In a demonstration video of how e-commerce will look like in the not-so-distance future, a customer running low on kitchen supplies gets a notification on their smart phone of a delivery.
At the door, a drone drops off a package of fresh groceries carefully selected to match their preferences and replenish the ones that are running low.
The video demonstrates how artificial intelligence and machine learning could soon make a trip to the supermarket a nostalgic memory for many.
Delivery drones are still be further into the future, however companies in the e-commerce, transport and logistics sector are already embedding Artificial Intelligence and Machine Learning (AI/ML) technologies into their business operations.
According to a report by the World Bank’s International Finance Corporation, Artificial Intelligence is expected to drive new disruption in the transport sector and potentially translate into billions of new revenue stream for companies.
“In 2017 the global market for transportation-related AI technologies reached between Sh128billion and Sh149billion according to estimates from global research firms,” explained the IFC in the report. “It could grow to Sh331 billion to Sh374billion by 2023, registering a compound annual growth rate of between 12 and 14.5 per cent.”
According to the report, AI applications in transport go beyond the hyped concept of driverless cars and experts anticipate more solutions will be deployed towards road safety, fleet management and environmental conservation
Investors have already identified the opportunities that these emerging technologies will create in the region’s transport sector; recent attention from Silicon Valley funders corroborate this.
Last year, Kenyan transport and logistics company Sendy raised Sh2.1 billion in a second round of funding led by Atlantica Ventures and Toyota Tsusho, the investment arm of Japanese car manufacturer Toyota.
The funding came months after Nigerian trucking and logistics firm Kobo360 raised Sh2.1 billion led by Goldman Sachs, with East African logistics firm Lori Systems raising Sh3.1 billion.
The latest funding brings Sendy’s total investment to Sh3.2 billion and the company said it is looking to make an entry in the West African market in the coming months by launching in Cote d’Ivoire.
“We have automated everything in the value chain using the existing technology to make it easy for all our customers and partners to get the services from us,” explained Sendy Chief Technology Officer Evanson Biwott.
“We’ve used AI/ML around optimisation and efficiency. For example, when you try to predict the estimated time of arrival that a rider will get to a customer.” AI/ML systems are not new and applications have been deployed in several industries for years.
In the past decade however, the use of predictive algorithms in social media and e-commerce applications has ramped up interest in the opportunities available in other sectors.
AI/ML systems rely on data, realtime or historical, to learn and predict patterns that can be used to make projections and key business decisions like where to invest or deploy resources.
“We have transport data like the conditions of the road network and the alternative routes that are available,” Mr Biwott stressed.
“This data can help to compute average timings that we then share with our customers to know when to expect their product.”
According to Biwott, AI/Ml has also been useful in cost optimisation, which is a delicate balancing act in the logistics sector.
Often consumers want to pay the lowest possible cost for their deliveries while vendors want to maintain healthy margins.
“So we get all the data points that affect cost, for example the weight of the items, how fragile they are or the distance,” said Biwott.
“We put all this data together and we can then figure out how to match the orders to the drivers or whether to pool some deliveries.”
Last year’s outbreak of the Covid-19 pandemic made many businesses aware of some of the pitfalls and opportunities in their current business models.
Sendy restructured the company into three divisions; Sendy Transport, Sendy Supply and Sendy Freight.
According to Biwott, the consolidation helped reduce overlapping functions across the business, making operations leaner and unlocking new product lines.
“We took the freight component from the logistics business for example and now we run within the entity,” he explained.
According to the World Bank, emerging markets lag behind in adoption of AI/ML technologies due to lack of key infrastructure including semiconductors, advanced telecommunication networks and open data repositories.
However, emerging markets like Kenya can leverage on existing technology ecosystems in the global market to register some wins for their industries.
“AI-powered technology can allow small players with few assets and little capital to tap into existing resources such as a city’s truck drivers or motorcycle couriers to provide efficient solutions for their clients,” asserts the IFC report.
According to Biwott, the level of skills and expertise in the country is improving.
“The distance between the producer and consumer is getting smaller as we go along,” he said.