Friday , August 17, 2018

Next Stop: Algorithmic Shopping

Security Notes

Shopping is an emotional experience. Shops lure us, play us, and make us shop and pay against any and all rationality. Only now, technology is about to redress that imbalance.

The biggest impact will be felt by ordinary commodities. No one gets overly excited about buying eggs or hauling milk. We just don’t want to run out of either. Our future fridge will take care of that. Realizing via RFID tags that there are only a few eggs left on the egg tray, the refrigerator—a node in the Internet of Things—will shop around with all local grocery stores hunting for online orders. The fridge will analyze the bids according to its owner’s preferences and quickly decide on the most attractive offer.

The artificial intelligence in the refrigerator will be smart enough to postpone its order if no offer is good enough, and while the stock of eggs is still high enough. The fridge will pay in advance for the order with digital money. No credit cards, no monthly statements, no invoices. Think about it: The decision to make a payment is relegated to an artificially intelligent entity!

In the near future, you will instruct your avatar to buy new sets of white sheets and light-blue towels. It would be a no-rush order, as the old sheets and towels are still serviceable. Your avatar will exploit this no-rush instruction. It will hunt patiently for a coming sale, and then pounce at the appropriate moment, pay, and order home delivery.

Unlike you, the avatar has no emotional ties to a particular store or a particular brand, among equal-quality options. The avatar is not influenced by parking considerations, location, or possible traffic jams. Its decision is not skewed by irrational brand loyalty, nor tilted by store loyalty (unless so instructed). Its decision is based simply on price and terms. It’s digital payments made algorithmically, logically, and serving the interests of the owner.

What will vendors do? They will have to adapt to the new “decision maker,” and attract buyers via algorithmic discounts. Since a vendor’s offer will be evaluated by smart intelligence, it can itself be smart and involved.

Today, vendors say: “Buy one, get one free!” That’s easy to understand. But what about an offer like this: “Buy one of this, and two of that, and pre-order a third item. Allow us to deliver it only two days from now. We will pay you back 44.25% of your purchase, using digital loyalty money good in this store and at the gas station near your home.” Such an offer would be impossible for a customer walking down the aisle to evaluate. But your avatar would rate its attraction in seconds, compare it to similarly convoluted offers placed by competitors, and decide which way to go.

The pure rationality of this process will allow merchants to get rid of superfluous stock in an easy and predictable way. Freshness data will be delivered to the avatar, but some consumers could opt for a nice discount for a somewhat older product.

Even garbage cans will be equipped with RFID readers, communicating to a housekeeper avatar how food items are consumed. The housekeeper avatar could optionally share this consumption rate with local groceries, which could offer the avatar a package deal for all the foodstuffs the household is running low on. Immediate delivery, attractive price.

Today, it’s habit, pleasing ambience, and personal attention that create store loyalty. But as shopping becomes increasingly algorithmic, loyalty will be generated via loyalty money through various broad coalitions. Avatars and smart phones will be loaded with this money, payable under various terms and conditions, with various expiration dates and usable according to a strictly logical order, as exercised by the avatar.

Today, we open our wallet for every cent we spend. Time and again, we count change or pull out a payment card. It’s just a matter of time until our payment card is compromised. Tomorrow, this specter will be viewed with puzzlement and empathy by the next generation of consumers. They’ll simply load an avatar with secure digital cash for everyday commodities.

Artificial intelligence and digital money are getting closer every day. When they touch, the impact on the consumer, on life and culture, will be shocking, amazing, and long-lasting. As with similar paradigm shifts, the visionaries who see it coming are the barbarians at the gates of today’s sprawling chains of merchants.

—Gideon Samid • Gideon@BitMint.com

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