While small businesses often struggle to compete with giant corporations, one Ottawa expert says AI could allow SMEs to collaborate as a network and bring more value to customers.
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While small businesses often struggle to compete with giant corporations, one Ottawa expert says AI could allow SMEs to collaborate as a network and bring more value to customers.
Ahmed Doha, a researcher and associate professor at Carleton University’s Sprott School of Business, has long studied the digital marketplace. In its current form, he said, SMEs are often drowned out by multinational corporations like Amazon, which is both a competitor and a platform on which they sell their products.
“Small businesses struggle to reach customers, so they sell on giant marketplaces like Amazon. Those same giants control the platform and steer traffic to their own products,” he said. “But if we help those businesses create value that those giants cannot, then that’s a game-changer, and eyeballs are going to now be steered towards the value.”
Doha’s solution is to create a system that designs personalized bundles for shoppers by packaging complementary products and services from different businesses together.
Though he began studying “cross-vendor” collaboration in 2013, Doha said the technology didn’t exist to match complementary products together. But now, AI is offering a solution. With the help of a federal government grant, Doha is creating an AI system designed to tailor bundles to customers’ tastes.
Though bundling is a popular internal practice for businesses, Doha said only the tourism industry consistently engages in cross-vendor bundling.
“In tourism, you book a hotel and you’re also being offered a car rental. They’re not directly collaborating; they’re collaborating through a middleman platform like Expedia. They bundle things together, make it less costly and more convenient for (the business and the customer),” he said. “Everywhere else, there is none of that, despite the fact that the opportunities are there.”
In addition to bundling products together — like recommending athletic wear or smart watches from other brands to a customer buying running shoes — Doha said adding service discounts can turn a product purchase into an experience.
“If we take fitness and wellness: a store in Barrhaven sells a pair of running shoes to someone running a 5K,” he said. “At checkout, the store surfaces a discounted physio package, a sports assessment at a nearby studio and a few weeks of local meal-prep services. The shopper gets a co-ordinated experience, not just the shoes.”
While the customer saves by getting each product or service at a discount for buying a bundle, the business also saves on overhead by sharing the costs of the sale with other businesses.
“The four vendors each reach a customer at the exact moment of intent and share the marketing costs,” said Doha. “None of them pay for an ad. That is key. Shipping products that are complementary in the same shipment, in the same delivery, can save a lot of costs for these collaborating businesses. That means less transportation, less traffic, fewer accidents, fewer liabilities, fewer inefficiencies.”
The AI-powered model is currently in development, with Doha hoping to get it up and running by the end of the year.
Once active, he said the goal would be to integrate the model into SMEs’ digital marketplaces to allow the AI to create custom bundles for customers at checkout.
A platform like Shopify, he said, would be well-suited as an integration point because it hosts so many small businesses for the AI to pull from.
“Shopify runs millions of web stores, billions of dollars of sales. They are small and medium-sized businesses, largely. Ninety per cent of their stores are small to medium-sized businesses, yet only 15 per cent of their revenue comes from that category,” he said.
“The idea is to turn their individually armed businesses into a network of collaborators and let them compete by offering meaningful experiences, not just stand-alone products.”
