Sparking Growth in Corner Shops
Finbots for Shopkeepers Series #4
In this series I have described how smartphone sensors can generate raw data and how AI techniques can be applied to transform that data into structured information. Now we are ready for the final step: putting it all together to create valuable insights for decision-making and to automate tasks to save time and effort.
To do that, we need to construct a devoted Finbot to advise and coach someone like our shopkeeper Rosita. This Finbot could, of course, work for many shopkeepers, observing what works and doesn’t across the network, and finding the best prices and products available in the market. Based on the sensor data and the intelligence from insights, a Finbot could provide support to Rosita’s main retail operations, which include:
- Serving the end consumer
- Dealing with suppliers
- Managing the business
- Partnering with financial institutions
Serving the End Consumer
Armed with information about who is buying what, the Finbot could help our shopkeeper, Rosita, create more valuable relationships with her customers by:
- Automatically creating a CRM populated with all her customer visits and sales. The CRM could then create key metrics like conversion ratios, basket sizes per customer, and so forth, flagging anomalies for Rosita’s attention.
- Offering loyalty promotions during checkout to customers based on recommender systems.
- Providing alerts if a customer hasn’t visited in a while, prompting tailored offers to lure the customer back into the shop.
- Knowing the purchasing profiles of the customers, the Finbot could classify the clientele (i.e. residential vs businesses) to suggest new products and categories.
Dealing with Suppliers
Since the Finbot would have data on sales, purchases, and inventory, it could streamline communications with suppliers by:
- Forecasting demand for products and suggesting purchase quantities. It could automatically place orders with the suppliers based on actual inventory levels, saving both Rosita and the supplier significant time by eliminating in-person inventory checks.
- Micro-targeting the product assortment based on the shop’s actual clientele, instead of following today’s one-size-fits-none marketing.
- Suggesting better layouts and product placement to boost revenue per square meter based on current shelf arrangements.
Managing the Business
The Finbot could also make Rosita a better business manager by:
- Helping to choose realistic but stretch goals for her business, creating a viable business plan, and offering training and advice on how to achieve the goals.
- Providing an accounting perspective at the general level and for each category and product.
- Pointing out the most and least profitable products, and suggesting changes to the pricing strategy, assortment or placement. It could also calculate the shop’s profitability per supplier so that Rosita can best allocate her limited working capital.
- Alerting Rosita of changes in her product costs or anomalies with product sales (e.g., How come you haven’t sold any soap this week? Did you forget to place the bars on the shelves?).
- Assisting Rosita as she’s inspecting the shelves and restocking products by offering step-by-step suggestions into her earpiece to help her save time and energy.
- Monitoring employees and clients, minimizing risk of theft and ensuring that customers are treated properly.
Partnering With Financial Institutions
Finally, the Finbot could help Rosita collaborate with financial partners by:
- Helping Rosita find financial providers that offer products appropriate to her needs.
- Sharing data to ensure that the provider understands Rosita’s quality as a shopkeeper and borrower.
- Suggesting working-capital investments in worthwhile new categories or equipment.
- Data from other shops would inform the Finbot about how those investments have played out in similar situations, thus reducing risk for both lender and borrower.
- Providing evidence that the investment was executed as agreed and offering early warnings in case of trouble to find the best solution.
Impact on the Shop
In Mexico, Rosita’s corner shop would typically keep almost a full month’s worth of inventory as compared to only five days for modern convenience stores. While any one decision supported by the Finbot coach may generate only small savings in time and money, the aggregate improvements could boost overall productivity. As an example, if all that excess capital locked up in inventory could be put to good use, it could multiply Rosita’s revenues!
In addition, the Finbot could provide on-the-job training, finally giving Rosita the chance to learn the basics of inventory management. By chatting with the Finbot about her products and data, Rosita could elevate her marketing skills and put idle moments in her day to better use. Perhaps Rosita could grow as a manager, getting tips on how to delegate to employees or advice on when she’d be ready to open a second shop.
Sparking growth in any business is about gathering data, culling insights, and making better decisions. A Finbot could make Rosita’s shop more productive by creating time for her to focus on her clients and suppliers. This would boost her income and eventually allow her to expand the business.
Unfortunately, such a Finbot doesn’t exist yet, even if it’s already technologically feasible. As is, Rosita is an impressive entrepreneur but patching together such a sophisticated AI system is beyond an average person’s skills.
In emerging markets, fundamental shifts in technology are planting the seeds for growth. With all the power that smartphones already offer, shopkeepers could leapfrog straight into a situation in which their mobile super computers digitize and run their businesses. We hope fintech innovators will consider building smart personal finance apps for low-income customers once they see Finbots for micro-entrepreneurs as a business opportunity. How can we accelerate this trend to give small shopkeepers around the world a business edge? We’d love to know what the community is up to and how they can be part of this wave.