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[Fórum 2020 - Global Edition] Dados e Al - A galinha dos ovos de ouro no E-Commerce

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Dados e Al - A galinha dos ovos de ouro no E-Commerce.
Philipp Povel - CEO e CO-Fundador, Dafiti Group
Malte Huffmann - CO-Fundador e MD, Dafiti Group

Published in: Data & Analytics
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[Fórum 2020 - Global Edition] Dados e Al - A galinha dos ovos de ouro no E-Commerce

  1. 1. Dados e AI A Galinha dos Ovos no e- Commerce Fórum E-Commerce Brasil São Paulo, Julho 2020
  2. 2. Why are we here? Dafiti’s essence is Art & Science - today, we would like to talk about the Science in our business! How does data and AI in particular transform our world and our business?
  3. 3. By now, we all know it... “Data is the new Oil “ Clive Humby (UK Mathematician)is credited to be the first who coined the term in 2006 “AI is the new electricity” Andrew Ng at re:MARS 2019 “From mobile first to AI first” Google’s CEO Sundar Pichai announced at Google I/O 2017 “Software Is Eating the World, but AI Is Going to Eat Software” Nvidia CEO Jensen Huang, May 12, 2017. Nvidia Developer Conference
  4. 4. ...or don’t we? MIT Sloan report: Many AI initiatives fail. 7 out of 10 companies surveyed report minimal or no impact from AI so far. Among the 90% of companies that have made some investment in AI, fewer than 2 out of 5 report business gains from AI in the past three years. This number improves to 3 out of 5 when we include companies that have made significant investments in AI.
  5. 5. The amount of data and connected devices is increasing exponentially Source(s): https://www.statista.com/statistics/871513/worldwide-data-created/ © Statista, https://leftronic.com/internet-of-things-statistics/ | https://www.statista.com/statistics/371828/worldwide-mobile-connections/ | https://www.bankmycell.com/blog/how-many-phones-are-in-the-world ) What is 1 zetabyte? 4.503.6 Trillion iPhone 11 Max Pro 256 GB or 8.868.7 trillion videos of 10 minutes (1080p) As of August 2019 there were 26.66 billion of active IoT devices and 3.4 billion internet users and creating around 9 billion mobile connections to the internet.
  6. 6. Moore's law is the observation that the number of transistors in a dense integrated circuit doubles about every two years As a result computing power is growing exponentially and is expected to reach human levels by 2029 Driven by Moore’s law
  7. 7. ● AWS has 125 different services available. Of these, 18 are related to AI / ML and 55 to data ● In 2018, AWS had 200 different ML related launches ● ~10,000 customers are currently using ML services And by significantly lower cost of storage and the emergence of cloud computing that offer “AI as a service” Source(s): https://mkomo.com/cost-per-gigabyte Hard drive cost per Gigabyte? >250.000 USD cost of GB before 1980 <0.10 USD cost of GB after 2010
  8. 8. As a consequence, the world as we know it is changing The way we commute.. Self-driving cars The way we buy.. Amazon Go The way we style... Stitch Fix The way we are watched... China surveillance The way news is created... Fake News
  9. 9. AI has been a significant catalyst for this change as investments into AI are growing at a rate of 48% p.a. and reached more than USD 40bn in 2018. Private Investment in AI (in bn USD) Number of funded companies Source(s): AI Index 2019 Report
  10. 10. AI is a General-Purpose Technology and as a result Global GDP could be up to +14% higher by 2030 - the equivalent of an additional USD 15.7 trillion. Source(s): PWC AI Analysis - Sizing the Price Report, 1) General-purpose technologies (GPTs) are technologies that can affect an entire economy (usually at a national or global level). GPTs have the potential to drastically alter societies through their impact on pre-existing economic and social structures Where will the value gains com from with AI - Global GDP impact by effect of AI USD 15.7 trillion is more than the current output of China and India combined! Productivity Gains will account for approx. 40% of all GDP gains and involve automation of routine tasks and augmenting employees’ capabilities. Increased Consumer demand will deliver 60% of additional GDP. Consumers will be attracted to higher quality and more personalised products/services, but will also have the chance to make better use of their time.
  11. 11. North America & China will be the winners accounting for USD 10.7 trillion and 70% respectively of the global economic impact Source(s): PWC AI Analysis - Sizing the Price Report Which regions will gain the most from AI North America & China stand to see the biggest economic gains with AI enhancing GDP by 26% in China and 14.5% in North America. I.e. 70% of the global economic impact! Europe and Developed Asia will also experience significant economic gains from AI enhancing GDP by 9.9% in Northern Europe, 11.5% in Southern Europe and 10.4% in Developed Asia. Developing countries (incl. Brazil) will experience more modest increases due to the much lower rates of adoption of AI technologies expected.
  12. 12. The USA and China are dominating AI on average, however, the reality is much more nuanced as local centers of AI excellence are emerging across the globe USA China Next Best or leader While the US and China dominate AI, there are strong centers of excellence in Europe, Japan and India as well that lead in some aspects of AI Source(s): AI Index 2019 Report Private Investments per country No. 1 ‘ No. 2 UK -> No. 3 Private Investment per capita No. 3 No. 13 Israel -> No. 1 No. of AI startups funded No. 2 No. 1 UK -> No. 3 No. of AI Patents No. 1 No. 6 Japan -> No. 2 No. of Deep Learning Papers No. 1 No. 2 UK -> No. 3 No. of AI Journal Papers No. 2 No. 1 India -> No. 3 Relative Skill Penetration No. 2
  13. 13. Brazil ranks last based on private investments into AI and has not yet defined a national AI strategy Private Investment in AI (bn USD) Source(s): AI Index 2019 Report ● Brazil has not yet published a dedicated artificial intelligence strategy, but has only partly addressed AI through related initiatives (2017 Internet of Things (IoT) National Action Plan, 2018 E- Digital strategy). ● To date, Brazil has most notably implemented AI in facial recognition systems (mainly in criminal establishment and airports). Brazil’s National Strategy
  14. 14. But is witnessing the second fastest growth in AI hiring in the world Source(s): AI Index 2019 Report AI Hiring Index by Country
  15. 15. Retail has the highest adoption maturity already - AI & automation has become a requirement due to winner-takes-all economics and continued margin pressure Source(s): PWC AI Analysis - Sizing the Price Report, Business of Fashion McKinsey 2020, IBM Institute for Business Areas with the biggest AI potential (1) Personalised design and production, (2) Anticipating customer demand, (3) Inventory and delivery management. (4) Intelligent automation Key Insights: (1) Margin pressure is mounting due to more competition: Top 20 fashion players by profit, account for more than the combined profit of the entire industry. (2) AI is already a reality - over 80% of retail industry expect to be using intelligent automation by 2021. 40% is already engaged in some form of intelligent automation (3) AI has winner-takes-all economics ● Margin pressure has made intelligent automation a requirement, not a choice. ● If you are not using AI, you are falling behind as AI is a reality with winner-takes-all economics that might kill you business.
  16. 16. Through our ideation process, we have identified hundreds of use cases for AI at Dafiti that could have a game changing impact on our business. Source(s): company information ● sales forecast (by SKU, region, yearly, monthly etc.) ● catalog enrichment ● high frequency pricing ● Vendor scorecard creation ● supplier risk management ● Intelligent picking automation ● Anti-Fraud Control ● Automation of Payment Acquirer choice ● shared basket analysis ● Auto e-mail response ● sentiment analysis / chatbot ● nps clustering detractors pred. ● LTV Prediction ● customer segmentation ● search, recos, catalog sorting ● churn prediction, similar brands ● clustering onboarding, offboarding, eNPS ● talent sourcing, profile match ● legal case predictor Value Stream ● event correlation in e-commerce system ● A/B testing of new digital services ● security threat detection Support Function Sourcing & Planning Operations & Logistics Payment & Order Marketing & Discovery Customer Service HR, Legal, Infrastructure
  17. 17. It is difficult to implement AI. Some best practices to get you started! Source(s): Dafiti Learnings; McKinsey Global Institute (https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/how-to-make-ai-work-for-your-business, https://hbr.org/2019/07/building-the-ai-powered-organization, https://www.mckinsey.com/featured-insights/future-of-work/skill-shift-automation-and-the-future-of-the-workforce) The biggest challenges are people and processes! Digital capabilities come before AI! Take a portfolio approach and start small and early! Don’t put tech. teams solely in charge of AI! You don’t have to go it alone on AI! AI’s Dos & Don’ts
  18. 18. Dafiti Example: Start small! ML can be extremely simple as shown by Dafiti’s Ratings & Reviews solution for an operational problem. Baseline Code Library import Only 12 lines of code! ● Problem Description: Backlog of more than 50k customer ratings & reviews had to be approved and uploaded to the website. Typically, this is a manual process and would require a lot of time. ● Goal: Automatically approve backlog by applying learning from previously approved and rejected R&R (approx. 600k) ● Results: small testset of 92 reviews showed 28 approved (~30%) reviews with ~90% accuracy which translates that in a backlog where I usually have ⅓ rejected reviews I could approve ½ of valid reviews automatically - big win in 12 lines of code ● Next steps: curate date (e.g. AWS mechanical turk), more data, better algorithms (e.g. word2vec) Ratings & Reviews approval Results
  19. 19. Dafiti Example: Image recognition (supervised learning) ● Problem Description: User wants to find similar products of a clothing she sees. Also be able to find similar clothes of influencer’s dresses (resolve out-of-stock problem). ● Goal: Find similar products of an image or photo. ● Results: Users which used visual search had on average ~10 % higher basket. By using an AI-as-a-service approach the same API could be used for influencer pages. Visual search Source(s): company information
  20. 20. Dafiti Example: Pricing optimization (supervised learning) ● Problem Description: Optimize prices in order to maximize each SKUs absolute profit contribution over its lifecycle. ● Goal: Model to predict conversion rate as a function of price changes, then optimize the price for a metric like revenue or contribution margin. ● Result: PoC with live test of xxxSKUs in randomized A/B test. ○ Using our ML Model allowed us to generate a 17% higher contribution margin ○ Very relevant uplift. Pricing Recommendation Source(s): company information
  21. 21. Dafiti Example: Picking robots and warehouse automation enabled by AI Source(s): company information 54k m² new fulfilment center Automated picking process by AI-driven robots Built within a fully environmental friendly mindset
  22. 22. In order for the world to embrace the potential of AI, 7 key risks need to be addressed going forward. Privacy Security AI Bias Explainable AI AI Monopoly Jobs Wealth Inequality 1 2 3 4 5 6 7
  23. 23. But: Most organizations are still not taking the necessary steps to mitigate the risks associated to AI Organizations taking steps to mitigate risks from AI (2019) Source(s): AI Index 2019 Report Percent of respondents
  24. 24. Now, let’s remember why we are here…. “Data is the new Oil “ Clive Humby (UK Mathematician)is credited to be the first who coined the term in 2006 “AI is the new electricity” Andrew Ng at re:MARS 2019 “From mobile first to AI first” Google’s CEO Sundar Pichai announced at Google I/O 2017 “Software Is Eating the World, but AI Is Going to Eat Software” Nvidia CEO Jensen Huang, May 12, 2017. Nvidia Developer Conference To understand how data and AI in particular are transforming our world and our business. ...and now, you really get it!
  25. 25. The transformation starts with you! Some books to get you started
  26. 26. Some books that inspire us!

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