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Blog Home / AI & Machine Learning   •   December 18, 2019

AI in E-commerce

AI in E-commerce and the New Era of Personalization

As society chases convenience and turns increasingly to online shopping over the traditional brick and mortar retail model, online retailers have had to evolve in how they interact with customers. The idea of a personalized shopping experience for each customer has been around forever, but we’re in a new era of personalization now. One that includes – and requires – artificial intelligence.

E-commerce businesses are already embedding AI into their online presence to understand their customers better and elevate the shopping experience. Shop at any major online retailer, and you’ll likely encounter both the trademarks and benefits of AI. In fact, AI is becoming all but essential to success in online retail.

How Does Artificial Intelligence Help You Shop?

Person shopping online
With a new focus on personalization, companies need to be accessible to customers 24/7, providing custom recommendations, content, and support to achieve sales. AI not only lets companies gather essential customer data in real-time, it also enhances the online shopping experience in a way that is increasingly more in tune with predicting customer needs.

There are dozens of major retailers innovating in this space, developing powerful AI and deep learning solutions to support their sales strategies. Here are the critical areas to watch out for as we see personalization reach its highest levels yet:

1. Search Engine Functionality

Never before has searching for products been easier and more high-value. Leveraging natural language processing, AI narrows and contextualizes relevant search results for the customer – a feat known as customer-centric search. It wasn’t long ago when a search for “boat shoes” would yield both boat and shoe products. Now, search has become much more advanced thanks to AI being able to understand that no, you don’t want any boat products, just the shoes, thank you. 

Even the display of results has transformed. AI is now able to display search results in a visual format that is easily digestible, grouping similar items as necessary. AI tags each piece with certain qualities, such as size, color, shape, and category. Those tags enable search engines to deliver relevant results and compare products. AI can also use these tags to show you complementary products (for instance, suggesting dryer sheets as an add-on when you search for laundry detergent). 

Through search engine functionality alone, AI directs customers to the products they want much faster, reducing the time of each transaction. 

2. Product Recommendations

You’ve probably noticed that most e-commerce businesses will give you product suggestions regularly. Your streaming service gives you movie recommendations, your clothing store sends you emails with outfits you might like, et cetera. Behind all of these recommendations is AI. 

Machines review troves of data to provide the product recommendations you see: past purchases, search history, third-party data, and relevant demographics for each customer. They analyze what other customers similar to you have bought recently, and look at predicted behavior patterns to guess what you’ll want to buy in the near future. 

Yes, retailers know how irritating it can be when you’re repeatedly offered a product you don’t want. They don’t want to drive you away as a potential customer with unsuitable recommendations, which is why getting their AI algorithms right is so important: relevant, high-value recommendations drive conversion rates and shorten the sales cycle.  

3. Web Interfaces

We’re in an age now where brands need to be personable. Look up any major fast-food company on social media, and you’ll see how they interact in a generally friendly, approachable (sometimes humorous) way with anyone who contacts them. It’s likewise important for online retailers to feel personable to their customers while still providing an individual experience, which is why they’re turning to AI.

Machines review a customer’s location, purchase history, search history, and other data to do more than just make product recommendations. AI can, in fact, alter the web interface that the customer sees. With customizable web interfaces, retailers are able to push out relevant, helpful content at the right time that is specific to the customer, rather than generalized to any potential shopper. The result: increased customer engagement and greater likelihood of a purchase. 

4. Customer Data 

E-commerce businesses that can not only collect the right customer data but analyze and use it to drive strategy will remain ahead in the era of personalization. Customer data insights gathered through an AI lens help retailers understand their target customers better and can even drive the discovery of new target groups. 

Data insights also support strategic decisions on sales and discounts to offer, and at which times of the year. Even more far-reaching, the insights collected by AI can impact decisions made on what kind of new products to offer, or what kind of products to bring back.

5. A Device-wide Experience

E-commerce businesses are trying to reach you through your phone, through their websites, through email campaigns, and – the latest development – through tech wearables. AI aggregates results across all of these devices to provide a complete picture to companies on their customers and how they’re using technology, assisting them in targeting customers.

In the future, you may see a scenario like this: you’re on your laptop browsing an online retailer’s website for a tent when you get a notification on your phone that there’s a new sale – 50% off all camping gear! This provides a more integrated shopping experience that can create added value for the customer by connecting them to what they need quickly.

6. Customer Service 

A key part of shopping, whether online or in-store, is customer service. With online shopping, there isn’t the benefit of salespeople ready to answer your questions or direct you to what you need. We already know that banks are turning to chatbots and virtual assistants to solve this issue, and online retailers are doing the same.

A chatbot can simulate a human conversation by using a trove of natural language data and observed speech patterns. In a time where customer service must be 24/7, chatbots never rest and can handle automated processes such as orders and returns in a split second. Chatbots are also being used to help customers find what they’re looking for and answer any questions, providing more convenience to the customer who no longer needs to send an email or call a support number. 

Retailers are using chatbots to target you on social media platforms as well. Brands know you’re often logged in to your social media profile while shopping online. They’ve now started leveraging this – for example, by sending you a Facebook message updating you on your recent order or messaging you about a new sale.

Read more about AI in e-commerce in this Linnworks article by Danny Asling

The Future of AI in E-commerce

Robot in retail store
Personalizing the e-commerce experience across multiple platforms and devices is essential for online retailers to stay ahead. AI is currently the only way to customize a shopping experience for a single customer efficiently and expertly. 

Retailers that embed AI in their online shopping platforms are already seeing the benefits:

  • Improved customer engagement across all platforms
  • Increased conversion rates
  • Reduced sales cycle and transaction times
  • Discovery of new target customer groups
  • An elevated, customized customer experience to drive customer retention 

AI can do the work that no sales team can: analyze millions of transactions every day to create a hyper-personalized customer experience. With AI technology, businesses are gaining customer insights that they’ve never had before, allowing them to create higher value for customers and their bottom line. 

As these changes continue, brands must be sure to weigh personalization against customer data privacy by being transparent and secure. If a company is offering something of high value, customers are more likely to share personal details. Keeping this in mind, businesses must work to bridge the gap between personalization and privacy.

What the future holds for e-commerce is just another example of how AI continues to integrate further into our lives. What’s next in online shopping? Perhaps an era of “hyper-hyper personalization” for the customer.

Read more about the future of e-commerce in this Forbes article by Kimberly Whitler.

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