Retail, which is defined as the sale of goods to the public, has always been a largely offline industry in the Caribbean. For comparison, in the United States online retail (e-commerce) is about 10% of all retail sales, so we would assume that this figure is much less in this region.
Although largely “offline”, the region’s B2C (business to customer) e-commerce market is estimated to be worth more than US$5 billion and is growing at 25% a year. The vast majority of this money is actually spent by Caribbean residents buying from U.S. based retailers. In Trinidad & Tobago for example and according to the Ministry of Trade and Industry, T&T residents spend over US$500M a year online, and the vast majority of this money goes to purchases made on U.S. retail sites like Amazon.com.
T&T residents spend over US$500M a year online, and the vast majority of this money goes to purchases made on U.S. retail sites like Amazon.com.
What we’re now witnessing is the birth of a new world, evident by the unprecedented increase in online spending, happening almost overnight. The post-COVID era will have an economy shaped by new habits & regulations based on reduced close-contact interaction and tighter travel & hygiene restrictions. The current disruption will change how we eat, work, exercise, manage our health, socialize, and most of all – SHOP. So, here lies the question, how are Caribbean retailers adapting?
Jamaican Retailers
As recently reported by The Jamaica Gleaner – grocery markets are adjusting before our very eyes. One example is listed company, Derrimon Trading. They actually had their online and home-delivery infrastructure in place long before the pandemic hit Jamaica, and even thought of upgrading its platform to include a virtual shopping initiative, where its customers could see and interact with digitally created shoppers and salespersons in a digital replica of its subsidiaries, Sampars and Select Grocers.
Over the past month, chairman and CEO of Derrimon Trading, Derrick Cotterell, says Sampars has seen a 300% increase in online sales while Select Grocers has also seen an uptick in the number of orders being texted into the company for home delivery. Even our Prime Minister Hon Andrew Holness has now began to push the narrative.
What we’re seeing is a shift or in many cases, fast-tracking of e-commerce initiatives across the whole retail industry but for the Caribbean to be globally competitive and get ahead of the curve, we see Artificial Intelligence as an extremely useful tool.
Driving Growth With Data Analytics and A.I
At present, most business owners use just 0.5% of all the big data in their possession. The bigger chunk of data remains siloed in proprietary software and external tools. However, as machine learning technologies are getting significantly better at retrieving and transforming scattered data into actionable insights, e-commerce companies are finally starting to unclog their data pipe. Below are just a few benefits that emerge as a result:
-
RETAIL – Higher Revenues from Cross-Sell and Up-Sell Campaigns: The typical customer buying journey is no longer linear – they switch between website, search Google for promo codes. Capturing and analyzing all those interactions is a challenging task for human analysts. But it hardly presents any difficulties for an intelligent algorithm. Predictive intelligence recommendations can significantly improve a business’s bottom line. Amazon’s product recommendation engine drives 35% of cumulative company revenue. What’s even better, the results arrive fast: companies who have already chosen to adopt a predictive intelligence solution have reported a 40.38% influence in revenue after just 36 months post-adoption.
-
RETAIL – Data-Driven Product Research and Product Development: Deciding on new products to sell or develop is never an easy task for e-commerce brands. The idea may look good on “paper”, but eventually flop due to poor market research and product positioning. According to Hubspot, 66% of products fail within the first two years and 80% of new products stay on the shelves for less than two years. Data analytics platforms can supply businesses with all those insights for a fraction of the cost. It just comes down to learning how to interpret that data.
-
RETAIL – Enhanced Pricing Strategy: Big data analytics unlocks access to more granular insights, allowing you to surge or drop the prices depending on individual customer’s tolerance just like Uber does. Data-backed price management initiatives bring significant results in the short terms perspective: 2%-7% increase in business margins and a 200-350% average growth in ROI over a 12-month period according to Deloitte data.
-
LOGISTICS – Predictive Capabilities: Having a tool for accurate demand forecasting and capacity planning allows companies to be more proactive. By knowing what to expect, they can decrease the number of total vehicles needed for transport and direct them to the locations where the demand is expected, which leads to significantly lower operational costs.
-
LOGISTICS – Automated Warehouses: AI in warehouse automation is being used for predicting the demand for particular products. Based on this data, orders can be modified and the in-demand items can be delivered to the local warehouse. This predicting demand and planning of logistics well in advance means lower transportation costs.