Artificial Intelligence (AI) is prominent in the way we shop online. AI in ecommerce is transforming the way companies work and how customers experience shopping. AI is showing the relevant products, guiding things like order problems, and offering support.
So, in this article we will find out how the AI in ecommerce works, how to take advantage of AI in ecommerce, some examples from the real world, and how generative AI in ecommerce is transforming the game.
What is AI in Ecommerce?
Artificial Intelligence in ecommerce means using artificial intelligence technologies to improve all aspects of the online shopping experience. The technologies can include machine learning, natural language processing, image recognition, and more. AI can assist in areas like:
- Personalizing product recommendations
- Managing inventory
- Fraud detection
- Automating customer service
- Trend forecasting
- Price optimization
Implementing the use of AI within any aspect of ecommerce can help businesses save time, lessen error, and increase sales.
Why Use AI in Ecommerce?
There are a lot of reasons to use AI in ecommerce, here are some of the big benefits:
1. Improved Customer Experience – AI surfaces the items customers are most likely to buy. This helps provide a quicker and easier shopping experience
2. Increased Sales – Businesses can sell more when they present appropriate product recommendations and pricing
3. Cost Savings – AI will allow the automation of some functions, such as chat support or managing customer orders, to reduce manual labour
4. Better Data Decisions – AI will easily analyse large amounts of data to assist businesses in making decisions.
How to Use AI in Ecommerce
I will now provide a breakdown of how AI integrates with ecommerce. Below are a few common use cases of AI.
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Personalized Product Recommendations
AI observes and learns from customer behavior, what they browse, what they buy, and how long they spend on a particular product page. It will then show product recommendations in real-time, by using predictions of what the customer is most likely to buy.
The technology is similar to that used by companies like Amazon and Netflix.
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AI Chatbots for Customer Service
Source Image: botpenguin.com
AI chatbots are a great way to provide customer service 24/7. They can be programmed to answer customer questions, including order tracking, refunds, returns, and more.
This improved customer service channel not only reduces customer wait times, but will save costs to businesses.
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Visual Search
AI allows users to search via image upload instead of a keyword search. If a customer uploads a photo of a shirt, the website will return search results with similar products to, or match the original product.
This method of searching makes it easier for users to find what they are looking for, even when it is difficult to remember the name of the product.
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Fraud Detection
AI can analyze and detect transactions that may be problematic, by identifying a pattern that looks suspicious. This will help protect the customer from fraud, as well as the ecommerce shipping company.
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Inventory Management
AI solutions can be trained to predict how much inventory is needed, based on historical sales data, and current market analysis. This will help prevent running out of product stock or buying too much product stock in an ecommerce business.
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Dynamic Pricing
AI can change prices based on demand, competition, and customer behavior. The same concept applies to flight tickets. Tickets often change prices in real time. This can be done in ecommerce as well.
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Voice Search Optimization
There are many smart assistants such as Alexa and Google Assistant and more people are buying with their voices. AI helps ecommerce platforms optimize their website for voice search queries.
Generative AI in Ecommerce
Now let’s talk about generative AI in ecommerce. Generative AI is a type of AI that can create content. It can generate text, images, videos, and more.
How Is Generative AI Used in Ecommerce?
- Product Descriptions – Businesses no longer need to type individual product descriptions. They can use generative AI applications to create descriptions instead. This way businesses remain productive with their time and produce consistency across product descriptions.
- Ad Copy and Marketing Content – Generative AI can create ads with the messaging for the product along with social posts and email campaigns intended for the target audience.
- Chatbots with Better Conversations – Conventional chatbots employ a rule-based set of pre-defined conversational paths. Generative AI allows for chatbots to create natural conversations, creating a better customer experience.
- AI-Powered Design – Generative AI can create product images, website banners, and design layouts for ecommerce businesses.
- Product Customization – Some ecommerce sites offer generative AI that assists users in designing their own products such as T-shirt designs or personalized home decor.
AI in Ecommerce Examples
Let’s go through some real-life AI in ecommerce examples:
Amazon is at the top of the league when it comes to AI, and ecommerce. It uses AI to recommend products, manage inventory, deliver packages using robotic systems, and even set prices.
Shopify makes AI accessible to small businesses offering tools that allow them to provide personalized shopping experiences while also utilizing smart marketing tools.
eBay uses AI for fraud prevention, customer service, and visual search for helping customers locate exactly the right item using image recognition AI to analyze photos.
Myntra is an ecommerce fashion retail site, based in India, that uses AI to suggest clothing based on user style and previous purchases.
H&M uses AI to analyze store data and mark trends in fashion. This information allows them to plan for inventory and pricing.
Sephora uses AI to provide beauty product recommendations, and also a virtual try-on using augmented reality and machine learning.
Challenges of Using AI in Ecommerce
While AI for ecommerce can provide ecommerce companies with a lot of value, it does come with some challenges as well:
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Data Privacy
AI requires extremely large volumes of data to operate optimally. Using customer data is beneficial for personalising customer experience but can cause privacy issues. Ecommerce companies must abide by data protection regulations (such as GDPR).
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Costly
Implementation of AI-based tools could cost a lot of money, particularly for small businesses.
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Complex
AI systems could be complicated to control and manage. It often requires people that know what they’re doing.
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Customer Acceptance
The use of these automated interfaces can be off putting for some customers who prefer human involvement. Finding the right balance is important.
Future of AI in Ecommerce
The future of AI ecommerce is looking good. More and more businesses will adopt AI tools as they become cheaper and easier to use.
Here are some trends to keep an eye on:
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Hyper-Personalization
AI will allow more hyper-personalized approaches, such as product bundling called the “basket” as well as additional content related to the site’s overall theme or user interest, emotions or previous behaviour.
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Automating (some) Business Functions
Source image: boomi.com
There is no limit to what AI and robots can or will automate in ecommerce processes, from re-stocking items to packaging things and much, much in-between.
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Real-Time Analytics
Report building will move to real-time reporting allowing owners to see what is working or not working and quickly adjust tactics when business conditions change.
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AR will work together with AI
Users will be able to “try” products through Augmented Reality (AR) and AI technologies prior to purchase.
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More Generative AI
Ecommerce brands will begin to make more use of generative AI for design, marketing and customer service as generative AI tools improve and may become less expensive.
To Conclude
AI in ecommerce is not only a trend; it is becoming essential. AI will be instrumental in enhancing shopping experiences, and making sellers’ businesses more efficient.
AI in ecommerce will shape the future of shopping online whether it be generative AI in ecommerce to develop content or smart systems using data to help customers with suggesting products to purchase.
If you are wondering how to implement AI in ecommerce, simply begin by starting small with AI-powered chat bots or recommendation tools that you can explore in your store. Eventually, explore other choices like dynamic pricing, generative content, or AI driven marketing.
Whatever process you choose, either way, you are making the shopping experience easier for your customers and easier for you to run your business.
