How AI will fuel consumerism in 2020
By: David Chong
Tags: Artificial Intelligence, Cloud Computing, Consumerism, Data Science, Machine Learning

We all know what consumerism is. We’re all guilty without acknowledging it. Recall the many iPhones (or Android phones) we either sell or stash away in our drawers just because we want to get our hands on the latest one. What for? A battery that lasts an hour longer and a camera that has a marginally higher resolution.

It’s the countless number of Hello Kitties or Pokémon figurines we spend hours queuing up for, just because they’re ‘limited edition’. It’s that favorite piece of apparel that we own in different colors, just because we can. It’s the shelves and wardrobes full of clothes and shoes that we tell ourselves we desperately need – beach wear, informal wear, formal wear, home wear, sleep wear, party wear, etc – but we actually don’t.

To many of us who are guilty, this phenomenon of consumerism and materialism is justified. What we don’t realize however, is how much Artificial Intelligence (AI) is fueling this phenomenon.

And it will only be exacerbated by AI in 2020.

Consumerism — what’s the big deal?

Let’s be honest — AI is already fueling consumerism. The best part? We don’t even realize how suckered we are into the whole ‘consumerism’ phenomenon. If we do, climate change and this whole push for a ‘greener’ lifestyle won’t even exist.

But this is not what this article is about. So even though the stuff we consume generates about 60 percent of global greenhouse gases [1], we’re going to take a moment to ignore this sad truth and examine how AI will fuel more consumerism.

Here’s my analysis.

Ad-Targeting — When Bots Know You Better Than You Do

How often do you click on a sponsored advertisement on Instagram, Facebook, YouTube or any other website? How often do you spot an advertisement on your news feed when you haven’t even searched Google for it but only vaguely remember mentioning it to someone, and feeling completely freaked out?

Answer: Not sure, but definitely more and more frequently

Relax, people aren’t spying on you. These algorithms are just getting better. With more and more data about you, these recommendation systems are able to fine-tune their weights of various parameters to obtain an almost perfect replica (model) of you (or so that’s what it seems).

These recommendation systems are perfect examples of perpetuating consumerism. They encourage you to get things you might want or need earlier than you usually would, simply by appearing in front of your eyes (visual stimulation).

Sure, some might argue that it’s another form of marketing. And it certainly is. But the whole idea of ad-targeting can be so scary when we think about sagas like Brexit, the Trump presidential election and of course the whole Cambridge Analytica hoo-ha that led to what we now know as Data Protection policies and even regulations.

Heck, it even makes me worried to give my email away for free WiFi because I wouldn’t want people to know where I am and selling that information away. The paranoia is real.

Recommendation systems are everywhere — e-commerce websites, social media, subscription based services (Netflix, Spotify, Medium, etc) and more. Consumerism is no longer just about material goods. It also includes content like music, movies, books and any written articles.

The better these algorithms get (i.e. more data), the more consumerism perpetuates.

The Amazon Effect— When Bots Run Your Warehouses

Jeff Bezos is brilliant. Investors love his company because of how much shareholder value he has brought, not to mention the conglomerate-like business model Amazon has. Competitors hate him because they struggle to keep up due to the lack of economies of scale and lack resources to scale vertically.

Of course, this isn’t just about Amazon. It’s about the whole e-commerce industry and the push toward brick-and-mortar liberalization, just like how Thanos snapped his fingers after gathering the Infinity Stones and made half the population disappear. As inconceivable as it seems, we’re surely getting there slowly. I believe that the experience of entering a brick-and-mortar store will soon shift from a purely transactional basis to an experiential one.

So, what has changed?

Recently, Amazon announced free same-day and one-day delivery to its customers in the U.S.. Its increase ($9.6 billion) in spending not only involves shipping and receiving, but also distribution and reverse logistics (returns & repairs) over land, sea and air. The goal: So you never need to shop anywhere else.

Alibaba has followed suit, spending $16 billion on a courier venture, in an attempt to build out its own delivery platform [2]. It’s also in response to JD.com’s first move into the e-commerce market offering same-day delivery in China.

Like Scott so brilliantly mentioned in his article (link below), this has huge implications on companies like DHL, FedEx and UPS [3]. It now makes more sense for these companies to be acquired by companies like Amazon or Walmart lest being completely ousted if they are unable to match the same-day delivery service provided. They definitely might be able to, but at a higher cost. Either way, something drastic has to happen.

Where does AI come into play?

If you haven’t already seen Alibaba’s warehouse on YouTube [4], you should. Robots run most of the operations in the warehouse and I’d imagine most warehouses looking like that in the future.

It’s essentially a haven for computer science geeks. The warehouse resembles a Pac-Man board, with Pac-Man (robots) having to navigate through the maze (rows of items) to obtain food (pick-up item) and avoid ghosts (other robots). What we have is a combination of a routing problem (traveling salesmen problem) and also a scheduling problem. With AI, these problems become easier. The use of deep Q-learning (reinforcement learning agents) and computer vision makes typical computer science problems much more solvable.

My bet is that e-commerce companies will all shift toward this gold standard of an automated warehouse. If they don’t, they lose competitiveness and Amazon’s goal will be achieved.

Increased consumerism is a mere consequence of such breakneck delivery speeds.

If returns are as convenient as having a courier arrive at your doorstep the next day (not to mention parcel drop-off points being so prevalent), who would go out anymore when you can try things from the comfort of your home?

Bonus: Lite is the new Heavyweight

This section does not relate directly to how AI fuels consumerism, but is something I would like to bring up due to a shift in business model in a cloud-based era.

I’m pretty sure in 2020, no one will dispute that technology companies are driving and will continue to drive the global economy. Companies that spring up are based on an asset-lite model whereas companies that already exist for a long time are also abandoning ship and moving toward an asset-lite model. Cloud providers like Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform (GCP) and Alibaba will reap all these profits, not to mention the great margins on these cloud services.

Spotify allows streaming of music. YouTube allows streaming of video content. Netflix allows streaming of movies and television series. Gaming is moving towards cloud, where expensive gaming hardware would no longer be necessary to run games at a high frame rate. Gone were the days where CDs were used for music, DVDs were used for movies and gaming rigs were used for hardcore gaming. All you need now is good internet to fuel consumption.

Concluding Remarks

While we look forward to a rewarding year ahead, let’s take a moment to appreciate how much AI has improved our lives. While we’re at it, let’s also observe a moment of silence to commemorate the environment’s sacrifice for us so that we can enjoy same-day delivery.

R.I.P. koalas and other animals in Australia [5].

References

[1] Environmental Impact Assessment of Household Consumption, Journal of Industrial Ecology — https://onlinelibrary.wiley.com/doi/abs/10.1111/jiec.12371

[2] Alibaba aims to deliver with $16bn courier venture, Financial Times— https://www.ft.com/content/3b5e9b5c-049c-11ea-9afa-d9e2401fa7ca

[3] FckdEx, Scott Galloway — https://medium.com/s/no-mercy-no-malice/fckdex-eca0025a0b11

[4] Inside Alibaba’s smart warehouse staffed by robots, YouTube — https://www.youtube.com/watch?v=FBl4Y55V2Z4

[5] Australian military brings supplies to thousands cut off by wildfires, CBS News — https://www.cbsnews.com/news/australia-fires-half-a-billion-animals-plants-koalas-dead-willdfires-2020-01-02/