How AI Can Help Marketplaces Innovate and Scale Fast

Published by Invisible Technologies, Invisible Technologies on January 25, 2024

overview

Digital marketplaces usually operate in an unpredictable and ever-changing environment.  Consumer preferences can change in an instant, new technologies can render existing platforms obsolete, and new competitors can emerge to capture market share almost overnight.

For these reasons, businesses need to be able to stay on the front foot, regularly testing new ideas.

“Perhaps more than any other sector, marketplaces need to constantly innovate,” explains Jean-Paul Biondi, Vice President Operations - Partner at Invisible Technologies. “What works today may not work tomorrow and, if someone comes along with a better way to do things, you can find yourself going quickly from market leader to playing catch up.”

Biondi says it’s therefore critical that marketplaces have an operations model that allows for rapid testing and adaptation of new ideas. 

“You need to be agile enough to grow - or scale - an idea quickly if it proves successful, or to pivot without significant losses if it doesn’t.” 

AI’s Role in Reducing Risk

Attempting to execute this with a traditional workforce is often prohibitively expensive and inflexible. If the project fails, there is the financial fallout, as well as the reputational risk that can come from having to carry out mass redundancies.  

Even if the project succeeds, there will be the need to quickly attract, train, and retain new employees - something that can be a challenge in a tight labor market. 

This is one of the reasons a study found fewer than 30% of pilots ever get scaled, while another concluded that, of those that do, the failure rate is anywhere between 50% and 90%.

“AI has an obvious and important role to play for marketplaces,” Biondi explains. “It can reduce much of the risk that’s inherent in pilot programs.” 

Biondi says this includes automating routine tasks, analyzing large volumes of data quickly, and handling many of the operational complexities involved in a pilot more effectively and efficiently than humans.

“If a pilot succeeds, it can also help companies ramp up much more quickly and cost-effectively than traditional methods,” he says.

Why Marketplaces Have an Inherent Advantage

When it comes to implementing and scaling pilots using AI, marketplaces are often far better placed than many other types of businesses.

“By its very nature AI requires good data,” explains Adam Haney, Invisible’s VP of Engineering. “Marketplaces tend to have an abundance of this, generated from user interactions, reviews, transactions, listings, and so on.”

“AI thrives on this kind of data because it can be used to extract meaningful insights, forecast trends, and even anticipate user needs.”

For instance, AI can help automate marketplace operations such as inventory management, pricing strategies, and demand forecasting, all of which are likely to give a pilot project the greatest chance of success. 

Humans in the Loop

But for all its advantages, AI still can’t be left to implement and scale a concept on its own. Human intervention is required to make sure AI is applied in a way that truly benefits the business, while also addressing unforeseen consequences of ethical considerations.

Humans can also often be needed in a more detailed way, especially when it comes to making sure AI understands the data and applies its learnings properly. 

As an example of this, Adam Haney cites Invisible’s work helping a major retailer digitize its catalog for online expansion.

“A large part of the project involved analyzing thousands of items for sale and describing them online,” he says. “While AI could do this up to a point, it wasn’t as adept as humans at identifying the nuances and differences between products.”

“For example, it had difficulty analyzing an image and telling the difference between, say, eyeliner and mascara, or describing the style of a swimsuit. This means humans had to also look at each product, apply their own knowledge, and make sure they matched how the AI had described them.”

Haney also mentions Invisible’s work helping a food delivery giant grow quickly during the pandemic - something that involved onboarding thousands of new restaurants around the world. 

“While AI could do this up to a point, we still needed humans to go through each menu and make sure everything was properly captured, including some handwritten notes.” 

“However, by combining humans with AI we were able to take what was a 72-hour process to onboard a restaurant and turn it into a six-to-seven hour one.”

How Workforces Will Change

What this means is that, for digital marketplaces looking to scale, the future of the workforce is likely to look very different from the past. In fact, testing new ideas, scaling them up, and bringing them into ‘business as usual’ (BAU) may require very few new employees and much less risk than in the past.

“What we’ve already shown is that we can help marketplaces spin up a team quickly to test out an idea for a short period,” Jean-Paul Biondi explains. “This lets them assess the viability of a project without the significant risks of hiring a bunch of people and overcommitting resources.'"

In doing so, Biondi says that Invisible doesn’t just help reduce costs, it can also help marketplaces take what they have always regarded as fixed costs and turn them into variable ones.

“This is where the real value in outsourcing both AI and human resources lies,” he concludes.

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