Applications Of Artificial Intelligence In Ecommerce

The role of artificial intelligence in ecommerce cannot be undermined. How does artificial intelligence work for ecommerce businesses? Take the example of the ecommerce powerhouse Amazon. Amazon is the pioneer in introducing AI-powered shopping. You are familiar with Amazon’s personalized recommendation system, right? Back in 2003, Amazon’s researchers wrote an iconic paper - “Amazon.com Recommendations: Item-to-Item Collaborative Filtering”.  This paper was the initiative for the powerful AI-based recommendation system of Amazon today. These recommendation systems are proven to give higher revenue and customer satisfaction. This is just one example of the awesome applications of artificial intelligence in ecommerce. 

“More and more brands are harnessing the power of AI to implement tailored product recommendations, and are seeing results. It’s estimated that 35% of Amazon’s sales come from its recommended products feature.” - Meghann York, product marketer, Salesforce

Amazon realized the importance of artificial intelligence in retail far earlier than its counterparts. You might be familiar with Amazon’s ‘flywheel’ mantra. It means that like a flywheel, the different parts of the company’s business work in liaison with each other as a single-motion machine (flywheel!). This policy has worked wonders in the Department of AI. From being a pioneer in personalization to advanced AI-based customer experience including Alexa and voice search - Amazon has enhanced its business through the use of artificial intelligence. 

In this article, I am going to share why artificial intelligence is becoming important for ecommerce, and list down some concrete examples of AI in online shopping. Let’s dig in.

Benefits of AI in Ecommerce

Here is a list of advantages and benefits of artificial intelligence in ecommerce:

• It helps in enhancing customer experience through personalization features such as AI-based recommendation, voice & visual search, smart AI shopping carts, and advanced AI chatbots.
• AI helps marketers make better decisions through customer segmentation, smart lead generation, and targeted marketing.
• AI can automate workflows and optimize processes through advanced analytics.
• Artificial Intelligence works with IoT to provide a smart customer experience.
• AI helps in supply chain management, advanced product forecasting, and product warehousing.
• Better ROI and profits! That’s obvious... Thanks to the abovementioned AI in ecommerce examples and benefits :)

Top Applications of Artificial Intelligence in Ecommerce

I have tried to categorize the AI e-commerce case studies into five major groups. I’ll discuss different use cases of artificial intelligence in ecommerce under each category.

Category	Use cases	AI Domain
Personalization and Customer Service	Chatbots	Natural Language Processing (NLP)
	Recommendation Systems	Advanced ML algorithms, Deep Learning (DL),
	Smart search, Voice Search, Visual Search	NLP, Speech Recognition, Computer Vision
	AI shopping cart	NLP, DL
Enhancing Ecommerce Sales Processes, Business, and Marketing	Lead Identification and Generation	Data analytics, ML, pattern recognition
	Customer segmentation and Targeted marketing	Data analytics, pattern recognition
	Ecommerce Analytics Use cases	Business intelligence and data analytics
Logistics	Supply chain management	Big data analytics
	Warehousing
Smart Shopping	IoT and smart home integration	Sensors, IoT, NLP
Product Management	Pricing	ML, data science, data analytics.
	Retail Analytics

Personalization and Customer Service

I can recall many times when my friends mentioned how Facebook shows the products they were already thinking to buy. I have personally experienced it too. This is a general reaction of customers:

In actuality, it is the magic of AI in work. Facebook Marketplace uses powerful AI algorithms to automate customized shopping from finding preferences through past shopping and customer body types!

There are many use cases of AI that help in enhancing customer experience and shopping experience. These include:

• Smart search, voice search, and visual search - Alexa, anyone? The future of the ecommerce business relies on such e-commerce ais tools like voice and visual search. These can enhance the customer experience to new heights, providing them with flexibility and ease to shop. 
• AI-based smart chatbots/virtual assistants - that can assist customers with prompt, smart responses (close to human behavior), that are correct with their information. Moreover, unlike human assistants, they are available 24/7!
• Personalized product recommendation systems  - Such systems give smart, personalized recommendations according to consumers’ tastes, likes, and needs, and are pretty accurate! Previously, I’ve discussed at the start how this amazing AI-based ecommerce use case works, and how it has helped Amazon in becoming an ecommerce powerhouse.
• AI shopping carts - These smart carts are integrated with AI chatbots and personal assistants. Customers can simply communicate with virtual assistants to fill their carts.

You might also like the following articles on AI: 

• Artificial Intelligence in Education: The Future of 'Smart' Learning
• Artificial Intelligence in Healthcare - Top Seven Use Cases
• AI in fintech: Top Six Use Cases of Artificial Intelligence

Enhancing Ecommerce Sales Processes, Business, and Marketing

Enhancing sales, marketing, and business rank as the top application of AI in Ecommerce. Here are some interesting examples:

• Lead identification and generation - Lead generation is the biggest headache for marketers and business development teams. Luckily, AI-powered lead generation tools can make their lives quite easy. 

• Customer segmentation and targeted marketing - Such systems help marketers to identify and segment their customers according to their behavior, needs and likes. This can reduce the marketing effort, giving better results.

• Business intelligence and data analytics - Ecommerce businesses have a huge amount of data in their hands. They can use data to enhance their business. Advanced business intelligence and analytics can help ecommerce businesses to find/evaluate their key KPIs and achieve their business goals.

• Churn detection - Loyal customers are an asset to every business. Churn detection tools help to identify potential customers that may churn. This helps ecommerce businesses to retain their customers. You don’t want your loyal customers to go - and AI can help you in this regard.

AI-based Ecommerce Logistics

AI and ML algorithms can enhance warehouse and supply chain management. AI-powered software uses sales data to stock, manage and deliver products. This helps online businesses with costs and time. AI-based supply chain and warehousing is the smart way to go!

Smart Shopping -  IoT & Artificial Intelligence

You might have watched this in sci-fi movies - A fridge is ordering milk online for the house owner. Thanks to IoT, cloud, and AI technologies this is possible now. For example, LG has experimented with several previous versions of the InstaView refrigerator that can help you with your shopping orders. 

Product Management

You can manage the pricing and perform retail analytics using AI tools. This can help in efficient & effective product management for your e-commerce business.

Conclusion

AI adoption can do wonders for your ecommerce business. Amazon realized this reality decades ago. It is time that every online shopping and retail business work to keep up with AI. If you need any guidance on the applications of artificial intelligence in ecommerce, feel free to contact us.

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