In recent years, artificial intelligence has advanced rapidly and is now being integrated into a variety of industries to improve efficiency and productivity. Retail is one industry that has only recently begun to use AI. Walmart, one of the world’s largest retailers, has used artificial intelligence-powered chatbots to negotiate supplier contracts, resulting in significant cost savings and a more efficient procurement process.
Walmart has collaborated with Pactum AI, a company that specialises in artificial intelligence-powered negotiation systems. Pactum AI’s chatbot system can automatically negotiate with suppliers on Walmart’s behalf, saving the company an average of 3% on contracts. Furthermore, according to Walmart, three out of four suppliers prefer negotiating with the chatbot over a human negotiator.
Pactum created a chatbot system. Walmart’s AI is programmed to operate based on pre-defined requirements and budgets. To reach a fair and cost-effective agreement, the chatbot system analyses and compares the supplier’s demands with industry trends, commodity values, and competitors’ costs. The use of AI in this process not only saves time, but it also results in better decisions because AI can analyse and process more data points than a human negotiator.
This chatbot system is currently used to negotiate contracts for store necessities such as shopping carts and other products rather than products sold on the shelves. Walmart has stated that the chatbot system is not meant to replace human negotiators, but rather to aid in the negotiation of contracts that do not necessitate extensive negotiations. The chatbot system still requires human oversight because the deals made by the chatbot must be approved and authorised by a real person.
Chatbots in retail negotiation are not without controversy. Critics have claimed that the use of chatbots for procurement could result in job losses in the industry, particularly at a time when many businesses are experiencing financial difficulties as a result of the COVID-19 pandemic. Proponents of AI chatbots, on the other hand, argue that they can help retailers reduce costs, increase efficiency, and provide a better customer experience. In Walmart’s case, the use of chatbots enabled the company to streamline its procurement process and save money on contracts.
To summarise, the use of AI-powered chatbots in retail negotiation is a growing trend that is likely to gain traction in the future. Walmart’s collaboration with Pactum AI demonstrates how artificial intelligence (AI) can be used to improve efficiency and lower costs in the retail industry. While there are legitimate concerns about job loss, the advantages of using AI-powered chatbots in retail negotiations cannot be overlooked. As long as human oversight is maintained, the use of AI chatbots in retail negotiations can give retailers a significant advantage.
