What The Automation Revolution Means For Brands
From drone delivery to robotic servers to Amazon Go and more
Last week, two of the moonshot projects from Google X — Project Loon, which provides internet connectivity to remote areas via stratospheric air balloons; and Project Wing, which focuses on autonomous drone delivery — graduated from being experimental projects and become independent companies under Google’s parent company, Alphabet. While both projects hold vast potential, the coming-of-age of Project Wing, especially, marks a milestone for the development of autonomous drones (aka. Unmanned Aerial Vehicle, or UAV) in the U.S.
Drones, along with the quickening development of autonomous vehicles and robotics, form the three consumer-facing points of AI-powered automation. Sooner than we expect, as such trends continue, specific use cases of machine learning will be able to replace human delivery workers, drivers, and other manual-labor jobs. Amazon alone, for example, reportedly has an estimated total of 100,000 robots working at its numerous warehouses worldwide.
Beyond manual jobs, the advances in computer vision and pattern recognition also mean that AI automation may soon replace human for white-collar jobs like insurance underwriters and financial analysts. Altogether, 800 million workers globally could be affected by automation and the rise of artificial intelligence by 2030, McKinsey Global estimates.
Instead of the early sci-fi fantasy of a general purpose AI that will be able to handle every aspect of our daily needs, the promise of AI is much more likely to manifest in a variety of narrow-focus machine learning tools that will automate a well-defined, simple task. Back in the day, people dreamed about a robot housekeeper to handle all the domestic chores for us, but instead we got inventions like washing machines and dishwashers to lighten our loads by automating certain parts of those manual tasks. We expected humanoids, but what we get instead were nothing like humans.
Similarly, the current wave of AI-powered automation is leading to many ways of automation that do not result in human-like robots. As far as consumer-facing applications are concerned., the trend is primarily manifesting via the aforementioned three areas, (Industrial automation is a whole other story that deserves its own article — here is a good one from the New Yorker.) And sometimes, that force of automation can even be completely invisible, as in the case of Amazon Go stores, yet working its AI magic to make our lives easier.
Much has been written about the economic and sociological impact of this shift towards AI-powered automation, and no doubt more will be published as the debate over the applications and ethical questions of AI automation rages on. In this piece, we will mainly focus on the business and marketing implications as we aim to lay out the three main consumer-facing areas of automation and their brand implications.
Drones To Transform Delivery & Logistics
The drone industry has been developing for a few years to transition the UAVs from military use to commercial applications. The main focus of that development is the promise of automation it could bring to the logistics and delivery industry, which, in turn, will cause strong ripple effects for retail, CPG, and restaurant brands as the future of e-commerce fulfillment to solve the problem of “last mile” deliveries, especially in remote areas with rough road conditions or subpar transit infrastructure.
Alphabet says Wing will continue to improve its delivery drones while also testing new unmanned-traffic management platforms to safely route their drones. Previously, Project Wing has contributed to delivering food and other products to people living in Australian suburbs, and delivering lunch burritos to students at Virginia Tech. Human pilots are on standby and ready to take over should a situation arise, but the long-term goal is to get fully autonomous drones for deliveries.
Of course, Wing is not the only drone company in the U.S. that is exploring the commercial use of drones. Amazon first unveiled its drone project — appropriately dubbed Prime Air — in late 2013, but it took the ecommerce giant a couple years of development to finally conduct an actual package delivery in Cambridge, England in December 2016. Beating Amazon to the punch is pizza brand Domino’s, which partnered with Australian drone startup Flirtey to successfully deliver a pizza order by drone in New Zealand one month earlier. Similarly, convenience store chain 7-Eleven has also worked with Flirtey to carry out 77 routine commercial drone deliveries in the U.S.
By and large, however, U.S. drone companies are still battling red tape from regulators for test permits, thus still stuck in early stages of development. At this rate, mass adoption of drone delivery likely won’t occur until after 2020 due to regulatory barriers, technical issues, and low consumer acceptance.
In contrast, drone delivery has progressed further in China, with ecommerce giants Alibaba and JD.com leading the charge. China is a unique market that is ripe for drone deliveries to take off, thanks to its accommodating regulations and owning the world’s biggest ecommerce market. Last year, the Civil Aviation Administration of China approved the joint effort between JD.com and SF Holding Co., China’s biggest express-delivery company, to start sending packages by drone in certain rural areas. So far, they have clocked up over 5,000 hours of drone flight time.
Alibaba, on the other hand, started working with Beihang Unmanned Aircraft System through its logistics division Cainiao to develop heavy-duty cargo drones in 2015. It has also been making drone deliveries via Ele.me, its food delivery arm, which gained approval in May to test drones in a large industrial zone in Shanghai. The competition between the two Chinese ecommerce giants is fueling their work in bringing drone delivery to reality as they build out drone networks and work closely with regulators to set the rules for widespread use.
Regardless of regional differences, it is clear that the deployment of drone-powered delivery will give wings to local businesses to deliver orders to customers in a prompt manner. By taking it to the sky, drones can skip over the congested road traffic and drastically cut down delivery time. Once a fully automated network of delivery drones is established, local businesses, including restaurants, pharmacies, and grocery stores, will have a fast and reliable way to deliver their products to customers. While some Amazon customers are on board, others still have trust-related concerns about letting trained and vetted Amazon delivery person enter their homes to drop off a package. So if drone delivery becomes a reality would they be quicker to embrace in-home delivery when no human beings are involved? Only time will tell.
Autonomous Vehicles To Drive Mobility Services
We outlined the status quo of autonomous vehicles in last week’s article on the future of transportation. To recap, the biggest tech companies in U.S. and China are leading the research and on-road testings of autonomous vehicles, and the leaders in the on-demand ride-sharing market are also actively involved in the process, hoping to deploy self-driving cars in their networks to offset some of the challenges that come with managing a two-sided network. If drones are changing the conversation about automated parcel delivery in the near future, autonomous cars will be the driving force behind the emergence of Transportation as a Service (TaaS), especially in terms of moving people and larger quantities of goods.
On the consumer side, common mobility services — trip planning, ride hailing, looking up bus and train schedules — alongside seamless booking, ticketing, and payment solutions all integrated into one app to solve all transportation needs. A TaaS network powered by autonomous vehicles and drones will bring a paradigm shift to the distribution model of many other industries such as retail, healthcare, and restaurants. When delivering goods and moving people become an automated modular service that any businesses can tap into on-demand, it will no doubt enable new business models that center around better, more convenient customer experiences, such as offering to get customers and their heavy shopping bags a free ride home after they spent a certain amount in stores.
Some of the mobility concepts that were demoed at CES 2018 showcased an early vision of how that could work. For example, Toyota showcased its e-Palette concept, a fleet of multi-functional, autonomous electric vehicles with an open interface that will allow partner companies to install their own automated driving system. Launch partners including Amazon, Pizza Hut, DiDi, and Uber, which covers ecommerce, food delivery, and on-demand ride-sharing. Meanwhile, Alibaba is about to start mass production of the G Plus, which is a four-wheeled small truck that uses a laser-based guidance system to navigate roads without the need for a human. It also can double as a smart, mobile coffee vendor, and a similar vehicle will soon start delivering groceries in the U.S. as part of a trial program. This week, Bloomberg reports that Zoox, a once-secretive self-driving car startup, is raising $500 million with the goal to publicly deploy autonomous vehicles by 2020 in the form of its own ride-hailing service. Whatever you think of driverless cars, they are coming, perhaps faster than you think.
Service Robots To Automate Everyday Tasks
Moving beyond automated means of transportation, AI-powered automation is also poised to change the way we handle everyday tasks, thanks to the advances in robotics. From dog-walking to sorting trash, from wrapping gifts to folding laundry, it seems like most household chores will soon become automated in the same way that vacuuming is being done by Roombas. Thanks to the time freed from doing housework, consumers will have more time to spend on other activities, whether it’s more binge-watching or online shopping.
At CES this year, Honda unveiled three new robotics concepts each designed to assist people in various circumstances, from disaster recovery to elder assist to recreational usage. Similarly, LG introduced three new models to its CLOi robot lineup that are designed to help customers with various tasks such as serving food and drinks at restaurants, guest check-in and -out at hotels, as well as guiding shopper to the right supermarket aisle. Although they have yet to become legit enterprise products worthy of wide adoption, some forward-thinking companies have started exploring with robot employers.
For example, Kohl’s has been testing its robot store guide at a San Jose store since 2014. This year, the Winter Olympics brought 85 service robots to Pyeongchang as robot guides, cleaners, and waiters. Pepper, the humanoid robot created by Aldebaran Robotics and SoftBank Mobile, is already being used to greet customers in stores across Japan, Europe and now in Silicon Valley. This March, Flippy, a robot arm capable of flipping as many as 2,000 burgers a day, officially took its place in the kitchen of a California burger chain to cut cost and improve efficiency.
In fact, more than half of all tasks associated with fast-food restaurants are poised to be automated, according to a study by McKinsey Global Institute.The study categorizes various professional skill sets, such as processing data, data collection, customer interactions, and managing others. Some of those activities, such as data processing and collection, as well as performing repetitive physical work, can already be handled by robotic automation today. In contrast, jobs that involve interacting with other humans, either as customers or coworkers, as well as creativity-driven jobs will take longer for robots to automate.
For brands, this means it is time to examine your operation and customer service to figure out which parts of your businesses are tasks can be easily automated by AI at this point, and which parts are interaction-driven ones that still requires a human touch. For now, service robots are far more suitable for backend support rather than front-of-house tasks, at least not until they stop being a novelty item and become possible to be deployed at scale. Low customer sentiment towards automation also needs to improve before brands can deploy robots in consumer-facing domains. If the public reactions toward Boston Dynamics’ latest robotic dog, which can open doors and fight back against human interference, is any indication, we still have a way to go before service robots become normalized.
The Invisible Automation
Beyond this triad of tangible automation, there’s also a more subtle yet equally powerful kind of automation that we previously laid out in our analysis of Amazon Go stores and other automated retail technologies. Drone, robots, and self-driving cars may serve as the physical manifestations of the upcoming AI revolution, but they are only the tip of the automation iceberg. With the advances in computer vision and voice technologies, computers can now process images, videos, and natural speech as data input, which means that the scope of tasks that AI-driven solutions will be able to automate will only continue to broaden. For example, the Google Duplex technology that was demoed at Google’s developer conference in May stunned the world by enabling Google Assistant to call restaurants and nail salons on the user’s behalf and pass for a human assistant while doing it.
So much of what we do now is increasingly happening through digital channels, and thanks to data-driven algorithms, a lot of the guesswork that would previously go into those tasks are now being handled by automation. For instance, flight-watching apps like Hopper and Skyscanner will find the perfect time to buy a plane ticket to ensure you get the lowest price possible. Shopping for groceries is becoming semi-automated as Instacart works with Allrecipes to let you add all the ingredients you will need to your shopping cart with one click. AI-powered investment apps like Robinhood Wealthfront and TradeHero are taking the hard work out of stock management and automating part of the investment process. If the machine learning algorithms, based on your shopping history, personal preferences, and additional contextual data, can correctly guess what you would want and serve them up without your explicit command, is it not an invisible automation of choice?
Retailers across the board are feeling the AI prowess that Amazon possesses and are working harder than ever to build out their own suite of AI-powered tools to improve their customer relationships. On Tuesday, Walmart announced they formed a five-year strategic partnership with Microsoft to use their Azure cloud computing platform alongside new projects focused on machine learning, artificial intelligence, and data platforms.
Moreover, the rise of connected devices and their growing shopping capability set the stage to turn everyday shopping from an event into a utility. Instead of putting down everything you need to buy on a list and head to the store, physical or online, to make the purchase, replenishment services embedded in connected home appliances, such as Whirlpool’s latest home appliances integrated with Amazon’s Dash Replenishment Service, will automatically detect when you are running low on supplies and reorder what you need for you. Target recently ran an Indiegogo campaign for its Target Fetch program, which automatically reorders household essentials for users through the use of three connected gadget: toilet paper spindle, paper towel holder, and soap pump.
In such scenarios, CPG products and retailers simply become part of the fabric of life for their customers, always there but rarely in the front of mind. In other words, part of shopping, namely the repetitive act of buying mundane everyday products, could easily become automated, which will no doubt bring enormous challenges for CPG brands and retailers to contend with.
This is not to say all shopping will be automated. Certainly, shopping for highly personal items like fashion apparel, gifts, and most big-ticket items will likely remain an experience in and of itself, and therefore unfit for automation. As we pointed out in our 2018 Outlook, retail is increasingly bifurcating into either convenience-centric or experience-driven. Automation is great for the shopping activities where one would prioritize convenience, and less so for the experience-driven ones. However, even for those experience-driven retail activities, there are still opportunities to apply automation technologies in the backend to improve their cost efficiency.
Overall, developments in artificial intelligence are leading to a sweeping force of automation that is set to transform all aspects of our lives, from how we get around, to how chores get done, to even how we shop. It is important to remember that, at the end of the day, AI-powered automation is created to make our lives easier, not to replace us and what we do. It is meant to be a tool that we can use, just like a bike or an iPhone, to help get things done faster and easier, not to do everything for us. And it works best when it’s invisible or imperceptible, allowing us to focus on what we do without even realizing the AI automation happening in the backend.
The same principle applies to how brands and marketers should approach automation tools — they are here to take care of certain tasks on your behalf and supercharge your customer experience, but you have to remember to bring the human touch in order to make a meaningful connection and deliver a differentiated brand experience.
