The Impact of Adopting an AI-Enabled Distribution Channel

Yi Liu, Z. John Zhang, and Pinar Yildirim, Marketing, The Wharton School

Abstract: The advance in intelligent technology is changing the way that people search for and purchase products. There is an emerging trend in which consumers are shopping through artificial intelligence (AI) enabled devices such as Amazon’s Alexa and Google Assistant, for a variety of products. In other words, a new distribution channel with AI technology embedded is emerging. While a growing number of online retailers are beginning to offer AI-enabled devices, consumers’ reaction to these new technologies is lesser-known, especially given the concern from previous literature that consumers tend to evaluate AI-enabled devices with some skepticism.

Our project is aimed at understanding the economic impact of technological innovation on consumers and firms. We want to find out whether/which consumers will like shopping through such a new, AI-enabled channel and then analyze how should firms respond to consumers’ attitude towards this new channel. From the firms’ point of view, developing and adopting such a new AI technology in distributing products is an innovation. However, some consumers can lag in their adoption of technologies. If this is the case, firms have to choose the right marketing strategies in pricing and product distribution.”