We’ve witnessed major improvements and changes in e-commerce in the previous year. AI in eCommerce helps businesses to improve their operations and increase sales. As it uses technologies such as machine learning, natural language processing, and computer vision. It can be used to optimize pricing, improve customer service, and personalize the shopping experience for customers.
Are you looking to revolutionize your business with artificial intelligence? Where can AI improve your shopping experience? In this article, we will explore how artificial intelligence can help you achieve your business goals.
From automating customer service inquiries to personalizing the shopping experience for your customers. AI in eCommerce can really help to streamline your operations and boost your sales. In the end, the invasion of AI in eCommerce keeps on pushing the limit of what online stores can do.
Continue reading to understand more about the role of artificial intelligence in E-commerce.
AI in eCommerce: Bringing change to the eCommerce industry
Artificial intelligence provides the most advanced algorithms through which human lives have become facile. To understand the broad definition of AI, we have to divide the technology into three components. These three include:
- Data mining: It helps to gather all the information (current and historical) in order to provide accurate predictions.
- Natural language processing: This one focuses on how the computer interprets and interacts with human language.
- Machine learning: It uses a combination of layering algorithms to solve a problem. The algorithms either apply past experience or provide examples in an effort to gain understanding.
AI provides us with a revolutionary tool that has a huge capacity to transform our lives and simplest the way we work. In fact, it has started to make an impact on us already. Many of us encounter the use of AI in part of our days. Whether in the form of facial recognition features in our smartphones or relying on search engines to answer almost everything we have in our minds.
We must accept that technology is a huge part of our digital lives. Just like how the invention of electricity transformed the way we lived. Overall, AI plays a critical role in transforming eCommerce and making it more efficient, personalized, and profitable.
Need for AI Application in eCommerce
Artificial intelligence has been described as the fourth industrial revolution. It has been implanting itself into various aspects of industries now. From security checks at the airport to connecting home appliances with technology such as IoT, it’s almost everywhere.
One of the main aims of AI includes providing humans the ability to perform complex tasks in a faster and more effective way.
Additionally, according to a McKinsey report, AI could unlock US$ 1.4 to 2.6 trillion value in marketing and sales. Undoubtedly, unlike humans, AI will never get bored or need a nap or break from its work. Hence, it will result in reducing the percentage of human errors in the process. In fact, many retailers make use of AI in eCommerce to analyze their consumer’s shopping patterns based on their previous data and purchases. This analysis helps them to boost their conversion rates and plan their store strategies more effectively.
Not only this but the application of AI in eCommerce can do so much more than this today. For instance, the intervention of artificial intelligence in eCommerce can offer exemplary chatbot services, analyze consumer behaviors, offer customized services, and many more that we will discuss below in this article.
The use of AI in eCommerce can really take down the complexities of the task in various roles. From arranging huge amounts of data to managing the entire systems and processes without any functioning issues. Turn more visitors into buyers with highly relevant search results and better customer support enabled by machine learning and artificial intelligence.
To sum up, we can say that the transformative use of technology has really helped online businesses to seek improved opportunities. The digital touchpoints are increasingly helping many brick-and-mortar businesses to boost their engagement and interaction.
Advantages AI Powered Ecommerce Brings to the Table
Over the last few years, the development of AI applications in eCommerce has skyrocketed. Tasks that would take you hours to complete can now be done in minutes automatically.
Eventually, the use of AI in eCommerce will help online retailers to optimize their customer experience. We can do this by simply collecting business and consumer data for improved predictions and better decisions. So let’s understand the benefits AI powered eCommerce provides to online stores in detail.
Targeted Marketing and Advertising
Proving customers a customized experience includes the top most priority of a business to succeed. However, not many take appropriate steps to fully implement it. But with the use of AI in eCommerce you can focus more on the one-to-one personalized conversation with your customers. A study by Adobe found that AI-powered programmatic advertising can lead to a 20% increase in conversion rates and a 30% increase in return on ad spend.
In simple terms, the involvement of machine learning encourages deep personalization strategies to offer a customized experience to users. It collects and analyzes complex data related to customer interactions and histories. After that, it delivers the content that they really want to see on their feeds. Furthermore, a study by Accenture found that companies using AI for personalized marketing saw a 20% increase in sales compared to those that did not.
Increased Customer Retention
If you provide your customers with a personalized experience and customized offering it will result in increased customer retention too. Research from McKinsey’s omnichannel personalization stated that omnichannel personalization strategies increase the revenue and retention potential by 10 -15%. It also stated that better insights into data also help to generate additional value across the value chain. In addition, another study by Epsilon found that personalized email campaigns driven by AI had 29% higher open rates and 41% higher click-through rates compared to non-personalized campaigns.
The ultimate motive of automating tasks with AI technology includes simplifying complex repetitive tasks with as little human intervention as possible. This simply means we don’t have to put much effort into recurring tasks that can be automated.
For example, leveraging technology to hire suitable candidates, product recommendations, or schedule emails with the help of CRM. Above all, the benefit of seamless automation also allows your team to focus on more important tasks now.
Efficient Sales Process
As mentioned earlier also, the use of AI in eCommerce enables your online store to effectively collect consumer data to help you complete more efficient sales. Additionally, the automated data also helps to follow up on abandoned cart inquiries. Also, it provides more customized chat services to engage customers.
Hence, results in motivating customers to engage more with your store. A report by Salesforce found that AI-powered chatbots can lead to a 100%+ increase in customer satisfaction and a 70% reduction in customer service costs.
In conclusion, it’s worth noting that these are general benefits and numbers may vary depending on the implementation and the industry you are working in. But in general, AI can bring a lot of value to eCommerce businesses in terms of marketing and advertising. Moreover, it’s clear that AI can bring significant benefits to eCommerce businesses in terms of marketing and advertising.
Use of AI in eCommerce
Unquestionably, we have seen plenty of use cases of AI in eCommerce (whether consciously or unconsciously). We just don’t realize that the used technology is actually built above AI. Artificial intelligence may assist companies in various processes. In fact, online merchants can benefit from artificial intelligence in E-commerce in so many ways now. Below, we have highlighted several ways we can make use of AI in eCommerce.
Pricing in eCommerce
AI in eCommerce helps to optimize prices in real-time based on market demand, competition, and other factors. Pricing in eCommerce is a complex and dynamic process that involves many factors, such as market demand, competition, and supply chain costs.
One of the main ways AI can be used for pricing in eCommerce is through dynamic pricing. This involves using algorithms to adjust prices in response to changes in demand and competition. For example, if demand for a product is high, the algorithm may automatically raise the price, while if demand is low, the price may be lowered. This helps to ensure that the business is charging the optimal price for each product at any given time.
Another way application of artificial intelligence in e commerce helps to price includes price optimization. This involves using data and analytics to identify the most profitable prices for each product, taking into account factors such as supply chain costs, marketing expenses, and customer demand. By using AI in eCommerce to analyze data and identify the most profitable prices, businesses can make more informed pricing decisions and increase their bottom line.
Additionally, AI powered eCommerce also benefits to monitor competitors’ prices and adjust prices accordingly, this will help to ensure that the business stays competitive and can attract new customers. Overall, AI offers a powerful tool for eCommerce businesses looking to optimize their pricing strategies and increase sales and profits.
Fraud prevention in eCommerce is crucial for protecting both businesses and consumers from financial losses. AI in e commerce helps to detect patterns and anomalies in financial transactions, such as unusual spending habits, large transactions, and suspicious account activity.
By analyzing transaction data, the use of AI in eCommerce can identify potential fraud and alert businesses to take necessary actions. For example, AI in e commerce will help to flag transactions that have a high risk of fraud, such as those made with a stolen credit card or those that show a clear indication of money laundering.
Moreover, the integration of AI and eCommerce can also be used to verify the identity of customers during the transaction process, by using facial recognition, fingerprint recognition, and behavioral biometrics. This application of artificial intelligence in e commerce can help to prevent identity theft and other forms of fraud.
Overall, AI-powered fraud prevention can help eCommerce businesses to reduce their losses and protect their customers from fraud.
Synthetic media, also known as computer-generated media, is media that is generated using AI algorithms. In AI powered eCommerce, synthetic media helps to improve the visual appeal of products and make them more attractive to potential customers.
One way synthetic media can be used in eCommerce is to generate product images. The application of AI in eCommerce can create images of products that look realistic and high-quality, even if the product is not yet physically available. This can help businesses to market products before they are available for purchase.
Another way synthetic media can be used in AI powered eCommerce includes generating videos of products. The application of artificial intelligence in e commerce can create videos that show products in action, such as a clothing item being worn, or a home appliance being used. This can help to give customers a better idea of what the product looks like and how it works.
Synthetic media can also benefit to create virtual reality and augmented reality experiences for integrated AI and eCommerce platforms, this can help customers to visualize the product, and make more informed purchase decisions.
Overall, synthetic media offers a powerful tool for eCommerce businesses looking to improve the visual appeal of their products and increase sales.
Intelligent product recommendation
Intelligent product recommendation offers a system where the use of AI in eCommerce is used to recommend products to customers based on their browsing and purchase history, as well as similar items they have shown interest in. This can help integrated AI and eCommerce businesses to increase sales and improve customer satisfaction by suggesting relevant products to customers.
AI-based product recommendations also provide a personalized experience to each customer, by analyzing their browsing and purchase history, as well as other factors such as demographics, location, and interests. Hence, AI applications in eCommerce can help to increase the chances of customers making a purchase, as they will be more likely to be interested in the products being recommended.
Moreover, AI-based product recommendation can also be used to cross-sell and upsell, by recommending complementary or higher-priced products to customers who have already made a purchase. Therefore, artificial intelligence in e commerce can help to increase the average order value and revenue for eCommerce businesses.
Overall, intelligent product recommendation provides a powerful tool for AI and eCommerce businesses looking to increase sales and improve customer satisfaction by suggesting relevant and personalized products to customers.
Smart search is a system where the application of artificial intelligence in e commerce is used to improve the accuracy and relevance of search results on eCommerce websites. This can help to make it easier for customers to find the products they are looking for, and improve their overall shopping experience.
In simple terms, the application of AI in eCommerce can analyze data from various sources, such as social media, search engine data, and customer demographics, to predict customer behavior and preferences. This can help businesses make more informed decisions about which products to advertise, and to whom.
AI-based smart search can be used to understand the intent of the customer’s query and provide more accurate search results. For example, it can understand synonyms, and correct spelling errors, it also can understand the context of the search and provide relevant results.
Additionally, AI-based smart search can also be used to analyze customer behavior, such as the products they have viewed and purchased in the past, and use this information to personalize search results. This can help to increase the chances of customers finding the products they are looking for, and improve the chances of them making a purchase.
Moreover, AI applications in eCommerce can also be used to understand the structure of the website and the products and to generate more accurate navigation for the customers. This can help them to find the products they are looking for faster.
Overall, smart search can be a powerful tool for eCommerce businesses looking to improve the accuracy and relevance of search results and make it easier for customers to find the products they are looking for.
Personalized customer experience
A personalized customer experience is when the customer’s interactions with an e-commerce platform are tailored to their individual preferences, needs, and behavior. AI in e commerce helps to analyze customer data and personalize the customer experience by recommending products, providing personalized offers, and optimizing website content and layout for individual customers.
Hence, the application of AI in eCommerce can help to increase customer satisfaction and loyalty and improve sales. To clarify, artificial intelligence in e commerce can analyze a customer’s browsing and purchase history to create personalized product recommendations and targeted advertisements. This can lead to higher conversion rates and customer satisfaction.
Above all, pulling off any highly customized shopping experience includes the highest prosperity of an online store. A report by Retail Dive found that retailers using AI-powered personalization saw sales increase by up to 30%. The application of AI in eCommerce has the ability to analyze and identify customer data. Therefore, it enables the technology to forecast the purchasing patterns of consumers and show them product recommendations on the basis of their interests.
Natural language processing
Natural Language Processing (NLP) offers a subfield of AI that deals with the interaction between computers and human languages. In eCommerce, NLP helps to understand customer queries, product reviews, and feedback.
NLP allows artificial intelligence in e commerce to understand customer intent, and to generate more accurate and relevant responses to customer inquiries. It can also analyze customer feedback, and extract valuable insights that can help improve the customer experience.
Furthermore, NLP enables the application of artificial intelligence in e commerce to integrate with chatbots, virtual assistance, and other AI-based systems to provide a more natural and efficient customer service experience.
In conclusion, AI in e commerce can optimize various aspects of marketing and advertising campaigns, such as ad placement, targeting, and messaging, to improve performance and ROI. Additionally, AI applications in eCommerce can automate many routine marketing and advertising tasks, such as ad creation, targeting, and budget allocation, freeing up resources for more strategic efforts.
Chatbots and virtual assistance
Chatbots and virtual assistance include AI-powered systems that enable AI applications in eCommerce to provide customer service and assistance to customers on eCommerce websites. We can integrate these systems with the website to provide a more efficient and personalized customer service experience.
Additionally, we can use them to answer frequently asked questions, assist with order processing and tracking, and provide customer support. To sum up, Chatbots and virtual assistance can save time and resources for businesses, and improve customer satisfaction by providing quick and accurate responses.
Inventory management includes the process of tracking and managing the stock of products of a company. AI in e commerce can optimize inventory levels, predict demand, and improve supply chain efficiency.
To clarify, AI-based inventory management systems can analyze data such as sales history, customer behavior, and market trends to predict demand, and optimize inventory levels to ensure that products are always in stock when customers want them. Hence, AI applications in eCommerce can help to reduce costs, improve customer satisfaction, and increase sales.
eCommerce strategy to remarket potential prospects
An AI in eCommerce strategy to remarket potential prospects offers a strategy that uses AI to identify potential customers who have shown interest in a product or service but have not yet made a purchase. These individuals then target personalized marketing campaigns aimed to convert them into customers.
AI in e commerce helps to analyze customer data, such as browsing and purchase history, and use this information to identify potential prospects and tailor marketing campaigns to their specific interests. Hence, AI applications in eCommerce can help to increase sales and improve the ROI of marketing efforts.
Customer segmentation includes the process of dividing customers into groups based on their characteristics, such as demographics, behaviors, and purchase history. AI applications in eCommerce help to analyze customer data and segment them into different groups, which can then be targeted with specific marketing campaigns.
For example, a business could segment its customers based on age, income, and location, and then target each group with a different marketing campaign. This can help to improve the effectiveness of marketing efforts and increase sales.
Combat counterfeit products
Combating counterfeit products provides the process of detecting and removing counterfeit products from eCommerce platforms and protecting the rights of intellectual property holders.
AI in e commerce helps to analyze product images and detect counterfeit products, by comparing them with the original product images and identifying any discrepancies. Hence, this can help eCommerce businesses to protect their reputation, and prevent financial losses due to counterfeit products.
Big data management
Lastly, Big data management includes the process of collecting, analyzing, and utilizing large amounts of data from various sources. We do this to improve business decisions and performance. The application of AI in eCommerce helps to process and analyze large amounts of data, such as customer interactions, sales, and marketing campaigns. This helps to identify patterns that can help businesses to improve their operations, increase sales and optimize their performance.
To sum up, the application of artificial intelligence in e commerce can analyze large amounts of data quickly. Furthermore, it can make decisions faster than humans, leading to increased efficiency in the marketing and advertising process.
Steps to Implement AI in E Commerce
After understanding these tempting applications of AI in eCommerce, you might get excited to jump into this new exciting technology. Although, you will need the right roadmap before implementing AI powered eCommerce. These steps will ensure that you don’t get lost anywhere else and put all your efforts into the right path.
Create a Strategy
Firstly, you have to plan out a strategy that will help you to reach your AI goal. Take some time and understand what you really want from the technology. Focus on the major reason you wanted to make use of AI in eCommerce.
Start with a practical approach and avoid taking big steps at the beginning. To clarify, always take small steps and then analyze whether it’s really working for you or not. If yes, you can extend the application of AI in eCommerce later.
Find Narrow Use Cases that are Relevant to Overall Corporate Strategy
The intersection of overall business objectives with artificial intelligence models provides the most successful point of AI applications in eCommerce.
In simple terms, focusing on data differentiation and revenue-generating opportunities provided by readily available proven technology gives us a big advantage in implementing AI powered eCommerce successfully.
Leverage Third-Party Expertise
Thirdly, it’s always better to have an expert by your side. Moreover, you always have the option to hire them part-time or on a full-time basis.
This will also help your team to learn some real experience and ensure your strategies towards the correct AI roadmap. In fact, third-party integration will also benefit to bring you a minimum viable product (MVP) at first.
Build Full-Scale Solution
Lastly, it’s time to develop a full-scale solution to effectively integrate AI and ecommerce app development. However, you also have to be ready if it requires any alterations to work as per the expected standards.
Once the team gets comfortable enough to effectively deal with the application of artificial intelligence in e commerce. You will gradually notice the benefits of AI powered eCommerce projects.
AI in eCommerce Examples to Take Inspiration From
Many big brands have long recognized the benefits of AI powered eCommerce and further technologies. Below we have highlighted a popular AI in eCommerce examples of companies that rely on technology.
Several large companies are using AI in their eCommerce operations, here are a few AI in eCommerce examples:
- Amazon: Amazon has started using AI in e commerce in their product recommendation system through which they clinch a positive impact on their revenue growth. The organization uses AI in many aspects of its eCommerce operations, including product recommendations, search, and advertising. The company’s machine learning platform, Amazon Machine Learning, uses to power these AI-driven features.
- Alibaba: The Chinese eCommerce giant uses AI in several areas of its business. From personalized product recommendations and fraud detection, to supply chain optimization.
- Netflix: The streaming giant uses AI to personalize its content recommendations for users. Its algorithm takes into account a user’s viewing history, search history, and ratings to suggest content they might like.
- Walmart: The retail giant uses AI in several areas of its business. It includes supply chain management, inventory management, and customer service. They are also using AI-powered chatbots to assist customers with their queries.
- Zara: The fashion retailer uses AI to predict which clothes will sell well and when. This helps them to optimize their production and inventory.
- Sephora: The cosmetics retailer uses AI-powered chatbots to assist customers with product recommendations and to answer their questions.
These are just a few AI in eCommerce examples of the many companies that are using AI in eCommerce. As technology continues to evolve and become more sophisticated, we can expect to see more and more companies adopt AI. This will help to improve their operations and better serve their customers.
Future of AI Powered eCommerce!
Undoubtedly, we can say that AI will constantly transform the eCommerce industry. The integration of AI and eCommerce benefits the store with improved engagement and better management for both customers and retailers.
A study by “Business insider” thinks that around 85 percent of customer interaction would be managed by AI by 2020. Furthermore, another report by “Tractica” states that the application of artificial intelligence in e commerce directly or indirectly helped online stores to increase their revenue by up to $59.8 billion. And with the increased use of automated emails, calls, and chatbots, we can clearly watch these stats appearing true.
In simple terms, the future of AI-powered eCommerce is likely to see even more widespread adoption of the technology.
Here are a few potential developments:
As AI algorithms continue to improve, we can expect to see even more personalized experiences for eCommerce customers. This could include highly targeted product recommendations, customized pricing, and promotions, and even personalized virtual shopping assistants.
More sophisticated chatbots:
AI-powered chatbots have already been used in eCommerce to assist customers with product recommendations and to answer their questions. In the future, we can expect to see chatbots that are even more intelligent to handle more complex interactions.
Virtual and augmented reality:
AI-powered virtual and augmented reality technologies have already been used in eCommerce to enhance the shopping experience. In the future, we can expect to see even more advanced and immersive virtual and augmented reality experiences. It will allow customers to better visualize and interact with products.
AI-powered predictive analytics will become more sophisticated. It will be able to predict customer behavior, and preferences. Moreover, it will even predict which products will sell well in the future.
AI will continue to automate more routine eCommerce tasks. For example inventory management, order fulfillment, and customer service, freeing up resources for more strategic efforts.
Overall, AI-powered eCommerce will continue to evolve and become more sophisticated. Therefore, providing businesses with powerful tools to improve their operations and better serve their customers. It is likely that AI will play a significant role in shaping the future of the industry.
Undoubtedly, AI in e commerce offers a rapidly evolving technology that will change the online storefront. In simple terms, it has the potential to impact various eCommerce functions across the organization. Moreover, it’s no harm in trying out something new that helps us to identify new opportunities for our business. Today’s intervention of AI technologies makes the conversion rates look more glamorous while streamlining the way a business runs.
To sum up, the use of AI in eCommerce will absolutely help us to use customers’ and business data in a better way while planning effectively for the future. In this article, we have highlighted how AI impacts the growing eCommerce trends in depth. However, if you have any doubts related to the topic feel free to contact us directly.