Skip to main content

How Artificial Intelligence is redefining the future of E-commerce Industry

Artificial intelligence (AI) is proliferating in every way in every aspect of our lives. It is only set to increase its presence rapidly with major technology companies investing or acquiring other companies offering AI tools and expertise. In 2019 alone, Facebook acquired GrokStyle (visual search), Crtl-labs (device-AI interaction), Eero (mesh network), Canvas Technology (warehouse robotics) and Sizmek (ad tech); Apple acquired Laserlike (machine learning), Drive.ai (autonomous mobility) and Fashwell (computer vision); Microsoft acquired Jclarity (machine learning) and Promote (automated product marketing); Alphabet acquired Onward (machine learning and natural language processing), Superpod (Question-and-Answer app) and Socratic (education technology using Question-and-Answer). A survey done by Tractica found that AI in e-commerce is expected to reach US$ 36.8 billion by 2025.

 


Exactly how is Artificial intelligence redefining e-commerce? We can categorize the impact in four different categories:

Digital Assistants

Online retailers can now deploy digital assistants such as chatbots or virtual personal shoppers for their customers. The assistants are more intuitive in providing better 24x7 customer support and experience. Chatbots can process customers’ voices and self-learn from previous interactions through natural language processing.  Starbucks leveraged AI to allow customers to use voice commands to place their orders. Amazon’s voice assistant, Alexa and Apple’s Siri now take voice commands for shopping online. With home assistants expected to be in 55% of households by 2022 and the expansion of smartwatches and other IoT devices, this is an avenue that e-commerce platforms can tap into consumers. 

Product Recommendations

AI has enabled online retailers to understand and track online consumer shopping. When customers browse (window-shop) on their pages, online retailers can display products similar to the product pages that customers visited. This is done through algorithms that process consumer data, search history and third-party data after receiving consent. Product recommendation has increased conversion rates by 915% and average order values by 3%. 

AI has made it possible for visual search engines to recommend products with images of their products. 

Personalization

AI delivers personalization which is the critical success factor for most e-commerce platforms. Based on user data generated, AI can analyze how customers interact on the e-commerce platform, their response to social media or email campaigns and the multiple devices they used to browse or shop online. According to a survey conducted by Yieldify, although only 54% are using AI for personalization, 89% of the respondents from companies in the US and UK plan to use AI to personalize their sites. The key goal for personalization is the retention of customers, then conversion and finally acquisition. 74% of respondents of the same survey believed that personalization was essential for the success of their websites.

Another emerging type of personalization that has started to transform the luxury and fashion industry is virtual try-ons. Shoppers can upload images of themselves or use augmented reality to try the products on before purchasing the products. Baume, a high- end watch manufacturer offers a 3D configurator on their website, enabling customers to customize and create their own designs.

Inventory Management

On the backend of online retail platforms, AI has helped businesses to manage inventory more efficiently anticipating seasonal demands by tracking sales data and factoring supply chain challenges, and in the process, freeing working capital. AI models are being used to analyze pricing patterns and to predict and recommend prices for products, using algorithms.

AI is also integrated with warehouse automation using robots. In 2012, Amazon acquired Kiva Robotics, a robotics start-up for automating its warehouses. Today, Amazon has over 200,000 robots operating in its warehouses and it is likely in the near future that these robots may replace human workers as AI evolves by learning further. More than $1 trillion of capital is tied up in inventory in the US and AI can solve the challenges e-commerce companies are facing.

Cybersecurity

Retail is the fourth largest industry affected by cyber-attacks and small companies are particularly vulnerable. AI is used increasingly to protect consumer data and fend off attacks or breaches, detecting spam or fraud when processing financial transactions.

In conclusion, companies in the e-commerce space, including e-commerce solutions providers cannot ignore AI and have to deploy the technology in order to understand their customer needs and deliver the best customer experience possible.


Comments

Popular Posts

5 Major challenges faced by e-Commerce sellers and ways to overcome it!

Based on a report by Google and Temasek Holdings, Southeast Asia’s (SEA) digital market could exceed US$200 billion before 2025. Southeast Asia’s digital economy is forecast to triple its size in the next 5 years. Read more on the challenges faced as a seller in the E-commerce marketplace, to help you decipher and be part of this immensely growing economy. E-commerce stores are on the rise due to a numerous reasons.  As far as market association is concerned, E-commerce sites already have an existing network of buyers. So, selling your products becomes relatively easy as branding and advertising is already taken care of.As  Sigmund Freud 's had rightly said  “ I carefully consider my decisions as everything comes with pros and cons! ”  Marketplace Management When it comes to South-East Asian E-commerce market, the most underestimated struggle is  Fragmentation  i.e. there are a number of e-commerce platforms in ASEAN countries attracting significant traffic, making

What you need to know about Gross Merchandise Value

Gross Merchandise Value (GMV) is defined as the gross sales revenue generated over a period of time by an e-commerce platform before any deduction for fees or commission . It is used to track the growth rate of an e-commerce business since it measures the value of the total merchandise that has been sold through the site for a specific time period, quarterly, bi-annually, or annually. Gross Merchandise Value = Number of Goods sold x Price of goods sold This metric is useful for e-commerce businesses that buy and store the merchandise from suppliers and delivers to customers when purchases are made. However, it cannot be used as a standalone metric for all online retail platforms. For e-commerce sites that operate as a Customer-to-Customer (C2C) business, they do not physically manage the goods. The total commissions generated and accrued expenses, such as delivery fees, advertising, return expenses incurred are more important to track for this business model. This is also known as Gro

Pros and Cons of Cash on Delivery payment in E-commerce!!!

Cash on Delivery payment in E-tailing is  the most preferred form of payment by the customers these days. Cash on Delivery option is not available in many countries. But some countries in Asia like India, Pakistan, Bangladesh, Vietnam, Thailand, Nepal etc. support Cash on Delivery option in E-tailing. These are the pros of Cash on Delivery payment: Cash on Delivery option is supported by many E-commerce sites in some countries of Asia, India being a part of it. Cash on Delivery (COD) is preferred by online buyers who would like to check the product before paying for it.  This is advantageous for the customers as they can check the product before paying for it. Another advantage of COD is that many people in rural areas of India and many other countries who do not have credit cards and debit cards can buy products online. COD is supported by many E-commerce sites to attract  online buyers who are not comfortable  to reveal their credit or debit card details online. Cons