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5 Ways Artificial Intelligence is Powering Ecommerce

Published: | Updated: | By David Kosmayer

The term Artificial Intelligence (AI) has been used historically as an attempt to describe human thinking as a symbolic system. However, AI as a field wasn’t really formed until the late 1950s, and while it has recently remained a fairly simple concept, AI is beginning to leave its mark across various industries.

AI simply refers to the idea that a ‘machine’ can complete a task in a smart way, a way that would have otherwise needed a human being to complete.

A similar concept is called ‘machine learning’ which is a subset of AI where machines learn different tasks as they are exposed to new data. Machine learning is an example of AI, and is one of the most popular areas in the industry at the moment.

Machine learning works by programming a set of rules that the machine follows, and using algorithms that allow them to learn quickly and on-the-go from the data given. The fact that a machine is able to run hundreds and thousands of images, for example, and simultaneously learn from them, is an accomplishment humans can never do, and this is what makes machine learning a huge trend right now.

AI and machine learning are indeed already shaping and disrupting numerous industries, but one particularly interesting industry that will be altered by AI and taken to the next level is e-commerce.

Think about it: e-commerce is simply buying or selling online. Why wouldn’t AI disrupt this industry, making businesses more of a success and redefining the rules of the game? Traditional methods of credit card processing in today’s competitive online landscape only means that businesses need to be smarter and find innovative ways to further ensure their success.

As a business, being smarter really narrows down to who has the most data that can be quickly analyzed and turned into actionable strategies. This is where Artificial Intelligence steps in. 

Here’s how AI techniques are redefining the rules from an E-Commerce website builder to chatbots, inventory management and everything in between.


1. Chatbots

While making an online purchase, if you speak to someone via chat, chances are, you are speaking to an AI chatbot. These chatbots are becoming more and more branded, personalized, and well, intelligent. It can even be difficult to distinguish them from human customer representatives.

E-commerce shops can now offer 24/7 customer support, track user behavior, and achieve brand continuity -- all through AI’s machine learning systems and cognitive computing.

As an e-retailer, you can drive conversion by personalizing your consumer’s online experience without having to lift a finger. This is your chance to stand out and help your customers get answers to questions they may have any time they shop on your website.  

2. Smart Technology

Ever heard of the Internet of Things (IoT)? It’s simply a network of physical devices, vehicles, home appliances, and any other items embedded with electronics, software, actuators, and network connectivity that enable such objects to connect to and exchange data with each other.

IoT is now one of the top three tech trends for marketers to watch in 2018. It is actually already being used -- we all have multiple devices that are becoming increasingly in tune with each other, making our lives easier on a daily basis (and thus, better).

How is this relevant to e-commerce in the first place? Meet Family Hub™ by Samsung for instance. This smart refrigerator couples AI technology with three cameras that are able to keep track of food levels and order groceries when these levels get low.

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Sounds a bit scary? Welcome to the future! The integrated smart tablet and accompanying software can also recommend recipes based on ingredients at hand and even organize your family’s eating schedule. 

3. Customer Relationship Management

One of the most impressive features of AI is its predictive nature. Customer Relationship Management (CRM) of yesterday (figuratively and almost literally) was boatloads of information gathered in a database that you could analyze when you found the time to do so. Anyone an expert at excel Pivot Tables?

Well, now you just need AI to go through the data and continuously identify who will buy from you, what they will buy, why they need it and when, and how you should meaningfully engage with these customers to maximize both your chances of a sale and the size of the sale.

Pretty soon, the days of aggressive re-marketing will be history. (Let’s face it, being chased around by digital ads online is annoying!) We will be able to target marketing efforts better while enhancing each customer's individual experience at the same time. 

Statistics reveal that the conversion rate of users who click on product recommendations is 5.5 times higher than the conversion rate of non-clicking users. So get that level of conversation going and increase it, which will result in more tailored and effective communication between you and your customers.

4. Inventory Management

Along the same lines, AI’s predictive analytics are blowing up inventory management for e-commerce shops; in a good way, of course. Anyone reading this who is constantly working on getting just enough inventory stocked can relate to how much of a nightmare the process can be.

Traditionally, inventory management, whether automated or manual, uses hindsight perspective. However, we all know that what has been is not always the best benchmark for what will be in today’s dynamic marketplace.

The benefit of AI technology is that it can easily identify key factors that influence demand, including the changing levels of demand for different products at different times. Because of the nature of machine learning, the system gets smarter and more accurate over time as it is fed more data.

This means retailers can predict their inventory needs with an increasingly high degree of accuracy, even in a highly volatile market. That would mean a big difference in your bottom line, for sure!

5. Image Classification

How many times have you seen something that you like and want, but have no idea what it is called and how to buy it? 

This is where AI’s influence on image classification, understanding, and interpretation is coming in handy. Think about going onto Pinterest, liking a chair in a pin of a beautiful room, and then being directed to visually similar results; or snapping a picture on your phone of someone walking by in a great pair of shoes and then using an app to help you find and buy those exact shoes.

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This really is the future of e-commerce, and every single business out there that cares about its customers can and should implement and embrace these aspects facilitated by AI. It simply makes shopping for the customer an experience that is hassle-free, time-efficient, and accessible on-the-go.Another important element to consider here is the idea that picture classification shortens the sales cycle, which means more sales for your business as it leverages motivation. If the customer is interested enough to take a picture to identify a product online, then the barriers that may have previously been in place will now be removed and turned into a sale.

So, when it comes down to it, are you the kind of business that will embrace such innovative techniques and positively influence consumers’ buying habits?

Artificial Intelligence is offering you the ability to truly personalize your customer's online shopping experience. Recommending products to shoppers, for instance, that are uniquely tailored to them will also provide them with a sense of ‘oneness,’ further encouraging them to hit that ‘buy’ or ‘purchase’ button.

AI will also enable customers to search for products using non-traditional conversational language, or even just images, as if they were communicating with an actual person.

The disruption of AI will be increasingly evident in the years to come (and sooner than we all think), and even though it’s challenging to pinpoint exactly where AI will take us, retail is an industry that should welcome the technology with open arms.

This is already evident across various e-commerce platforms. Retailers, for instance, that have already implemented personalization strategies have seen sales gains of 6 to 10%, a rate two to three times faster than other retailers.

AI could also boost profitability rates up to 59% in the wholesale and retail industries by 2035. These numbers are definitely huge when compared to traditional e-commerce marketing techniques.

In essence, AI is offering a huge value to e-retailers. Don’t get left behind; it’s high time for you to get smarter and increase your conversations with your valuable customers. Use Artificial Intelligence and ride the wave of the future!

About the author

This guest post was written by David Kosmayer, CEO and Founder of Bookmark, an AI-powered website builder disrupting the web design industry. David created his first company at 22 just coming out of college. Marketing Extensions Inc., an online affiliate and marketing agency, was born from the basement of his parent’s home. This company grew under his leadership into a 55-person team, topping $60M in revenue in less than a decade. David is highly focused, dedicated and passionate about building successful companies.