May 11, 2017

Otto Group using AI

One of my major examples for successful digital transformation is the Otto Group from Germany. They used to have every ingredient to die with their paper catalogue, but managed to become a modern retail company with impressive ease. Here's a short but interesting piece in the Economist about how they use AI - one of the big issues for online retailers is the stock they need to keep in their warehouses, often having hundreds of millions of Euros at stake in case the stuff doesn't sell (that's why many move towards becoming a marketplace where a long tail of small retailers keep the stock and the risk of buying physical material that may not sell - like Alibaba). With AI, Ottto managed to reduce surplus stock by a fifth. 20%. That's huge.