What custobots are, and why companies should start paying attention

The new year has begun and — as is typical of this season — we use the spare time of the last days of holiday to take a look at the predictions and technology trends that could shape the near future.

Even though Artificial Intelligence continues to dominate the general media, among the predictions appearing in the most authoritative outlets one topic stands out for its originality: it’s one of the trends highlighted by Gartner in its annual report “Top 10 strategic technology trends 2024”: Machine Customers, or Custobots (Customer-robot).

Gartner Inc. is one of the best-known and most authoritative IT research and consulting firms — providing insights, advice and tools mainly aimed at top managers in large companies — and its forecasts are usually reliable and well thought out.

The report mentioned was published in October, but obviously gained media coverage at this turn-of-the-year period. Among the 10 trends brought to its audience’s attention is the one on the rise of robot customers, accompanied by a fairly bold prediction: within the next 5 years, worldwide revenue attributable to purchases made autonomously by machines will exceed one trillion dollars.

While the custobot topic has been mentioned — among the trends to keep an eye on — by only one other authoritative consultancy, Deloitte, the in-depth reports (paid) and the monograph published by Gartner in January 2023 contain convincing food for thought, based on solid and well-documented market analyses.

So: what exactly are custobots, why should companies start paying attention, and why are the activities we’re carrying out at Chirale and within the Digital Innovation Hub of Rome aligned with this topic?

Let’s start with the definition: custobots are bots — i.e. automatic software agents — capable of autonomously managing the purchasing processes on behalf of a customer (private or company) for suitable products or services, obviously through an e-commerce channel.

The concept isn’t brand new, and a major e-commerce player like Amazon had already tried to launch a product of this kind.

The project wasn’t successful, and most of you probably won’t remember Amazon Dash Replenishment — a service launched in 2018 that allowed customers who had bought appliances made by selected partners (including Philips, Bosch, Siemens and Candy) to manage the purchase of consumables (detergents and additives) at the simple press of a button.

The appliance, connected to the Internet through the home network, would place an order for products that were running out using the dedicated APIs made available by Amazon and linking to the user’s account.

The appliance fitted with Amazon Dash software and button is exactly an example of a custobot. The technology needed to implement this kind of service has been around for a while and is mature: e-commerce giants like Amazon, Tencent and Alibaba meet all the requirements to support such services, and in many cases they already have live APIs that allow smart-device manufacturers to implement custobot functionality.

But it’s also a fact that, until now, no system of this kind has taken off, as the Amazon Dash case shows. Why should the scenario change right now?

The answer is that there are many indicators suggesting the times are becoming ripe — not so much from a technological standpoint, since these are consolidated technologies, but from the standpoint of market dynamics and consumer behaviour.

The fact that a technology makes a service or product feasible doesn’t automatically mean the product will meet market favour. The analysis must be carried out — beyond feasibility — on possible use cases.

Why should a consumer delegate shopping activities to a machine, in a world where the buying experience is constantly extolled and highlighted as a value by modern marketing?

Gartner’s report addresses this point. The conclusions are as obvious as they are convincing.

Not all buying experiences are gratifying. It depends on the type of product or service and on the consumer’s tastes.

Most of us probably find it gratifying to personally buy clothes, books and home accessories. Doing the food shopping is certainly a pleasant activity for those who love cooking and gastronomy, and if you’re at the supermarket buying cheese and cured meats, throwing in some detergents isn’t a problem. So spending hundreds of euros more for a smart-home dishwasher fitted with Amazon Dash probably isn’t justifiable — and that may explain the failure of the initiative.

But which of us finds it pleasant to book the dentist or the maintenance check on their car? Is renewing your car insurance a gratifying buying experience? Refills for boiler decalcifiers are usually not stocked at supermarkets, and plumbing-supply shops don’t sell cheese and cured meats and tend to be located in areas with no easy parking — so most of us buy refills on Amazon, almost always forgetting to do it in time.

These are all examples of use cases where there’s a benefit in delegating the purchase to a bot.

The situation is similar to other services — for example videoconferencing. So-called “calls” have become a routine by now. As proverbially hated as they are, they’re nevertheless less demanding experiences than traditional face-to-face meetings. The required technology had been available for some time, and the rationale that would have suggested its use was valid even before the pandemic, but the habit wasn’t there. Every process innovation alters the routines we’re used to and generates resistance, until something happens that changes the scenario.

In the case of conference calls it was the need for social distancing that emerged during the pandemic. Once we got familiar with the new tools, calls became a habit. In professional settings, occasions where it’s worth meeting in person are now few — especially for the more routine meetings.

In other cases it has been a more gradual process that, at a certain point, literally exploded. Think for instance of e-commerce: born at the start of the millennium but largely unused by most consumers until — for a number of converging reasons — a critical threshold was crossed that definitively cleared this purchasing mode and shook market scenarios.

According to Gartner, over the next few years, a series of factors will push more and more towards the use of custobot technologies, at least for certain types of product.

For those interested in an in-depth analysis of this topic, we recommend the book “When Machines Become Customers: Ready or not, AI-enabled non-human customers are coming to your business. How you adapt will make or break your future” (Gartner, Inc., January 2023), available on Amazon or consultable at the library of our Research Centre at Spazio Chirale in Garbatella, starting next week.

Here we’ll just mention the two factors that seem most relevant to us.

The first concerns a general economic theme: in capitalist economies the drive to increase consumption is physiological and is normally sustained by demographic growth; but in a scenario where such growth begins to stabilise and the topic of sustainability begins to be seriously addressed by state and corporate policies, the automation of certain purchasing processes is a factor that helps sustain demand for commodity products and services and supports the implementation of more sustainable supply chains.

The second is linked to the democratisation of generative AI technologies. The threshold for accessing technological tools has lowered considerably. Natural-language interaction is becoming an ever more common interface mode, making smart objects increasingly pervasive both in the personal sphere and in professional and industrial contexts.

The shift in the so-called “mindset” toward new technologies is a triggering factor in fostering the adoption of innovative solutions that modify and optimise processes traditionally carried out.

Based on these and other elements, Gartner considers the rise of Robot Consumers imminent.

The market impact will be significant and — as always — will entail risks and opportunities for businesses and professionals.

On one hand, those who today work in Web Marketing and SEO should start developing strategies to reposition their services and skills in a context where — beyond the two traditional target categories, business (B2B) and consumer (B2C) — a new emerging category will appear, which we could call machine customers or B2M.

For this latter sector, traditional marketing strategies — based on brands, logos, emotional copy and images — will be totally ineffective and will have to be replaced by attention to sustainability, completeness of specifications and technical product features. Machines have no emotions and decide based on purely rational processing.

On the other hand — given that the major digital marketplace operators will play a fundamental role in shaping the new context — a vast universe of opportunities opens up to identify solutions, products and services able to take advantage of the growth of this new category of buyers.

Artificial Intelligence, Internet of Things, Composable Commerce and MACH software architectures will be the main ingredients for developing these new solutions.

These are all technologies in which Chirale, together with its partners at the Digital Innovation Hub of Rome, is on the front line, with pioneering projects in their respective fields.

The success stories we’ll present in the coming weeks — and write about on this blog — will involve precisely these technologies and these new scenarios.