E-commerce Artificial Intelligence: 9 Practical Applications Businesses Need to Try

You can have data without information, but you cannot have information without data. These words belong to Daniel Keys Moran, a well-known American programmer. Indeed, in a world where tons of data are produced daily, it’s ineffective to base your decisions simply on intuition or gut feeling. It’s much better to use data to turn it into valuable insights on how well you perform and what else you can do to do better.

E-commerce artificial intelligence opens access to valuable data on overall performance, locked opportunities, customer behavior, operation gaps, and more. If you are interested in how artificial intelligence (AI) can transform your business, this few-minute-read article can do a great job for you.

Ecommerce AI in Numbers

Here is a quick overview of AI in ecommerce and its potential to fully penetrate the industry in the upcoming years:

• 40% of consumers expect to receive discounts and special shopping offers from chatbots. This requires chatbots to be smart and able to learn. Imitating human communication with a chatbot is now possible with AI. The greater technology you offer, the more chances to earn a new client you get.
• 78% of brands report they’ve already implemented AI tools in their online stores or plan to do it in the nearest future. One of the most valuable benefits Ai solutions give them is better customer service and personalized marketing.
• By 2030, AI-powered ecommerce solutions will be worth $16.8 billion. These ecommerce statistics show that more and more companies shift their focus from offline shopping to digital. They rely on AI-powered predictive analytics. It helps them optimize their expenses and target their resources into relevant channels. This is why the trend for ecommerce AI is only growing. Market forecasts are more optimistic each year.

Business Benefits of AI in Ecommerce

The use of ecommerce machine learning is a big trend. Let’s look at the general benefits each business can expect to get from the AI and ML application.

• Efficient back-office operations. AI helps you detect operation gaps across the supply chain and optimize the team’s work. You reach maximum efficiency by improving the whole system.
• More effective marketing. Generalized ads often go unnoticed or, what is worse, can annoy customers. AI gives you as much data on your customer as possible. This allows you to craft great targeted marketing campaigns that will appeal to a particular user segment and definitely attract their attention.
• Reduced risks. The more data you have on hand, the more informed decisions you can make. There’s no need to wonder what would happen if you did some action. Self-learning algorithms can gather data on those who already did the same and you see what results they achieved.
• Higher conversion. AI software helps ecommerce retailers turn random website visitors into potential customers by personalizing customer experience. We’ll cover this topic a bit later, but this is mainly achieved with personalized product recommendations, advanced search, and need-tailored ads.

9 Use Cases of AI in Ecommerce

In the previous section, we discussed the impact of AI on the ecommerce market in general. Now, it’s time to get more specific about the results of implementing AI in your organization. This is what you can get with AI in e-commerce sector:

Predict the Future

Let’s divide this benefit of using AI in ecommerce platforms into 2 main aspects.

Client Behaviour Predictions

AI is a powerful tool for predicting how your customer will behave. It gives you the chance to forecast clients’ actions in real-time. Suppose that AI algorithms tracked a customer staying on a particular product page for a long. This may be the sign that they are one step away from the purchase. With this knowledge, your technology can react accordingly. For example, send an engaging email or site notification that will encourage the customer to proceed with the purchase.

AI also offers a deeper insight into client decisions. Based on the gathered data, the machine can define what category a customer belongs to and how likely they are to return and order from you again. These data help you facilitate your marketing effort and target the right users at the right time. Moreover, AI can provide your managers with info on users who are likely to leave. The technology calculates the likely customer lifetime value (CLV). When the time to say goodbye comes, you can apply your engagement strategies and encourage a user to stay with you. This will increase your CLV and lead to higher online sales.

Imagine this: you are an ecommerce business owner selling office supplies. There’s a client who works as an office manager. He orders supplies from you every 5 weeks. But this time, the client doesn’t order anything — he just logged into your website and viewed product pages. As a representative of the e-commerce industry, you will never notice it. But AI technology will. It’s likely that this client refrained from placing an order because he found other alternatives. If you don’t want to let him go, you can use AI to thank the client for his loyalty.

This can be done via generating and sending personal discounts, making special offers, inviting the client to participate in some program, etc. This case is one of the hundreds faced by ecommerce websites daily. It’s physically impossible to pay attention to every case. That’s why companies integrate AI and ML to notice each detail and react effectively to get benefits in the long run.

Market Trends and Product Forecasts

Market trends and the right estimations of client size prevent you from losing money. AI and automated ML technology can conduct a market analysis for you. You will know what measures competitors take to engage users. Knowing what trends competitors support is a way to optimize expenses and integrate ecommerce trends that are truly valuable.

Enhance Product Search

This part will also consist of three vital aspects.

Personalized Search

Have you ever noticed that search results for the same query may differ for your mobile and PC? That’s because of the AI-driven algorithms that analyze your search history to make the search process more personalized.

Not all clients are good at keyword search, which form the basis of the alphanumerical search process. How can you deliver the right results to this audience in this situation? Use e-commerce intelligence product search.

Modern customers are overwhelmed with data. They are limited in time and are not eager to formulate long customer queries. Clients want machines to know what they look for and quickly deliver the right results. In the case of AI and ML, search results become more personalized. The technology analyzes search data on every customer. These historical data, click patterns, shopping patterns, and info on location are used to drive a personalized shopping experience.

Visual Search

With the growth of computer vision and mobile shopping, the use of image recognition software is becoming a big trend. Using mobile apps or browsers for shopping helps streamline product search and reduce the effort a customer needs to take to reach their search goals. In visual search, all you need to do is to have an image of the product you are looking for.

Suppose that a customer ordered a face cream and it’s almost over. They want to order the same product again. For this, the customer chooses online shopping. They just make a photo of the product and go for a visual search. Ecommerce intelligence implements the image recognition engine and delivers the result based on the most likely match. Client effort is narrowed to making a shot and placing it into the search box.

Autocomplete Search

AI-driven autocomplete algorithm is more than scouring via dozens of item attributes and descriptions. This technology has the ability to learn from the user experience. If you have a big number of products, the need for an advanced search function arises. To make sure that all your goods are visible to clients, you need to help them find the products easily.

AI-powered autocomplete function involved natural language processing. It’s capable to detect patterns in search, match precise product descriptions with synonyms they can be replaced with, and more.

Improve Product Recommendations

Product recommendations powered by AI are one of the hottest trends in online marketplaces and the ecommerce industry in general. Users cannot even imagine how much AI influences their purchase decisions and behavior on the Internet. AI is capable of processing tons of data for each user in a matter of seconds. Based on customer data, the technology determines how particular products can match and suggests the right mix for clients. For example, if a client orders a shampoo, they are likely to order the conditioner from the same line if the latter appears in their recommendations.

AI analyzes everything about your online shoppers: what pages and subpages they visited, how long they stayed on a particular page, at what point they bounced, their purchase history, etc. It collects data on user sessions and detects patterns. As a result of AI work, your sales and marketing managers get a complete picture of each client segment. They know everything about customers’ preferences, buying habits, average order cost, social media activity, geographical data, etc. The data can be used for effective proximity marketing and digital promotion campaigns and for boosting your key ecommerce metrics.

Boost Personalization

Service Personalization

Each visitor comes to your site with a different goal. But there are some touchpoints in their goals: to order goods, make a wish list, check prices, compare your offers with competitors, etc. So, user needs may be grouped into several categories based on the touchpoints. AI ecommerce technology can analyze customer interactions with your product in real-time and choose the right corporate strategy for promoting your services. It helps you deliver a seamless customer experience.

Content Personalization

ML algorithms automatically personalize content a user sees on your ecommerce website or application. The technology processes big volumes of unstructured and structured data and applies the knowledge to each user session individually. Based on the data gathered, ML shows specific product recommendations, displays products in a particular order, chooses what kind of messages to send to drive personalized shopping, etc.

Marketing Personalization

AI systems help ecommerce companies choose the right marketing strategy for the right client segment. Earlier, it was a salesperson and a marketer who were responsible for segmenting the audience manually. Today, there’s no need to rely on human factors and increase the uncertainty risk. You can use AI to make precise estimations and forecasts concerning each user. Deep knowledge of each client segment will enable you to deliver relevant offers, improve the effectiveness of targeted ads, and personalize the feed to encourage a user to stay on your website for a long.

Manage Supply and Demand

Finding the right balance between supply and demand enables you to stay competitive and prevent money losses at the same time. Having the right products in stock positively affects client satisfaction and streamlines inventory management. This is why it’s important to have AI algorithms at work that will forecast seasonal and incidental customer demand during the given period and help you adjust the supply accordingly.

Optimize Pricing

If you want to improve your ecommerce KPIs, consider AI-powered pricing optimization. How to make sure that a customer will choose you and not your competitors? To offer reasonable prices. Your task as an ecommerce vendor is to offer the best service at a rational price. Ecommerce artificial intelligence helps here, too. It launches the analysis of competitors to determine the best price for a particular product. Also, machine learning gathers data on discounts, special offers, etc., and learns from it. The results of the analysis can be used by your managers to grow sales and reduce the shopping cart abandonment rate.

Here’s an example. A client wants to buy PlayStation 5 online. They google PlayStation 5 buy online and see the following result:

If your pricing policy is too radical, little chances are that this client will buy from your online store. On the other hand, putting a price that is much lower than the average on the market leads to reduced profit and missed opportunities.

Also, price monitoring helps you promptly react to pricing changes on the market. If you see that your competitors raise prices because of economic reasons, you get more confidentiality in your decision to implement a price increase as well.

Prevent Fraud

Detecting and preventing fraud is a painful topic for online retailers. It adversely affects the vendor’s reputation and leads to significant monetary losses. Hopefully, business intelligence in ecommerce can save you from all of this. The technology is able to detect suspicious activities, notify humans immediately, and launch automated preventative and security measures to reduce the risks.

Return Policy Frauds

AI helps to prevent this kind of fraud by comparing fraudulent behavior to the patterns of normal user behavior when requesting a refund. The sign of suspicious activity may be, for example, a too short period between ordering products and requesting refunds.

Account Takeover

Such frauds are particularly dangerous for clients that have their credit cards linked to ecommerce profiles. By taking over their profiles, fraudsters get the chance to spend money as they wish. AI algorithms detect suspicious patterns at the stage of ID verification. For example, if there are too many login attempts or a login comes from an unusual location or device, AI technology can notify a user via SMS or disable the login function for several minutes.

Promo Code Frauds

This type of fraud occurs when users create multiple accounts and activate promo codes or make use of special offers. This is done to get free shipping, discounts, and other benefits offered by a website to newcomers. In this case, AI launches signal source analysis. If multiple accounts are created from the same IP address, the machine blocks these actions and prevents fraud.

Launch Insightful A/B Testing

A/B testing is not only about trying how two options work and choosing the better one. It’s about deep data analysis and comparison of the two results in order to choose a better/viable/relevant one. A/B testing facilitated by AI can double the benefit you get and bring you clear, informative results.

First, data gathered by AI can suggest the features or software aspects that need to undergo testing. If the machine notices that CTA clicks declined by 20%, it can notify you and suggest changes or testing of a better CTA option. This self-learning technology can automatically generate variants of changes and run tests. This will save you time and resources that can potentially be spent on creative marketing ideas.

Here are the results other e-commerce retailers reached with AI:

Top-Notch Customer Service

Churn Optimization

AI helps reduce churn rates and increase customer retention. With artificial intelligence in ecommerce, you can detect factors that make clients leave you after some time and work towards improving them. Having these data on hand, you can apply the knowledge to developing client-tailored marketing campaigns.

Omnichannel Brand Presence

AI technology in ecommerce never sleeps. The machine can help you create a feeling of 24/7 cross-channel presence for customers. This is a significant benefit if you are an international online retailer and your clients live in different time zones.

Chatbots and Client Support

Rule-based chatbots are helpful only in situations that can be predicted. But what if a client’s question goes beyond the prescribed rules? In this case, smart chatbots will be much more effective. Smart AI-powered chatbots can self-learn. The work of the artificial assistants can determine if you earn a new customer, or if the latter leaves your website feeling puzzled. Virtual assistants increase customer engagement and lead to a more efficient sales process.

AI-driven chatbot helps users find the relevant product, get updates on their order, compare or clarify product qualities, check website’s policies, etc. Speech recognition and natural language processing technologies enable the machine to decode text input, detect crucial meaningful elements, conduct a semantic search, and formulate the answer using the internal database. If it lacks details to provide an answer, the chatbot will ask extra questions. Chatbots can be a helpful hand to your assistants during peak hours, or completely replace them when your employees are off.

It’s Time to Take Advantage of E-Commerce AI

Where should you start to deliver enhanced customer experience with the help of e-commerce AI? If you operate in the ecommerce landscape, we suggest the following plan:

1. Define your needs to be covered with technology. The needs have to be precisely communicated and outlined; for this, involve your team and stakeholders.
2. Learn more about AI implementation in the ecommerce world. Our blog is regularly updated with fresh articles on ecommerce topics, including that of AI.
3. Make sure that your goals can be met with AI. For this, you can refer to ecommerce consultants that deal with AI and know for sure if it can serve your needs.
4. Find an off-the-shelf software meeting your needs. Just Google it, compare functionality, check pricing, etc.
5. If you find no good option in step 4, hire experienced AI developers that will create a custom solution tailored to your requirements and compatible with various e-commerce platforms. This will be an investment that will pay you off in the long run.

Forbytes is a machine learning development company helping retail businesses across the globe leverage the power of technology and get better ROI. We invite you to get to know us a bit better and leave us a note. Our specialists will promptly contact you to discuss your ecommerce challenges and come up with an effective digital solution.