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Implications of AI on e-commerce logistics

In the Middle East, e-commerce is estimated to reach $50 billion by 2025

E-commerce has witnessed an explosion in recent years. In the Middle East, e-commerce is estimated to reach $50 billion by 2025, driven by cutting-edge technologies and government policies to promote digital economies. This trend is further accelerated by a young and tech-savvy population embracing online shopping.

Smooth logistics is at the heart of successful e-commerce operations. We have witnessed logistics transform from a quiet, back-end operation into a strategic asset and value driver. At the same time, exciting new opportunities are opening up in the logistics industry to develop and apply innovative technology solutions to streamline operations.

In this context, Artificial Intelligence (AI) has enormous potential to optimise logistics. Today, AI is enabling possibilities for smarter route planning, which means faster deliveries with less fuel wasted. Customers also receive a more accurate time window for their delivery – and the flexibility to manage delivery. In an industry typically characterised by uncertainty, volatility and cumbersome processes, AI could be the technology businesses need to become more efficient.

There are various types of AI with varying applications, ranging from geolocation and navigation, facial detection and recognition, to chatbots, digital assistants, speech-to-text dictation, and e-payment. These bring greater efficiency to operations, making the day-to-day activities of employees less manual while also delivering a more automated customer experience.

Today’s customers increasingly want to know when their deliveries will arrive. Using extensive forecasting models, it is possible to predict specific volumes of shipments that will arrive in a certain facility on a particular day. This information can then be used to start planning the couriers’ routes, matching volumes, service and other important variables. Once the packages are in the delivery vehicle, there is room for further route optimise using AI-powered software.

The impact of these developments on the logistics industry is huge, but further developments are expected in interactive AI, which will transform the customer experience. With Interactive AI, customer service automation makes immediate email responses, automated phone services, and integration with most widespread used text messaging platforms, possible.

Chatbots, in particular, can help logistics companies handle low to medium-volume call center queries about requesting deliveries, editing orders, shipment tracking, and responding to FAQs. Chatbots represent today’s fastest-growing brand communication channel with a handling rate of chat completion from start to finish at 68.9 per cent in 2020. They can also facilitate valuable analytics metrics, enabling the company to better understand customer needs and enhance the customer experience.

Analytics of data captured on an interactive AI platform can provide valuable insights to the business. For example, companies may better understand customer pain points and consumer behavior patterns, enabling more effective marketing campaigns to attract potential leads. Data analytics can help with price optimisation. Retailers can take advantage of better in-store and web-based layout mapping based on behavioral data. It can also help retailers and e-commerce businesses efficiently manage the supply chain while ensuring supply and demand are met at operational level.

Start-up vendors delivering sales and marketing intelligence as well as acceleration software tools are enabling companies to reach their full potential through interactive AI. Continuous adoption and scaling of interactive AI technology within warehouses and other operational environments as well as in back-office workflows could improve human-machine collaboration.

As the Middle East region braces itself for an expanding ecommerce market, seamless logistics will be critical to ensure productivity across the supply chain and transform customer interactions. Many logistics players and retailers are focusing on enhancing last-mile delivery, a crucial component of e-commerce fulfilment. Improved AI and automation will drive service upgrades, intelligent workflow automation and new customer experiences in the future.

The writer is CEO of DHL Global Forwarding Middle East & Africa.