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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), (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. 


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.


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.


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