaces. Dark Stores, for example, will combine the good side of stores and warehouses to deliver convenience and state-of-the-art automation. E-commerce is also increasingly available on many “unexpected” channels, such as Instagram and WhatsApp, which have integrated payments.

Perhaps more importantly, however, they could eventually enable parts of the delivery chain to be automated, providing a better customer experience and ensuring that e-commerce and DaaS operators are as sustainable as possible.


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