The role of artificial intelligence in ecommerce
Earlier this year, Shopify announced Magic, further proving that Artificial Intelligence is the future of ecommerce by generating product descriptions based on keywords and tone (“conversational,” “formal”).
And this is just one example of the practical uses of AI thus far. Today, sellers can generate product descriptions using generative AI and rely on GPT4 enabled customer service. Soon, teams can create paid ad creative and launch entire marketing campaigns personalized to each buyer.
Not only does AI make online shopping easier for the consumer, it helps ecom sellers and companies grow their businesses through everything from operations to creative. In this article we’ll cover how AI is used in ecommerce, practical examples of AI in action, and what it could mean for buyers and sellers in the future.
E-commerce has become an indispensable part of our lives. In 2023, an estimated 2.64 billion consumers will have completed at least one purchase online.
Just like you’ve probably purchased something on mobile, you’ve also probably interacted with AI in an ecommerce capacity. Whether it be through an AI-powered customer support bot or an ad catered to you based on your purchase history, AI is integrating into the ecommerce industry more and more to improve sales and engage customers.
Here are some examples of how AI is utilized in the e-commerce experience today.
1. Personalize the customer shopping experience
Personalization builds customer connections. AI does this by analyzing customer conversations, behaviors, and patterns to help solve problems, suggest products, and just about everything else.
2. Optimize operations
There are a lot of uses of AI. There are the creative ones, that push boundaries and create sentences – even creative assets.
Then there are the operational uses, that can cut your costs, time to market, and generally organize your business and processes better.
Take inventory management: With AI inventory optimization, you'll only stock up on the inventory you need. AI can analyze historical purchase data, and allow you to select the in-demand and profitable goods you need.
More ecommerce metrics and KPIs here: 21 key ecommerce metrics.
AI tools can analyze data, track your balances, and predict future demand.
3. Improve customer support
By using Natural Language Processors (NLP) and machine learning, AI-powered chatbots are able to understand the context of a customer problem in a sentence, and can carry on a full conversation.
The use of chatbots in customer communication has been on a steep rise in recent years. Chatbots allow for 24/7 customer service, leaving no wait time, which increases customer satisfaction and reduces your support team’s workload.
4. Optimize ad creative
One creative use of AI has to do with video marketing. When developing a product or brand video for a company, tools like Wistia can help video creators understand which visuals are more likely to lead to a sale.
Wistia is only one example of an application helping with creatives. There are a lot of animated video makers, 3D video creators, and intro makers that can help you to have captivating and memorable videos.
How AI will improve ecommerce in the future
The potential of AI, combined with advancements in technology and data analysis, will usher in a new era of possibilities for ecommerce.
The idea of AI being revolutionary to ecommerce mirrors what the internet did to commerce. If you think about the differences between then and now, it can be both inspiring and inspire a headache.
Ecommerce sellers are entrepreneurs; ready to pivot to changes in customer preferences and excited to utilize the tools at their disposal. From hyper-personalization to virtual shopping assistants, the potential for tools AI offers are boundless. By embracing these advancements responsibly, ecommerce professionals can create a more intuitive, efficient, and customer-centric online shopping ecosystem.
Here’s where we think AI in ecommerce is headed…
Hyper-personalization beyond imagination
Algorithms will evolve to a point where they can understand preferences with remarkable precision, taking real-time context into account. With Apple Vision Pro, it’s also not hard to imagine ad experiences or product recommendations based on facial expressions.
The idea of a fully curated, personalized ecommerce experience is that it perfectly aligns with the user’s preferences and tastes. The idea isn’t that ads are omnipresent and interfering with a user’s experience, but that you are fostering a genuine connection by offering the right ad at the right time.
AI anticipating shipping and logistics
AI’s predictive capabilities will transform the shipping and logistics landscape. Delivery processes will become anticipatory, with systems that can accurately forecast customer demands and preemptively position products in warehouses closer to buyers.
You can expect a reduction in shipping time, with optimized delivery routes that can reduce carbon footprint.
AI virtual shopping assistants
Customer service is already undergoing a massive transformation in light of AI. But AI chatbots have a lot more uses than just popping up when something goes wrong.
AI-chatbots can offer personalized shopping guidance, holding contextually relevant conversations and simulating in-store experiences through augmented reality.
More focus on ethical AI and data privacy
Striking the right balance between personalization and customer data privacy will become a crucial factor in customer trust. E-commerce platforms and advertisers will need to adopt transparent data practices, adhere to regulations, and provide customers with the autonomy to control their data.