December 14, 2023

How AI is Transforming Ecommerce Business

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How AI is Transforming Ecommerce Business
How AI is Transforming Ecommerce Business

Only a few years ago, artificial intelligence was seen as something futuristic. But today, it has become part and parcel of our world with its impact seen in various industries, especially ecommerce. 

Ecommerce has shown the power of AI-based solutions in running business operations and improving customer satisfaction. According to statistics, the AI-enabled ecommerce solutions market will be worth $16.8 billion by 2030. 

With artificial intelligence, ecommerce businesses can collect data on consumer behavior, find out what products shoppers want, and make crucial business decisions that improve user experience. 

In this article, we will look at the various ways artificial intelligence (AI) is shaping ecommerce businesses. 

What is artificial intelligence (AI)? 

In simple terms, Artificial intelligence (AI) involves the simulation of human intelligence in machines. These machines can perform tasks that would typically require human intelligence. 

Over the years, AI has made impressive strides in understanding and interpreting human language, making predictions based on data, and recognizing faces and objects. 

In ecommerce, we have many AI-based applications like chatbots and recommendation engines that personalize shopping experience and improve customer satisfaction. 

Some big AI-enabled ecommerce companies include Amazon and eBay. 

Amazon has an AI engine that can use customer data to provide personal recommendations for relevant products. eBay also uses AI to identify patterns in consumer behavior and ultimately make product suggestions they may be interested in. 

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AI uses in ecommerce 

Here are some common uses of AI in ecommerce: 

  • Product recommendations: With artificial intelligence, ecommerce retailers can collect and analyze consumer data about their online shopping experience and offer more personalized product recommendations based on findings. 
  • Customer service: AI tools like chatbots and virtual assistants have come to stay, delivering better customer support. With these tools, retailers can provide 24/7 customer support. 
  • Demand forecasting: Inventory planning is a crucial part of ecommerce success. With artificial intelligence, businesses can get both historical and real-time data to monitor shifts in consumer demand for better targeting and price optimization. 

Benefits of AI in ecommerce

Many ecommerce companies use AI and machine learning to improve the selection of products, optimize logistics, and improve overall user experience. Here are some benefits of AI in ecommerce: 

  1. Better automation

With automation, you can carry out tasks with little or no human intervention. From scheduling emails, scheduling social media content, and automating those repetitive tasks. AI plays a valuable role in automating these tasks to keep your online store running. Apart from automating repetitive tasks, you can automate things such as product recommendations and loyalty discounts. 

  1. More targeted advertising 

Perhaps one crucial role that artificial intelligence plays in ecommerce is personalization. AI allows business owners to analyze various consumer data, purchase histories, and consumer interactions to create more personalized experiences and better-targeted advertising. 

With AI, you can target consumers more accurately and create content that resonates best with them. 

  1. Improved customer retention 

With improved targeting, you can create personalized advertising messages that address customer needs which ultimately improves satisfaction and increases customer retention. According to research, there is a 10-15% uplift potential in customer retention and revenue with omnichannel personalization strategies. 

7 ways AI is transforming ecommerce businesses 

Now let’s look at a few ways artificial intelligence has spread its tentacles in the ecommerce world: 

  1. Smarter site search
  2. More personalization 
  3. Better content creation 
  4. Better product recommendations 
  5. Better inventory management 
  6. Automated customer support 
  7. Online fraud prevention 

Smarter site search

Have you ever carried out a site search with some words spelled wrongly and still got accurate search results? Well, that’s where AI comes in. 

AI, through Natural Language Processing (NLP), tries to understand a customer’s query or search and proactively provide display search results they are looking for. It helps with the correction of spelling errors and missing phrases or words. 

AI also takes it a step further by making it easy for users who prefer to share images or speak. AI tools through visual search can analyze images and suggest similar images. 

More personalization 

Personalized shopping experiences can strengthen customer relationships,  improve customer loyalty, and impact sales and profits. According to a McKinsey report, companies that use personalization have 40% higher profits than companies that do not. 

Today, the majority of consumers expect a personalized experience when they walk into an ecommerce store. With artificial intelligence, you can create personalized experiences tailored to specific preferences and needs. 

AI can capture large amounts of customer data and pull out real-time consumer analytics which helps the ecommerce site to suggest the right offers for the customer. 

Better content creation 

Every ecommerce store owner understands that product copywriting is everything. From the product title to the product description, and product photos. However, creating content can get quite time-consuming and that’s where AI can help. Today,  AI is helping ecommerce businesses create better content. With AI, you can write well-optimized product descriptions and even spot product photos that are likely to convert. 

Generative AI is an AI technology that can create various forms of media including text, images, audio, and video in only a few seconds. This improves content creation for ecommerce businesses and improves the overall consumer experience. 

Better product recommendations 

Perhaps one of the most powerful ways AI has impacted ecommerce is through product recommendations. Brands like Amazon can spectacularly tap into this by suggesting products based on factors like purchase history and browsing history. 

With AI, ecommerce sites can gather insights about shoppers, make accurate predictions, and recommend products shoppers are likely to buy. 

Better inventory management 

Inventory management is a huge part of ecommerce success. Proper forecasting can drastically reduce loss in sales and improve customer experience. AI technology uses predictive analysis to keep an eye on the supply chain and monitor current stock levels. 

AI can help ecommerce businesses determine how much inventory to order and how much inventory to keep. 

AI is also useful in warehouse management as bots can take on the job of storing and retrieving stocked items. With this, you won’t have to worry about running out of stock or overstocking inventory, reducing unnecessary costs. 

Automated customer support 

When it comes to customer support, AI tools like chatbots and virtual assistants do a good job of ensuring customer queries are resolved. 

Chatbots can do what human personnel cannot. They can provide 24/7 customer support without taking any breaks. So, you can constantly interact with customers no matter the time or place. Whether it’s an early bird or a night owl, AI can proactively get the work done. 

This frees up time for your customer care agents to attend to other complex issues. In the coming years, we expect to see more refined chatbots tackle trickier problems. 

Online fraud prevention 

Fraudulent online activities cost many retailers both money and reputation. Thankfully, AI can help identify fraudulent activities and take preventive measures

Machine learning detects fraud by analyzing massive data points and using complex rules to identify suspicious behavior. So, AI can spot an online fraudster entering an incorrect address which may otherwise go unnoticed by a human. It can also detect false information like fake reviews. 

Ultimately, AI can save businesses from costly fraudulent activities which can destroy brand reputation and lead to loss of data.  

Final thoughts 

Are you taking advantage of artificial intelligence? As we have looked at, AI has a significant impact on the world of ecommerce. From better inventory management to automated customer support, more personalization, fraud detection, and much more. 

With the increasing competition in the ecommerce space, AI is one thing that can set your ecommerce business apart from the rest. 

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