Introduction
Artificial intelligence is everywhere, from how we use social media to how businesses interact with customers. It's there even when you don't notice it; whenever you get a movie recommendation on Netflix or speak with a bot online, that's AI.
AI in eCommerce is no exception.
With artificial intelligence in eCommerce, retailers can:
- Avoid repetitive tasks.
- Enhance their workflow.
- Make data-driven decisions to ensure customer satisfaction.
In this article, you’ll learn about the different applications of AI in eCommerce, with examples of companies using AI and expert perspectives from the eCommerce masterplan podcast.
What is AI in eCommerce?
Artificial intelligence in eCommerce uses advanced algorithms and data analysis methods to drive business growth and improve decision-making to enhance shopping experiences.
AI in eCommerce covers:
- Natural language focuses on how computers interact with human language.
- Data mining involves collecting past and current data to guide future predictions.
- Machine learning uses previous experiences to generate insights to provide solutions.
With AI, even small businesses can compete effectively in the digital space to create a more personalized customer experience. From 2018 to 2022, the use of AI in organizations embedded within a business or product function doubled. This shows how relevant AI has become for businesses to thrive.
9 Use Cases of AI in eCommerce: Practical Applications For Customer Satisfaction
Finding the ideal use cases your business can leverage can help you bag the easy wins, get ahead of the competition and even impact revenue can be tricky. Since AI in eCommerce is still in its early stages, business owners can be oblivious about areas to integrate it.
Some common use cases include:
Personalized Product Recommendations
Predicting the possible products customers might purchase used to be a pipedream before the advent of artificial intelligence. Businesses had to rely on costly trial-and-error systems to determine their customers' needs. Most times, it was a waste.
With AI in the eCommerce industry, brands can improve personalization through data collection, data analysis and predictive analytics showing the product a customer will likely purchase. This way, businesses can boost conversion rates and foster customer loyalty.
CEO at Nibble, Rosie Bailey stated:
"Human behavior is changeable, it's emotional, it's surprising. And AI is uniquely placed to be more human than any previous attempts we've had in eCommerce at personalization.”
How Wayfair Does It
Wayfair is an eCommerce company that provides personalized product recommendations. It launched Decorify, a virtual room styler powered by generative AI to help customers envision how each product will suit their homes by providing real-time suggestions.
Customer acquisition and lead generation
AI tools can help eCommerce brands acquire customers faster and at a lesser cost by detecting leads with a higher possibility of conversion. Here are some practical applications that impact AI in sales:
- Data-driven targeting that uses AI to analyze datasets and identify consistent patterns among customers.
- AI sales analytics and forecasting to ensure eCommerce companies distribute their resources effectively.
- Sales teams can use AI for lead scoring to determine the likelihood of leads becoming paying customers.
- E-commerce businesses can identify opportunities for upselling and cross-selling to introduce products to customers based on their previous history.
Creation and enhancement of products
Artificial intelligence remains relevant in helping eCommerce businesses analyze market trends and identify customer preferences to design new products tailored to customer needs. E-commerce brands use AI to also enhance their existing product portfolio to improve customer experience.
Businesses can create more sustainable products using AI algorithms and configure them to suit customer preferences. AI is also useful for predicting product failures and detecting imperfections before reaching the final consumer.
How Unilever Does It
After analyzing 46 terabytes of data, 6,000 ingredients, and 3.5 million fragrance combinations, Unilever launched the Axe AI body spray. Relying solely on human input to achieve this result would take time and effort. But with AI, it was made possible.
Customer Service
VP Americas & Global Partnerships at e-Desk, Jody Gaines, asserted that:
"AI helps in getting rid of busy manual tasks, especially when it comes to support. In some instances, businesses can use AI for hands-free mode, which doesn't require immediate agent intervention, dropping the response time from minutes to seconds."
Customers no longer have to wait for donkey years before getting a response to their queries since 53% of customers get frustrated from waiting too long. Artificial intelligence makes 24/7 availability, even outside business hours, possible through chatbots and virtual assistants.
Chatbots and virtual assistants are also great for helping customers track their orders to determine the estimated delivery times. Artificial intelligence helps process customer feedback to identify areas in customer support that require improvement.
Scribe is an AI tool that helps you create FAQ pages, step-by-step guides, knowledge bases and customer tutorials. Customers can easily find answers on your website without contacting you directly using Scribe.
Dynamic pricing systems
Instead of spending hours monitoring your competitor's pricing and considering external factors to determine your price changes, AI provides a more flexible pricing strategy for business owners.
Dynamic pricing allows you to tailor prices according to your recent users and their behavioral patterns. This pricing strategy uses data to price items based on your costs and competitor prices. Even McKinsey attested to a 5% increase in customers' sales who leveraged dynamic pricing models.
How Amazon Does It
Amazon, a multi-vendor marketplace, is considered a pioneer of dynamic pricing in the eCommerce space. This eCommerce company changes its product prices 2.5 million times daily, and they've recorded over 20% increase in sales.
Fraud Detection
With massive booms come massive opportunities for exploiters to manipulate systems. The eCommerce niche has not remained untouched by such manipulations. Only in 2020, over $600 billion was lost to false declines in global e-commerce revenue.
Before, merchants had to waste time reviewing transactions to detect fraud, but they can now rely on algorithms to analyze huge data sets to achieve precise results. These algorithms study behavioral patterns using data to identify suspicious transactions. Fraud detection technologies allow eCommerce business owners to automate their detection process.
Inventory management
Managing goods and materials from the point of manufacturing to distribution can be a handful for eCommerce companies. Businesses have to meet customer demands without procuring excess inventory. This is where AI comes in.
Artificial intelligence uses data to influence distribution and manufacturing decisions to predict scenarios. This way, eCommerce businesses make goods available for customers right when and how they need them.
Two major areas stand out:
- Demand forecasting: Through the data generated from internal and external sources, eCommerce businesses reduce supply chain errors for demand forecasting using AI. In 2022, Nestle relied 80% on data to make forecasts, which helped them save costs while meeting customer needs.
- Effective warehouse management: Artificial intelligence reduces the possibility of human error by optimizing logistics tasks, facilitating communication with real-time data and identifying seasonal demand patterns.
Marketing
Artificial intelligence in marketing is useful for eCommerce businesses, from generating content ideas to retargeting customers who previously interacted with your brand. eCommerce businesses leverage AI to optimize their campaigns and remind customers of their interest to boost conversion rates.
In addition, eCommerce businesses can automate emails using triggers to deliver timely messages to customers at every crucial step. Only the shopping cart abandonment rate is calculated at an average of 70.19%, a result that can be recovered using AI in eCommerce marketing.
AI also helps eCommerce business owners gain content recommendations to improve their marketing campaigns. Content writing tools are great for generating ideas, exploring different content types, optimizing for SEO, rewriting and editing existing content. This way, even small businesses can improve workflow and produce consistent copy for their target audience.
Virtual Merchandising
Artificial intelligence allows eCommerce businesses to create an immersive shopping experience that facilitates visual merchandising. The fusion of AI and VR in eCommerce allows customers to try on products, visit the digital version of stores and even tailor products to suit their preferences.
This way, customers can better understand how products suit their needs without sacrificing convenience. eCommerce retailers can create virtual showrooms and virtual landscapes of upcoming projects to introduce customers to new features.
What are the Benefits of AI in eCommerce?
Managing Director, EMEA, Deann Evans, Shopify stated:
"We are heading into a decade of high velocity and massive change at the dawn of AI. Breakthroughs in AI are accelerating innovation and unlocking new possibilities for AI at an incredible pace. We are only just touching the surface in commerce."
Here are some major benefits:
Reduce Operating Costs
Artificial intelligence reduces the possibility of human errors even in the manufacturing process, which helps eCommerce businesses reduce costs. Small businesses can also leverage AI to compensate for their lack of huge budgets to ensure they run smoothly.
Increase Productivity
With artificial intelligence, eCommerce businesses can minimize the time spent on mundane tasks so the team can focus on other crucial areas. AI allows eCommerce brands to automate tasks across different areas to improve workflow.
Empower Decision Making
Instead of relying on guesses, eCommerce companies can make data-driven decisions based on facts and patterns identified. This way, business owners can have better insights on the right move to effectively meet their customer’s needs.
Drive Innovation
The best eCommerce businesses thrive on the strength of new ideas that fit recent trends. With AI, companies can research eco-friendly and sustainable methods to improve product life cycles.
Boost Revenue
AI enhances the personalization of customer experiences, which fosters cross-selling and upselling by suggesting complementary items. This way, customers can spend more time on your eCommerce website since your efforts show you care about their convenience.
5 AI Tools for eCommerce Businesses
Although most eCommerce giants set up an in-house team to integrate artificial intelligence into their operations, small businesses can still leverage available tools to improve customer experiences.
Scribe
Scribe is an AI tool that documents your processes for you. eCommerce businesses can create AI-generated guides and manuals to address customer queries without requiring an agent.
You can guide your target audience through complex processes by simply clicking on "capture" using Scribe. Team members can also facilitate communication and collaboration using this AI tool to detail processes.
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Jasper
Jasper allows eCommerce businesses to gain consistency in their brand voice. You can train this AI tool to adapt to your brand's different content styles in communicating your message to customers.
Vue.ai
Vue.ai is a personalization engine that helps business owners build shopper profiles using their previous actions. It then makes product recommendations effective after considering the buyer's journey.
Prisync
eCommerce businesses can use Prisync to track their competitor's prices to improve profit margins. Prisync sets product prices automatically as you've set the rules to help you bag the easy wins.
SalesForce Einstein
Salesforce Einstein helps retailers generate sales forecasts to enhance the customer acquisition process. eCommerce businesses can also use Einstein for product recommendations, personalization, customer service, and even generating product descriptions.
Conclusion
eCommerce platforms like Amazon and Alibaba have successfully integrated AI into their business functions. These eCommerce behemoths have grown tremendously, relying on data-driven insights to satisfy customer needs.
Even SMBs can follow suit to unlock productivity, revenue growth and innovation to satisfy customer needs with tools. Without large budgets, retailers can use third-party AI tools like Scribe to gain a competitive edge.
