Using AI in E-Commerce - Changing the Rules of the Game

It’s no secret that Artificial Intelligence or AI is powering, or helping power a myriad of technologies at present today. It has become a ubiquitous part of processing in a timeline many would have simply not predicted. But its integration into most fields of business is still in its infancy with many only now looking at it as a key component of their continued and successful functioning.

One major player in this game of computing chess is Amazon. The E-commerce giant seemingly climbs new highs every fiscal year and has become the single-most influential pinnacle in the online shopping category. And a large part of its success can be attributed to Amazon’s integration of AI in its main online retail website.

According to a report, a staggering 35% of Amazon’s total revenues come from product upselling and cross-selling. The “Products You Might Like” tab you spend an inordinate amount of time on, was the first step in the company’s use of AI to bolster sales and engagement. And this isn’t the only use case either. Amazon uses AI to analyse customer comments on products, implements chatbots and focuses on providing personalized services to its customers.

And how do we know it’s working? A study on chatbots in 2019 found that 1 in every 5 customers were willing to purchase products through chatbots while 40% of online shoppers used them to avail discounts and offers. The numbers speak for themselves and this is bound to inflate as AI systems become more commonplace and sophisticated.

So how does this impact and (hopefully) facilitate other e-commerce businesses looking to replicate some of the aforementioned success for themselves? It’s a good idea to know what AI is and how capable it is right now before you decide to integrate it into your business.

What is Artificial Intelligence?

In a nutshell, Artificial Intelligence is the automation of tasks by computers which would previously require human input. But what separates AI automation from the traditional image you get of clinical robot arms assembly lines is that the former can actually learn and improve. The same way a human does.

AI is e-commerce is drastically changing the way people shop. By analysing and learning user shopping behaviour and patterns, AI algorithms can accurately place and send out products a user might be interested in buying. Take for instance, this product page for Dr. Martens boots. The AI correctly assumed that once a user buys this brand of leather boots, they would need maintenance items too. They might even offer supplementary products but at cheaper prices. And if you’re browsing for boots a few regular times, you might even get a customised email with a discounted offer.

Amazon and a handful of other e-commerce stores have mastered this and regularly tailor the shopping experience to each user. Amazon’s Alexa now supports voice shopping too. This allows users to shop through their voice assistant. Alexa also provides wardrobe tips including the best fashion combinations and is sophisticated enough to provide comparisons between outfits, based on what would look better on you.

AI is also helping brands like Zara by reducing the number of product returns. They do this by using the customer’s measurements along with their style preferences and suggest the best available options. This helps the brand reduce the number of returned products due to incorrect sizing or any other factor.

Google’s Duplex is also another great example. It is a real-time alternative for accepting calls, dismissing spam calls and placing orders or reservations in the user’s voice. Freeing up valuable time for the user instead.

AI Applications in E-commerce

AI is used in a multitude of ways in e-commerce but the four major use-cases are: 

Chatbots

Many e-commerce businesses are moving towards chatbot implementation in their websites and applications to help their customers with support around the clock. Chatbots are built using AI and have the ability to learn with every encounter or interaction they have.

And apart from their customer service and support functionalities, chatbots also have other capabilities such as addressing customer needs through deeper insights, self-learning capabilities and can even provide custom targeted offers to customers. 

Smart Product Recommendations

With the help of big data, AI is helping customers make smarter choices when it comes to product selections. This is a culmination of a few factors namely, knowledge of what the customer has bought in the past, products searched and online browsing habits. This helps e-commerce businesses by providing a higher number of returning consumers and a personalised shopping experience, all the while improving sales.

AI Personalization

Personalisation is at the heart of AI and in e-commerce, its importance is fully realised. Based on specific data gathered from each online user, AI and machine learning are deriving important user insights from the generated customer data. An effective way of using data for personalisation is by delivering real-time incentives. With AI at the forefront of these incentives, there is unlimited potential to bolster sales conversions, increase website user engagement and enhance profits from every transaction.

Inventory Management

Maintaining the right amount of inventory that can fulfill your market’s demand without adding to idle stock is an essential e-commerce practice. And trying to maintain this balance manually is a task many fail at regularly. AI helps alleviate this issue based on data related to, previous sales trends, projected and predicted change in product demand and any other supply-related issues.

And besides keeping tabs on inventory, AI also helps with warehouse and stock management. AI-powered robots are being used to store and retrieve stocks and are also entrusted to dispatch products when an online order comes in.

It’s no surprise that AI has a huge role to play in the future of e-commerce. Its implementation and use today by some of the leading companies in the world is testament enough to the technological prowess artificial intelligence possesses.

With global e-commerce sales to be projected to reach $4.8 trillion by 2021, the utilisation of AI to help elevate businesses is going to be a key determining factor. The course of manual tasks is changing rapidly and intelligent automation seems to be the next big player.