Cyber Monday might have been a bit of a disappointment, but in a year when so much shopping is happening online, omnichannel-savvy retailers are undoubtedly the winners.
Nevertheless, the true revolution in shopping may still be yet to come.
That’s according to Lisa Chai, senior research analyst at ROBO Global. An investor with nearly two decades of experience focusing on disruptive technology, she notes that e-commerce is easily the best performing subsector of the recently launched
ROBO Global Artificial Intelligence
exchange-traded fund (ticker: THNQ), which she manages. She says she’s excited by the direction retail is taking.
While no one expects online shopping to disappear after Covid-19 does, Chai notes that the investments companies are making today will transform our experience as consumers. With so few people visiting bricks-and-mortar locations for fear of infection, tech investments in improving the in-store experience aren’t having much of an immediate impact. Yet retailers are using the pandemic to test some initiatives while also using it as a spur to pursue longer-term goals.
“You have to spend the money now—because of Covid, you get a free pass,” she says. “If you’re going to spend extra money on tech, on improving your supply chain, fulfillment centers, and POS [point of service], no one is going to yell at you now, but by next year it will go back to normal.”
One silver lining for traditional retailers, as Barron’s has noted, is their ability to close underperforming stores without the usual scrutiny. Others have turned shuttered stores into fulfillment centers as they pivot toward online sales.
Chai notes that some of these locations will never return, given the U.S.’s overstored landscape, but they might be more useful for distribution, as strong supply chains have been crucial this holiday season. She points to
(AMZN) ability to keep items in stock and promise tight delivery windows for products across the board, helping it be a major winner this year, even more so than in the past.
“Amazon learned months ago the impact of their supply chain from the pandemic,” she says. “They ramped up their inventory for the holiday season, and if anyone has the technology capability to do it, it’s them.”
But it isn’t the only winner. Chai highlights
(SHOP) expansion of its offerings to merchants,
(ETSY) algorithmic investments, and
(WIX) catering to small businesses that aren’t competing with Amazon but know they need an online presence to survive.
Artificial intelligence is at the heart of a lot of this innovation, from Amazon’s robots to analyzing social media “likes.” Chai believes we’re only in the early innings of machine learning enhancing our shopping experience, enabling increased personalization and greater online choice on the consumer end and better inventory control and merchandise sourcing behind the scenes.
E-commerce existed long before Covid, but the pandemic accelerated the shift online. Barron’s has argued that the new habits that consumers are forming in 2020 will remain powerful even after a vaccine is available. Chai agrees: “Consumers are much more demanding now,” whether it’s next-day shipping or the ability to shop for all categories from home. Artificial intelligence makes these things happen more smoothly, but it also powers new features, like extreme personalization and customization.
Ultimately, she notes that 2020 “is a wacky year,” and not all the patterns we’re seeing this holiday season will have legs. For example, Cyber Monday and Prime Day may have come in light because consumers, after months of browsing at home, had already homed in on what they wanted, and were discerning in looking for deals. She argues that the next big trend will be integration, as point of sales, supply chain software, and mobile apps—which operate largely independently now—will have to be able to talk to each other.
AI will be a big part of that, and will help create a more seamless, better experience overall for consumers. “I really believe it will keep us from buying things we don’t need, that just end up shoved in a closet,” Chai says. “We’re going to be shopping smarter, not necessarily more.”
Write to Teresa Rivas at [email protected]