How Artificial Intelligence Has Transformed The eCommerce World
Artificial intelligence is making its way through the eCommerce industry at breakneck speed. In fact, marketers have reported a 186 per cent increase in the adoption of artificial intelligence (AI) since 2018.
Not only that but 79 per cent of organisations report that artificial intelligence in marketing and sales has resulted in increased revenue for their organisations. However, artificial intelligence has had a profound impact on more than just profits. The use of artificial intelligence has resulted in significant advancements in the way eCommerce businesses operate.
What are the benefits of AI for eCommerce?
Artificial intelligence (AI) has made its way into every aspect of eCommerce, from customer service to manufacturing and distribution. Artificial intelligence (AI) is assisting teams with data analysis, predictions, efficiency, and productivity, allowing eCommerce companies to reduce costs while increasing revenues. One of the most significant advantages of artificial intelligence is its ability to perform data analysis.
The ability to analyse data in great detail allows businesses to improve personalization in sales and marketing, as well as in customer service and product development, among other applications. Modern businesses can better analyse customer data, segment their audiences, and deliver more effective personalised campaigns as a result of artificial intelligence. As a result, 74 per cent of businesses have implemented some form of marketing strategy.
Because 72 per cent of customers say they only engage with personalised messaging and because customers are most loyal to companies that provide personalised customer service to meet their needs, this is a logical conclusion.
Image Source for eCommerce
The ability of artificial intelligence to manage data also allows eCommerce businesses to make accurate predictions and model future outcomes based on those predictions. Ecommerce businesses are utilising artificial intelligence to make predictions about all aspects of their operations, including sales, profits, product changes, and risk.
Artificial intelligence can also assist eCommerce companies in providing better customer service to their customers. Using social listening tools, for example, 51 per cent of marketers can obtain real-time information about the conversations that are relevant to their target audiences.
Sentiment analysis and smart search features are two other artificial intelligence tools that companies can use to better understand their customers’ needs. These tools provide eCommerce brands with information about what is popular and how customers feel. Ecommerce companies can be proactive in meeting these needs by leveraging conversational artificial intelligence tools such as chatbots.
In addition to improving efficiency and productivity on the front lines, artificial intelligence is being used to streamline processes behind the scenes to improve efficiency and productivity. Companies are employing artificial intelligence to improve yield, energy efficiency, and throughput in manufacturing, and 12 per cent are employing it to improve predictive maintenance, according to Statista.
AI Image Source is being used by businesses.
In the field of supply chain management, one in every ten organisations is utilising artificial intelligence to optimise logistics, with another one in every ten organisations utilising it to improve inventory management. Other businesses use artificial intelligence to assist in the improvement of deliveries through the use of tools such as route optimization software.
The supply chain for e-commerce
Shortly put, artificial intelligence helps eCommerce companies gain a better understanding of the data that drives consumer behaviour while also providing more efficient mechanisms to meet the needs of their customers.
8 ways artificial intelligence has transformed eCommerce
Across the eCommerce sector, artificial intelligence is being used in a variety of ways to increase efficiency and effectiveness while also providing personalised services that improve the customer journey.
Here are some of the most significant ways that artificial intelligence has influenced eCommerce in recent years.
1. Sentiment analysis
Sentiment analysis, also known as opinion mining, is a type of artificial intelligence that makes use of a technique known as natural language processing. This is the stage at which companies analyse consumer text data to determine the emotional sentiments behind the conversations they hold.
Source of the image: economic analysis
For example, companies may use sentiment analysis to analyse thousands of customer reviews at the same time to determine how customers feel about a particular product or service. As an alternative, companies can combine sentiment analysis with social listening to determine the overall sentiment toward a product or topic across social media channels.
Overall, sentiment analysis enables brands to better position themselves in the market by fine-tuning their products and service delivery to the sentiment of their target audience, which results in increased sales. On a more specific level, sentiment analysis can assist businesses in determining how to improve their own products, pricing, marketing campaigns, and customer service by analysing customer feedback.
2. Multi-channel personalization
Currently, only 5 per cent of brands provide content that is relevant to the context in which it is being consumed. When it comes to eCommerce companies, this is a problem because 72 per cent of consumers now expect brands to know what they want and to meet their needs promptly.
Artificial intelligence assists businesses in dissecting customer data to gain a better understanding of what influences purchaser behaviour. Personalization of messages, products, recommendations and much more across all channels, from social media to email, is made possible as a result of this technology.
Let’s say you’re a subscriber to the clothing subscription service Stitch Fix.
Suggestions for clothing based on artificial intelligence
Image courtesy of Shutterstock
Stitch Fix not only uses an artificial intelligence-driven style quiz to help customers personalise clothing recommendations, but the clothing company also solicits feedback from customers after each subscription box is delivered to their homes.
With this feedback, the system can train the product recommendation machine to make better choices the next time it’s called into action.
3. Customer service chatbots
Excellent customer service, according to 30% of marketers, is what distinguishes them from the competition. This is why 46 per cent of eCommerce brands are utilising conversational marketing tactics powered by artificial intelligence, such as chatbots, to drive sales.
A chatbot is a type of artificial intelligence that asks and answers questions while also analysing customer responses to serve as a personalised virtual assistant for the user. 67 per cent of business leaders believe that chatbots increase profits in addition to streamlining the customer journey by assisting customers in answering questions and finding relevant products.
Let’s say you’re a fan of the luxury fashion brand Burberry.
Chatbot for eCommerce powered by artificial intelligence
Image courtesy of Shutterstock
To provide immediate customer service, Burberry employs a Facebook Messenger chatbot that responds to questions and recommends products, as well as checking product availability.
4. Dynamic pricing
Not only do 94 per cent of online shoppers compare prices before making a purchase, but 31 per cent of buyers believe it is the most important aspect of their shopping experience. Dynamic pricing is a pricing strategy based on artificial intelligence in which companies can adjust their prices in response to market conditions.
Dynamic pricing, which makes use of algorithms that analyse the current situation, assists in determining the optimal price for a product at any given time. For example, airlines could use dynamic pricing to offer lower-priced flights during off-peak hours to entice buyers to purchase when there is less demand for their services. This strategy is already being used by a quarter of eCommerce companies around the world, including Dyson, Hershey’s, and Ring, among others.
5. Retargeting adverts
The most effective personalization method, according to 30 per cent of marketers, is targeted marketing campaigns. This is one of the reasons why retargeting campaigns are so effective. Retargeting marketing campaigns follow potential buyers who leave your website and target them with personalised advertisements on other channels, all based on their previous online behaviour.
These advertisements make use of artificial intelligence to suggest similar products based on the products that the customer was browsing at the time. For example, if a customer leaves your website after perusing the maternity section, they may see advertisements for maternity leggings in their Facebook feed.
This advertisement by Freerider is a great example of what I’m talking about.
6. Assembly line optimization
While artificial intelligence (AI) can assist eCommerce companies in a variety of ways, including defect detection, predictive maintenance, and quality assurance, assembly line optimization is critical to increasing profits.
Improvements in the efficiency and effectiveness of the assembly line can help eCommerce companies move closer to lean manufacturing practices, which can help them save money on operating costs while increasing revenue by scaling output. As a matter of fact, 73 per cent of organisations report that artificial intelligence in manufacturing has increased revenue, while half report that it has decreased costs.
7. Risk management
eCommerce is rife with potential dangers. Failing to conduct a thorough risk assessment, whether it’s for a marketing campaign, data centre infrastructure, or supplier integrity, can result in excessive costs, unplanned delays, and regulatory compliance issues, among other things.
A whole host of risks is associated with eCommerce, and any one of these risks can cause a company’s financial and operational collapse. These are some examples:
Customer complaints and grievances
Supplier unreliability is a problem.
Payments fraud is a serious problem.
Threats to information security
Deliveries that are late or fail to arrive
Inventory and logistics management that is substandard
Errors in taxation
As of this writing, only 16 per cent of businesses are utilising artificial intelligence to analyse and model their risk profiles.
Image Source: eCommerce artificial intelligence risk
A further 12 per cent are utilising artificial intelligence to investigate fraud and debt risks. Even though artificial intelligence risk management tools are still in their infancy, 68 per cent of brands claim that it increases their revenue while 38 per cent claim that it decreases their costs.
8. Multichannel inventory management
The use of artificial intelligence made it easier to manage all of the accounts from eBay, Amazon, and other online commerce giants from a single location. If in the past, online store owners had to manage all of their accounts separately and primarily manually, they now have access to a far superior alternative. Using multichannel inventory management software, eCommerce business owners can manage all of their inventory from a single location using an automated approach.