Stifling competition, customer demand for personalized services and a push to elevate the in-store shopping experience, will drive the retail and e-commerce artificial intelligence (AI) market to $19.37 billion in revenue by 2025.
This would represent a combined annual growth rate of 42.8 percent over the forecast period beginning 2019, according to a ResearchandMarkets.com report.
Though major software firms, including IBM, Microsoft, SAP and AWS are leaders in this market space, newer companies are springing up to serve the needs of retailers drowning in data and hoping to uncover game-changing insights. A Capgemini report issued in August found that 28 percent of 400 surveyed global retailers were deploying AI in their enterprise in 2018. In the report, Paul Clarke, CTO of British online grocery chain Ocado described AI as “completely in a disruptive league of its own—it’s the one to rule them all, in the Tolkienian sense.
“It lets you accomplish really exciting things with other technologies,” Clarke said.
U.S. retailers (25 percent) lagged leaders like France (37 percent) and the U.K. (39 percent) in experimenting with or deploying AI, Capgemini’s “Building the Retail Superstar: How unleashing AI across functions offers a multi-billion dollar opportunity” report found.
Among retailers that offer product in a single category, apparel/footwear showed the highest AI usage at 33 percent. Meanwhile, multi-category merchants like Amazon have made AI an integral part of their business and 42 percent use AI to some degree. eBay credits AI with increasing its business as VP of applied research Tom Pinckney said, “It is indeed north of $1 billion per quarter. AI and ML are driving incremental sales that wouldn’t otherwise have happened.”
All of this interest in the promise of AI is attracting investment eyeballs, too.
Last month, intelligent retail automation platform Vue.ai raised a $17 million Series B round led by Falcon Edge Capital, which has invested in Lyft and other logistics tech firms. Sequoia Capital India and Global Brain, a GP of KDDI Innovation Fund, also participated. The three-year-old Redwood, Calif.-based startup, which claims to be the first company to automate corporate retail functions that traditionally require human intuition, has raised $27.5 million to date and counts Levi’s, Macy’s, The RealReal and ThredUp among its customers.
Vue.ai combines seven products—VueTag, VueCommerce, VueModel, VueStyle, VueFind, VueMail, and VueStudio—into a unified retail “neural network” whose goal is to help merchants make smarter, more informed decisions. The startup breaks down the essence and attributes of a retailer’s products into language that merchandising teams can understand and help them make “better decisions on the fly.”
Ashwini Asokan, Vue.ai founder and CEO, believes that retail’s future as an entertainment-centric experience is a significant factor in why retailers are looking to automate their companies.
“The experience economy we see today is the start of that era,” Asokan explained. “Brands are shifting to designing worlds that consumers want to be a part of and that has to integrate with the new ways people shop. Vue is the electricity that powers all these complicated and important retail functions so retailers can focus on the business of entertaining you.”
Vue.ai said it plans to use the new funding to add new talent, continue executing on its product roadmap and attract new retail clients.