[Korea and the fourth industrial revolution <11-1 Shopping>] Changing room will soon be your own bedroom

July 03,2017
In 2014, American e-commerce giant eBay made a clarion call for what it called “zero-effort shopping.” It would be, eBay said, the next big thing in retail.

“A future in which commerce intelligently happens automatically through our smart devices,” was how Steve Yankovich, head of eBay’s innovation and new ventures team, described the future of shopping. He thought the incubation time would be 10 years.

“Zero-effort commerce will anticipate your shopping needs and act upon them,” he predicted.

Three years have passed and Yankovich’s 10-year “moonshot” is already approaching realization.

Artificial intelligence can recommend items that suit individual consumer’s preferences. Virtual reality technology enables people to shop from the comfort of their living room, den or their bed - but feel like they are in an actual store.

“The shopping experience will get more ubiquitous and convenient with online and offline platforms converging into one,” says Chung Min, a researcher at Hyundai Research Institute. “Consumers will get more empowered, even intervening in the manufacturing and retail steps of the process.”

Major retail giants such as Lotte, Shinsegae and Hyundai have all jumped on the bandwagon to stay relevant in a fast-changing industry. Smaller e-commerce players are doing so too.

“In order to take an upper hand in the industry, accumulating data and extracting meaningful information is vital,” said Seoh Kee-man, a director at LG Economic Research Institute.

Empowered consumers

Consumers have limitless access to information at their fingertips. They have a clearer idea of what they want and what they need than ever before.

In order to satisfy these consumers, personalized services are becoming a must.

Amazon is the front runner in the race.

It recently launched Echo Look, a virtual shopping assistant. When a user stands in front of the camera-equipped gadget wearing different clothes, it will assess the styling and gives its opinion, utilizing massive amounts of data based on current trends, the users’ figure and his or her previous purchase history. It will also suggest what kinds of clothes to buy based on previous style selections.

China-based retail giant Alibaba also utilizes an algorithm to recommend more creative selection of items. It relies not only on the purchase history of the customer, but takes into consideration web pages that have been browsed or bookmarked by the customer.

Korean retailers are also opting to provide more personal and customized services to customers.

SK Planet, an operator of Korea’s leading e-commerce platform 11st, launched a chatbot service named Baro in March.

Customers ask for recommendations through a chat room accessed on its online platform. Baro is always there to respond. Baro, which is an upgrade of 11st’s previous online concierge system, is smart enough to understand the underlying intent of customers’ sometimes vague orders.

For example, if asked to recommend an air purifier for a one-room studio, Baro offers diverse options of small air purifiers just big enough to cover a 50-square meter (538-square foot) or so studio. When asked to recommend a laptop that is good for watching movies, it prioritizes screen quality when making a list of suggestions. Once the item is selected, Baro browses through the items not only on its own platform but in other platforms as well - such as Naver - to offer the cheapest price possible.

Based on its deep-learning function, the system gets smarter and more precise as more customers use it.

“According to the usage pattern of Baro for the past three months, people used it the most between 6 p.m and 9 p.m. when the human concierge service is not available,” said Kim Tae-yang, Vice President of the Conversation Commerce Office at SK Planet.

Hyundai Department Store, a major retailer in Korea, has a similar service called Heibot on its online platform thehyundai.com. Hyundai said it has inputted some 5,000 keywords into the system and some 50,000 possible answers. The 5,000 keywords include delivery, award points, benefit, discount coupon.

“When will I get my skirt delivered?” a user may ask. The response: “Sorry, the delivery is being delayed because of lack of stock. Please wait for a while longer.”

In brick-and-mortar outlets, robots are being introduced to cater to needs of customers.

Visitors can try a virtual fitting device at Lotte Department Store’s Myeong-dong branch in central Seoul. There are 180 items available from 56 brands. [PARK SANG-MOON]
On the doorstep of Lotte Department Store’s Myeong-dong branch in central Seoul, a shiny white robot greets customers and recommends things to do at the store.

Its name is Elbot and it was created by Lotte in partnership with the Korea Institute of Science and Technology’s in-house startup Robocare.

The humanoid robot, which is a little less than 1 meter high, speaks four different languages - Korean, Chinese, English and Japanese - and recommends restaurants in the store or helps visitors find certain destinations, including the human-staffed help desk.

The Elbot is only in one branch, but Kim Seong-kang, CEO of Robocare believes its future is bright.

“At stores, robots’ ability to speak several languages comes in very handy because when foreigners don’t speak the language, they tend to feel uncomfortable with human contact,” he said. “It can act as an information desk and later as an in-store clerk as well.”

Going borderless

Online shopping is convenient. It gives customers many options and is fast. But there is one downside. Customers can’t actually see an item from different angles and can’t try anything on. For fashion, especially, this is a deficiency.

“I bet everybody has returned either clothes or shoes because they didn’t quite correspond to what they saw on the screen,” Ms. Jeon, a 28-year-old Seoul resident said.

“Then refunds take at least a couple of days, so unless you are really sure about a product or seen other people wearing it on street, it feels kind of risky to buy clothes off a computer screen,” she added.

This is where virtual reality technology comes in. It allows customers to not only take a look around the store from the comfort of their own home but lets them inspect items from various angles. They also feel the vibe of a store, an important part of most retail experiences.

Goldman Sachs estimates that virtual or augmented reality technology in the retail sector would reach $1.6 billion by 2025 and said it would profoundly affect e-commerce.

In 2016, eBay Australia joined forces with local department store Myer to launch the world’s first virtual reality department store. Just by turning one’s head slightly, one can browse through the store and make purchases as well. Alibaba launched a similar service named Buy+ last year.

In Korea, Hyundai Department Store enabled VR browsing for selected brands ranging from sports brand Nike to cosmetics brand Benefit and luxury label Montblanc. VR service is available for 20 brands and items are upgraded every two or three months.

Making purchase inside the VR environment is not yet possible. Yet, the retail company laid out plans to introduce a system that recommends items from customers’ preference inside the VR realm in 2018 and launch a whole department store with VR technology in 2019. The VR showroom is updated once every two months.

Lotte has taken a different tack in utilizing VR technology. It introduced a virtual fitting service at its department store in Myeong-dong, just next to Elbot.

Standing in front of a huge LED screen lets the device measure the customer’s size through sensors and enables the customer to virtually try on different clothes by a slight wave of the hand. There are 180 items available from 56 brands.

“The technology is at its very early stage but it allows customers to briefly see how they look in a trench coat, shorts, formal jacket - and to check out dozens of items in less than five minutes,” said a Lotte spokesperson.

Analysts say the virtual fitting technology will become more appealing when adapted by online shopping platforms.

A report by Walker Sands, a U.S.-based marketing firm, says 35 percent of 1,400 U.S. consumers it surveyed answered they would shop more online if they could try items on virtually.

Lotte plans to offer some 500 items from 100 brands for virtual fitting within this year.

Virtual reality doesn’t always have to be about fashion.

In fact, the furniture industry is exploring its full potential, allowing consumers to see in advance whether certain furniture goes well with the rest of their interiors.

Korea’s leading furniture maker, Hanssem, an affiliate of Hyundai Department Store, recently launched an augmented reality service through customers can virtually place an item in their homes and see if it fits. Early this month, Swedish furniture company Ikea partnered with Apple to develop an augmented reality shopping app with similar functions.

Obstacles still remain

For a country that is dubbed an IT powerhouse and has the world’s highest smartphone penetration of 88 percent, Korea’s cutting-edge shopping services are unimpressive.

Director Seoh from LG Economic Research Center says an industry pioneering service is only available when massive amount of data is accumulated. That is the only way to bring out the full potential of artificial intelligence and allow it to surprise users with recommendations.

“Merchandising data is common in foreign countries such as Japan and the United States. There are data brokerage firms and start-ups that collect data and sell it to other companies,” Seoh said. “But in Korea, regulation is harsh and with people feeling extremely sensitive to personal data leakage, there is no company or person willing to jump into the industry,” he added.

Korea ranked in 12th place out of 24 in terms of policy environment for cloud computing last year in an analysis done by the BSA, a Washington-based software industry trade group. Cloud computing is an essential element to enable big data analysis.

KT, one of Korea’s leading telecommunication providers, is shutting down its e-commerce curation service Shodoc on July 10 after only one year. It recommends items to consumers based on their age, gender, neighborhood and purchase history. Since its launch last year, downloads have surpassed 2.9 million, which is not small. But a lack of data doomed it from the start.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]

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