thecleanTusk

The pandemic forced the world into the new age of digitalization in the effort to entertain and convert consumers without needing to leave their homes. Now, even the most basic omnichannel interactions are performed through a tech tool. Gone are the days where you have to be a large business to afford AI tech services! Across global industries AI is predicted to benefit the global economy in the range of $2.6 trillion to $4.4 trillion.Today, even the smallest fashion startup can take advantage of the democratization of AI tools. Last week’s article examined how issues in the luxury supply chain negatively impacted brand perceptions. In this article we examine the many current ways that AI is currently being used to efficiently run small luxury businesses.

A distribution channel is the culmination of a supply chain and a marketing channel coming together to deliver a product to a consumer in the most efficient and caring manner. The supply chain side involves many partners which help bring a particular product to life. In the context of a small jewelry brand that focuses on gemstones that may involve raw material suppliers, the jewelry manufacturer and even the agency which performs chemical and quality testing.

The marketing channel side involves people and systems which help move the product from the producer to the end customer. Visually, a distribution channel would be set up like a network web rather than vertically joined operational areas. This means that communication can happen across a distribution channel and information can be exchanged between the buyer and seller.

Each exchange has transaction costs associated with the transfer of information. These transaction costs however, have been minimized significantly with the advent of embedded AI capabilities, seen across existing tech tools, software and new API. Previously, luxury businesses required a high capital investment needing physical stores, well trained sales personnel and even dedicated warehouses for wholesale fulfillment.This demotivated younger aspirants from various backgrounds to even explore their ideas. Accessibility to AI tools has empowered an entire generation to invest in the luxury industry, without breaking the bank!

My recent interaction with a small luxury gifting company has revealed much about how the distribution channel network structure is accessed by AI to create a seamless customer experience. I remember receiving personalized emails with names of the birthday recipients that I previously placed an orders for. The email copies were written to remind me to send them gifts again this year. CRM tools like Hubspot and Mailchimp now have AI based personalization capabilities built into the platforms to enhance prospecting efforts and ultimately to create a convenient experience for the potential consumer receiving the messages.

A day prior to the delivery of my chosen gifts, I was informed through email that a specific add-on was “out-of-stock” . The AI-generated email also detailed available alternatives, making the re- selection process smooth without missing the delivery date. Inventory management is also an area that is utilizing AI to help SMBs run efficient businesses. Tools like Katana and Zoho Inventory are using machine learning for inventory management and to predict demand. This can help luxury startups gear up for seasonality and growth by tapping into the supply chain relationships early to deliver on periods of increased demand. AI in inventory management can also help B2B luxury startups to predict stock outs and manage logistics route optimization for on-time deliveries.

The day of the delivery, I received a WhatsApp text from the gift brand’s chatbot API indicating that the mail person had failed to reach the recipient through the number I provided. The chatbot asked me to provide an alternative mobile number to reach the recipient to open their gate and confirmed that the item was finally delivered. Be it text chatbots, app integrated APIs or even call center voice assistants, AI has given founders and their teams hundreds of hours back as it independently takes care of frequently asked questions, order changes and status updates. AI tools on platforms like Intercom and WhatsApp Business API take care of customers’ queries directly and efficiently.

AI capabilities built into existing and integrated business tech tools have many benefits including increased efficiency, adapting to growth, generation of customer insights and ultimately customer satisfaction. The move towards AI adoption has already begun as revealed by a recent survey by the Small Business and Entrepreneurship Council which found that 41% of small business owners used AI to automate routine tasks.

With many of these tools offered for as low as $20 per month, luxury startups can still come across as organized and sophisticated businesses to new and returning clients, competing with the standards set by larger market players. In conclusion, I recommend luxury startup founds to not overlook the potential of AI integration across their distribution channels. Leveraging these technologies, especially free and cost-effective solutions, can significantly enhance operational capabilities, competitiveness and ultimately fuel growth!