Not so long ago a shopping assistant that knows your style better than you do, or a chatbot that answers questions faster than a human sounded like something from sci-fi movies. But now AI is revolutionizing the world of eCommerce, turning every click into a carefully curated customer experience.
A report published by Grand View Research states that the AI market is already worth $136.55 billion, and predicts a CAGR of 37.3% from 2023 to 2030. In today’s AI-powered eCommerce landscape, Amazon’s or Alibaba’s recommendation engine drives billions of dollars in a single day. But it’s not just the giants; small businesses are harnessing AI to perform many tasks a human would normally do—only better and much faster.
Besides intelligent product recommendations, merchants use AI to predict trends, optimize pricing, boost conversion rates, personalize user experiences, and add value to the services offered. Thus, businesses need to grasp eCommerce AI technologies to retain a competitive edge and maximize their revenue.
How is AI changing eCommerce? In this post, we’ll try to find an answer to this question, show the best use cases, and give advice on integrating it into online business activities.
5 most powerful AI use cases in eCommerce
Machine learning algorithms help AI to become smarter as it engages with customers and processes more data. By analyzing previous purchases and interactions, it is possible to identify customer preferences and deliver targeted services.
How does artificial intelligence affect business? First of all, businesses begin to understand its high potential and look for ways to add AI to their operations—be it content creation, customer service or inventory management.
Is the deployment of AI in your eCommerce solutions an important subject in your business?
Below you’ll find the most efficient AI use cases, and learn how to turn a common eCommerce solution into an AI eCommerce platform, introducing these features.
1. Personalization and dynamic pricing
Personalization is nothing new for eCommerce but AI is undeniably revolutionizing it, as evidenced by the highly effective automated product recommendations that customers receive via email or when accessing their favorite eCommerce brand’s website.
For example, AI can be used to showcase recently viewed products, execute an automated and customized email campaign, and create a personalized product list. In this case, content is dynamically displayed based on customers’ click-throughs, browsing behavior, and purchase history.
AI-powered dynamic pricing is another powerful strategy to adjust product prices in response to market fluctuations. By leveraging cutting-edge data analytics tools, it’s possible to predict the optimal time and discount level to offer, ensuring maximum profitability and customer satisfaction.
Example: Netflix is a true pioneer in the realm of personalized recommendations. With its cutting-edge recommendation engine, NRE (Netflix Recommendation Engine), the streaming behemoth carefully analyzes the viewing history of each user and suggests movies and TV shows that are sure to hit the mark.
2. Smart search and discovery
In the vast universe of eCommerce, finding the perfect product is often akin to searching for a needle in a digital haystack. Fortunately, AI-driven search and discovery have emerged as the compass guiding users through this labyrinth. An AI search for eCommerce combines merchandising techniques and online search practices, including faceted search, navigation, autocomplete, recommended product listings, recent searches, etc.
When a customer visits an online store and types in a vague keyword, AI algorithms, equipped with Natural Language Processing (NLP), instantly decode the query, understanding nuances like size, color, shape, fabric or even brand. This analysis leads to highly relevant search results.
Leveraging machine learning, AI not only finds matching products but also automatically tags, organizes, and visually searches content by labeling features of the image or video. These algorithms track every click, dwell time, and interaction, shaping a dynamic, personalized storefront tailored to a customer’s preferences.
Example: Google is completely changing the way it showcases search results by integrating artificial intelligence conversations and departing from the traditional top 10 list. The new search engine will be more “visual, snackable, personal, and human,” with a focus on short videos and social media posts.
Earlier this year, Microsoft successfully integrated the technology behind ChatGPT into its search engine Bing, resulting in an advanced version capable of engaging in extended conversations with users. In a bid to outpace Google, smaller search engines have also eagerly incorporated conversational AI features to attract and retain users.
3. Inventory management and demand forecasting
Inventory management, once a daunting task of balancing overstock and understock, now heavily relies on AI algorithms to optimize stock levels. AI assesses a wide range of factors, including historical sales data, seasonal trends, supplier lead times, and even external variables like weather or economic indicators. AI-powered eCommerce helps companies better manage inventories, plan logistics, and warehouse space.
Being known as a guessing game, demand forecasting has been transformed into a data-driven science. AI crunches enormous datasets to predict customer preferences and buying patterns. This enables retailers to anticipate demand fluctuations, optimize procurement, and minimize costly overstock or stockouts, enhancing customer satisfaction.
Example: Amazon, for instance, uses predictive analytics to anticipate customer demand and integrates real-time data on website traffic, customer reviews, and even social media to quickly adapt to changing market conditions and customer preferences. The company also resorts to AI algorithms to optimize the movement of goods within its extensive network of fulfillment centers. Robots, guided by AI, assist with tasks like picking and packing, ensuring efficient and timely order fulfillment.
4. Customer service and support
Despite the existence of contact forms, phone calls, and email, an AI chatbot solution for eCommerce is the fastest and most convenient means for visitors to get answers. It serves as a virtual customer service agent, available 24/7, tirelessly answering questions, resolving issues, and providing information.
The most intelligent chatbots don’t just follow predefined scripts, but also learn and adapt from every interaction. They analyze customer input to provide accurate responses and improve customer satisfaction rates. AI-driven customer service and support are easily scalable. There is no need to make a human support team work on weekends and holidays as the chatbot can direct customers to relevant knowledge base materials, schedule callbacks, or take messages for agents.
Integrating a chatbot system into a shopping cart is also a highly effective step. In fact, certain systems require shopping cart integration to access crucial information like product details, quantities, and shipping terms. Using these data, chatbots can provide customers with accurate and efficient answers to any of their inquiries.
Example: Many eCommerce chatbots are capable of handling basic customer inquiries, but the truly innovative ones serve as shopping assistants. Sephora’s chatbot, a leading cosmetics retailer, provides answers to questions about returns and exchanges and acts as a virtual assistant by asking customers about their skin tone and makeup preferences in order to provide personalized recommendations.
5. AI-driven data analytics and insights
AI-driven data analytics and insights help businesses understand their customers better, predict future trends, and protect against fraudulent activities. One of the best advantages of AI is that it can analyze data with data without any prior assumptions or biases, which creates a more accurate picture.
Based on behavior analysis, AI segments customers into groups, for example, to deliver highly targeted marketing campaigns—a remarkable feature for AI in B2B eCommerce. However, AI doesn’t just analyze past behavior; it predicts future actions.
Businesses use AI to forecast customer lifetime value or identify customers at risk of churning. These techniques extend beyond individual customers. By analyzing vast datasets, AI can anticipate market trends and demand patterns, as well as detect fraudulent activities, flagging them as soon as they occur.
Example: IBM is another prominent brand that has been at the forefront of utilizing AI for data analytics. Watson is a flagship AI platform that encompasses a wide range of applications. It is used in healthcare for medical research, diagnosis, and personalized treatment recommendations. In financial services, Watson is employed for risk assessment, fraud detection, and trading analysis. Watson’s capabilities extend to natural language understanding, enabling it to sift through vast amounts of unstructured data for valuable insights.
Best AI tools to integrate with eCommerce platforms
So you’ve seen some cases of how companies use artificial intelligence in their activities, but running businesses often don’t have enough time or resources to develop their own tools, and need ready-made AI solutions for eCommerce.
While there’s no AI-based eCommerce platform, many products utilize AI technologies to some extent (through add-ons/plugins or custom features). For example, popular SaaS eCommerce platforms are integrated with third-party tools harnessing the power of AI for the needs of customer segmentation, inventory tracking, or in-depth analytics.
However, one should keep in mind that vendor lock-in applies to these tools too, and merchants have to use what they get, without an opportunity to integrate another solution or develop their own. That’s why businesses that prefer customization may be more interested in choosing from the best open-source eCommerce platforms which don’t impose any limitation on third-party integrations.
But what tools to invest in? What solutions to seek to begin with? Here’s a short list of eCommerce AI tools that can be beneficial for saving money and automating routine tasks.
AI copywriting tools
If you’re struggling with writing captivating website copy, product descriptions, or marketing content, there are tools that would help create high-quality AI content. ChatGPT and other artificial intelligence technologies have recently rocked the digital space and learned to produce human-like written content.
These tools analyze vast datasets of text to understand language patterns, tone, and context, allowing them to create coherent and contextually relevant content. The best thing is that the copy will be ready faster and overall cheaper.
For eCommerce businesses targeting global markets, AI copywriting tools can translate and adapt content into multiple languages, which expands market reach and enhances international sales.
AI marketing automation tools
As e-commerce businesses grow, the demand for marketing efforts also increases. Thus, AI marketing tools come in handy to handle larger volumes of data and customer interactions. In fact, they can automate various marketing tasks, from email campaigns to social media posting and customer segmentation, which ultimately not only saves time but also reduces the risk of human error.
Backed by real-time data, AI marketing tools can identify opportunities for cross-selling and upselling, encouraging customers to explore additional products or services. By delivering personalized experiences, these tools help businesses build stronger customer relationships and improve customer retention rates.
AI customer support services
Artificial intelligence for eCommerce can help not only win new customers but also make sure they stay with the business for a long time. For example, AI customer support solutions, like chatbots, are available around the clock, ensuring customers can get assistance at any time, even outside regular business hours.
Quickly assessing the nature of a customer’s issue, AI will direct them to the appropriate resources or human agents when necessary. This approach guarantees that human agents can focus on more complex and value-added tasks, such as resolving intricate issues and providing specialized assistance.
Future AI trends and emerging technologies to look for
Today we can surely state that there’s a massive hype around AI in eCommerce. But the real thing is that this tornado of new technologies will likely strengthen in the next few years.
Let’s dive into more AI technologies that going to shape the future of eCommerce:
- Virtual try-on and augmented reality. AI is poised to transform the retail and fashion industries. Enhanced by computer vision and machine learning, virtual try-on platforms will enable customers to visualize how clothing and accessories look on them without physically trying them on.
- Voice commerce. With AI’s evolving natural language processing capabilities, voice-activated shopping through virtual assistants like Alexa and Google Assistant will become more prevalent, allowing users to make purchases using voice commands.
- Visual search. Advanced visual search capabilities will enable customers to instantly find related products by uploading images or using their device’s camera.
- Hyper-personalization. AI will continue to enhance personalized product recommendations, content, and marketing strategies based on individual customer behavior and preferences.
- Social commerce. AI will integrate shopping experiences with social media platforms, facilitating in-app purchases and seamless transitions from social content to shopping.
Key takeaways
Today the role of artificial intelligence in eCommerce is hard to be overlooked or underestimated. But is AI really taking over the eCommerce world? Paradoxically, the answer is yes and no.
AI never tires, needs sleep, or gets distracted or bored. No human errors occur when AI is in charge. eCommerce AI is always ready to scale and rise to a challenge. The more universal it becomes, the more is the temptation to completely rely on it but the reality is a little bit more complicated.
While embracing and introducing AI, it’s possible to streamline operations and boost eCommerce business, humans still remain at the very heart of eCommerce. Despite its vast capabilities, AI is more like the ‘secret sauce’ behind eCommerce’s unprecedented growth, where the ‘main dish’ is getting cooked by professionals in the sphere. So the focus shouldn’t be shifted away from inner business operations to fancy technologies that aim to improve them rather than build from scratch.
