One Way AI Costs Small Businesses Money

AI is touted as a way to make things easier for businesses large and small. It's the latest buzzword; just about every advertising or spam email boasts that whatever they are trying to sell me is "AI powered".

But it's not all good. AI is a tool, and just like any tool it can be beneficial or a hindrance. It's all down to a combination of what it is designed to do, how it is actually used, and any unforseen consequences.

Image by Ray Shrewsberry • from Pixabay

I had an interesting email a few days ago. It came from a company I use for another IT service, and it was advertising their new product, an AI price scraper. I'm not going to name the company; the service I use from them is actually really good and they are nice people. I just think they are badly misguided in launching this.

The text in the body of the ad looked like this;

Sounds good, yes ? But it's got a couple of significant downsides.

The Race To The Bottom For Prices

First is that it makes low prices the most important driver of inter-business competition. Service, speed of shipping, accurate product data; all these things are considered irrelevant compared to being the cheapest. It creates a race to the bottom, in the same way we've seen on Amazon and eBay. In the process, small businesses get destroyed by those with the greater scale that gives them the ability to push suppliers on price.

Those small businesses are more than just box movers, they are delivering service and expertise to customers. It's something I haven't yet found a successful way to monetise, and when we had a shop it became frustrating having people coming in, taking up staff time to learn all about some sometimes complex products, and then go "I can get it 50p cheaper on Amazon". But premises and staff time cost money, meaning that there is a limit below which there is no point trying to match a low price while giving far superior service. It is one of several reasons why we closed the shop and went back to being purely online.

The Impact on Software Costs

There is a more immediate way this kind of service is costing me money. As a small e-commerce business, many of the software packages we use (particularly SAAS ones) are priced based on usage. Sometimes that is the number of orders, but other times it is based on web traffic or similar metrics.

One package I use is a thing called DooFinder. It's basically an in-site search engine that makes it easier for customers to find products on our site (we've got about 8500 different products....).

DooFinder pricing is based on price bands according to the number of searches carried out by visitors. It's calculated monthly, and for the last couple of months I've been getting warnings from them that we're close to the limit on our current plan and need to either upgrade or buy a one-off booster pack. This is despite sales being relatively consistent.

Talking to our webmaster, we worked out what is going on. Price scraping software is using AI bots to come in and use the in-site search to find products, scrape the prices and report back to our competitors. The bots are programmed to act like human visitors and use VPN's to spoof their locations and IP addresses, making them very, very hard to detect or block.

That means that I've got a choice; pay another £50-£100 a month to upgrade my plan so that I'm effectively paying competitors to steal my data, or not pay and give our genuine customers a worse buying experience.

It's a tough choice to have to make, and has caused me to curse the abuse of AI to create such a harmful outcome !

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