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AI-based

AI-based Technologies to Use in Ecommerce Projects

Words by
DV Team
Published on
February 7, 2023
Development
E-commerce
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Who Are We, And What We Know About AI In Ecommerce

The popularity of artificial intelligence technologies in eCommerce is not surprising: the number of customers is growing, their requirements and demands are becoming more complex, and the level of satisfaction is increasing very slowly. Modernization and automation of most eCommerce processes have become a necessity.

Artificial Intelligence (AI) is revolutionizing the e-commerce industry. The pandemic is increasing the popularity of online shopping. Shoppers are demanding faster and more convenient purchases. And as a result, the demand for artificial intelligence tools is growing.

Many applications, services, and programs have been created based on artificial intelligence technology, but not all of them are equally applicable to online stores. In addition, they are pretty expensive to implement. So before we start implementing this fancy new technology, let's look at how AI can provide growth for eCommerce, improve the customer experience, and increase conversion rates.

If you're an eCommerce project that's interested in taking your business to the next level with advanced technology, you've come to the right place. We'll find out what is AI in eCommerce and look at the specifics of using it in online retail and how exactly it's being applied right now. Let's go!

Importance of AI in the Ecommerce Industry

Before the advent of personalization tools, stores interacted with the customer mainly randomly: often, a person saw advertisements for products that were not part of their interests. For example, a user who had just ordered a set of alpine skis could immediately be notified of a promotion on snowboard boots and hockey sticks.

AI in eCommerce

To avoid this, you had to process data for each customer manually, but it was an impossible task if you had a few thousand customers.

Today, thanks to the use of AI in eCommerce, we can anticipate customer needs without complex data manipulation. This is done by analyzing a customer's purchase history, pages viewed, and search queries. Based on this information, the system selects the appropriate products for advertising: either similar or complementary.

For example, if a consumer has just purchased a wine decanter from you, there is no point in showing him other decanters from the range—it would be more logical to offer him a set of glasses at a discount. In the process of analysis, artificial intelligence "learns" itself. For example, suppose a user often takes headphones or a power bank together with their smartphone. In that case, the system will remember this pattern and start offering these accessories to new users who are interested in phones.

Top 5 Ways AI Can Benefit Your Ecommerce Business

Let's take a look at 5 artificial intelligence-based technologies that will help your business reach new heights.

Augmented reality

Augmented reality (AR) is a technology that has only recently emerged. Some stores are implementing solutions with which customers can virtually try on accessories and clothing. Potential car shoppers can use AR apps to switch between different color options.

According to Think With Google, products advertised with VR/AR content have a 94% higher conversion rate than others. Deloitte also found that 40% of customers would even pay more for a product if the store offered an opportunity to test it through AR.

Augmented reality helps compensate for the disadvantage of online commerce, where customers cannot try on and feel the product. Google says 66% of people are interested in using augmented reality technology in online shopping. The technology improves the customer experience by visualizing the use of an item before purchase.

Advanced chatbots

Many online stores already use chatbots, for example, as first-line customer service. In some companies, chatbots have replaced automated phone calls that used to annoy customers. They also answer frequently asked questions.

Approximately 74% of consumers use chatbots when looking for the product or service they want. Chatbots also boost sales by:

  1. Communicating with customers who are in the process of making a purchase decision.
  2. Sending personalized offers and promotional alerts.
  3. Reducing the number of abandoned shopping carts.
  4. Increasing the number of repeat orders.

Introducing chatbots helps reduce the cost of attracting customers, increasing the percentage of repeat purchases and overall profit of eCommerce projects.

Fraud protection

E-commerce companies often rely on banks to detect fraud with credit cards. Banks, in turn, often use artificial intelligence to detect anomalies in card usage based on clients' past experience.

Companies can also use a CAPTCHA technology linked to artificial intelligence to reduce fraud. The technology requires users to prove that they are not robots by selecting specific images. However, this technology may not be available to people with visual impairments.

Voice recognition

This technology allows customers to shop online using smartphone voice assistants, Google Home, and so on. That’s definitely the future of AI in eCommerce.

Voice bots (Audio AI) already understand people's words, but so far, only main information, not every word. And some devices can even translate languages.

AI benefit in eCommerce

Voice commerce brands continue to improve their technology in 2022. In the wake of the popularity of voice technology, events such as the Alexa Socialbot Grand Challenge, which encourages experts to compete with one another by creating new voice commerce tools, are emerging.

Smart recommendations

Artificial Intelligence can suggest products to customers based on their demographics, previous purchases, location, etc. The customer receives these recommendations on the website or in targeted social media ads. The original purpose of the AI product recommendation tool was to reduce information overload for Internet users. But now, it has become an essential strategic tool for eCommerce companies. The block of recommended products, which is present on the product page, influences the purchase decision by showing alternatives to the user.

What’s the Future of Ecommerce Like with AI?

AI in eCommerce motivates companies to integrate sales, marketing, advertising, customer service, and even logistics departments into a single data structure, where data quality and completeness are the top priority.

When all business data is collected and stored correctly—without loss or duplication, without format violations, if all connections are logically constrained—then such data can be used for artificial intelligence training and further use. They will provide high-quality analytics with enough power to solve complex business problems, improve processes, and enhance the customer experience. Here are more examples of what else AI can do for eCommerce industry:

  • Predict future conversions. By tracking all user actions on the site and in the app, you can predict what purchase and when he will make and not target "unnecessary" advertising to him but increase bids at the most appropriate moment.
  • Increase the ROI (return on investment) of advertising campaigns. By optimizing the targeting of advertising campaigns, AI allows you to reduce the advertising budget without losing sales. Those visitors who still need to be ready to buy will be excluded from advertising segments, or bids will be automatically lowered for them.
  • Predict the customer journey. Based on the recommendations of artificial intelligence, you can make the path to purchase as comfortable as possible and gain a competitive advantage through flexible margins and the ability to assess the effectiveness of the future marketing plan. In addition, offline selling points can be improved. Collect data from sensors and video cameras to track how visitors move through the store—how they build their path, where they stay longer, and which shelves they leave unattended.
  • Reduce human error in supply chain planning. You can provide full, real-time visibility into your inventory.
  • Detect problems before they occur. AI technology allows you to be alerted to anomalies or suspicious transactions, supplier actions, or fraud while there's still time to intervene and figure out what's going on.

And that’s just a short list. The future of AI in eCommerce is still shaping, so we’ll see more cases in the next couple of years.

AI Use Cases in Ecommerce

Of course, without examples, our words may seem unsubstantiated. With examples from market giants, let's see how AI is used in eCommerce.

AI use cases in eCommerce

  1. Amazon: When we talk about this company, Alexa comes to mind first. But voice assistants are not the only area where Amazon uses artificial intelligence. The company also collects data on shopping habits, which it uses to increase personalization in product recommendations. To do this, they enlist the help of predictive analytics. They also use AI in their Amazon Go convenience stores, which can "remember" which items you choose and charge for them automatically through an app on your phone.
  2. eBay: This marketplace decided to go beyond personalizing recommendations and went further. Artificial intelligence helps eBay work with pricing, improve delivery times, use image search, increase trust between buyers and merchants, and more.
  3. Alibaba: The Chinese eCommerce giant also uses artificial intelligence technology to hone recommendations by predicting user purchases. In addition, it is able to create product descriptions on the site automatically.
  4. JD.com: This Chinese counterpart to Amazon uses AI in every possible area of work, striving to automate the company as much as possible. It’s an ultimate example of AI in B2B eCommerce. The company has fully automated its warehouses down to drone delivery and is preparing its business for retail in the fourth industrial revolution.

How to Implement AI in Ecommerce

So, what do you need to do to incorporate AI into your business development?

Implement AI into eCommerce

  • Develop a strategy for using AI to grow your business. This should include your vision for applying AI to your eCommerce project and what sets your company apart from the competition.
  • Prioritize artificial intelligence initiatives in your company. It should be at the top of your technology development budget.
  • Carefully select and hire specialists and experts in AI and data collection and analysis. If you don't have enough quality data, the value of AI will be severely limited. It's also important to keep resources on data storage equipment.
  • Choose your AI projects responsibly. You don't have to choose everything—it's better to focus on relevant and narrow use cases that are well supported by data.

Final Word

Artificial intelligence for retail is no longer just a short-term whim but an effective means of communicating with customers, improving interaction with them, and a way to solve problems of product selection and delivery.

Even though only the largest eCommerce projects can afford such solutions, in the near future, there will probably be effective solutions available to small online stores as well.

So stay tuned for more on this topic! In the meantime, fill out a request form so we can help you optimize your site for future artificial intelligence!

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