Running an online store offers many advantages that are not available to traditional brick-and-mortar shops. First and foremost, operating costs are lower because there is no need to pay (often high) rent. An online business can also operate 24/7 without increasing costs, and the customer base can grow to a global scale. That is not the end of the good news. Thanks to modern technologies, the e-commerce industry has the potential for further growth. In the article below, we will look at currently available solutions and the possibilities that await us in the future.
The Application of Artificial Intelligence and Machine Learning in E-commerce
Artificial intelligence and machine learning have numerous applications in e-commerce. An example that quickly comes to mind for many is chatbots. More and more online stores are already offering customer support via virtual assistants. Artificial intelligence can simulate human behavior, which can be utilized specifically for customer service. However, e-commerce and artificial intelligence go hand in hand in more ways than just what we see at first glance. AI’s ability to learn allows it to independently discover patterns wherever data is available. It is therefore possible to monitor customer behavior on a website, draw conclusions, and even predict future actions. Based on the phrases customers search for, the articles they read or download, and how often they return or make purchases, artificial intelligence can categorize customer groups accordingly, which will increase the effectiveness of our marketing. Furthermore, AI can better analyze the actual User Experience of our site. When we conduct A/B testing, artificial intelligence is much better at identifying which change actually improves the reception of our site’s content. For those interested in the impact of artificial intelligence on digital marketing, we also encourage you to check out our other article on this topic. Now, however, let’s look at the specific AI applications currently available in e-commerce.
Currently Available Market Solutions Supporting Sales and Service in the E-commerce Industry
Let’s move on to practice and more concrete examples. One of them is dynamic price optimization. As we know, the price of a product is crucial for the customer during the purchasing decision. The Internet allows for easy and quick comparison with competitors. Consumers, of course, also take into account factors such as shipping costs and delivery times – often, online price comparison engines can perform this comprehensive comparison. Because cost has a huge impact on whether a product will be purchased, online store owners must ensure their offer remains consistently attractive. However, market changes can happen instantly, for example, due to demand or supply chain situations. An average person may not keep up with updating offers, especially when they have other daily responsibilities. ML is a great solution here. Thanks to it, we can not only stay up to date with current market trends but also better understand consumer behavior. Another example of available solutions concerns analytics. Specifically, the analysis of products that a given consumer has already purchased in our store. This allows ML to predict what other products they might need and suggest them at the moment they proceed to the shopping cart. It can also analyze what other products were bought by customers who made similar choices. This recommendation is more effective the better the customer tagging is, i.e., assigning them to specific groups. Why is it so important to select suggested products accurately? The answer lies in human nature: the more choices a consumer has, the more overwhelmed they feel, especially when the differences between offers are subtle. This is exactly the situation we have on the Internet: the choice can be paralyzing and ultimately stop customers from making a purchase. The use of artificial intelligence can facilitate this choice through more accurate suggestions. If a user has no doubt that they are seeing a good offer for them, they are likely to make a purchase. ML can also improve search results. If a customer provides a different product name, searches in a different language (e.g., English instead of Polish), or makes a typo, they will still be able to quickly find the desired product thanks to intelligent suggestions. The shorter the search time and the more efficient the process, the greater the chances that the customer will use our online store’s services instead of going to search in a brick-and-mortar shop. All the above solutions are available now and have a real impact on electronic commerce. This, of course, leads us to the question of the future.
Development of AI-based Solutions for the E-commerce Industry
There is no doubt that online shopping has become a daily routine for consumers. A particular surge in interest in this type of activity occurred during the outbreak of the coronavirus pandemic, but the solutions implemented in many e-commerce companies at that time permanently accustomed users to the comfort of buying online. With the development of VR, we can expect that, for example, trying on virtual clothes in the comfort of one’s own home will continue to be more encouraging for many than standing in line for a fitting room in a physical store. Already today, the company e-obuwie offers a similar solution – using a foot scan, the app suggests a more comfortable shoe size for a specific model for a particular user. Artificial intelligence can also suggest other similar shoes if those chosen by the user seem less suitable. Thanks to this, buying shoes online means a lower risk that the goods will be returned due to a poor fit. Customer satisfaction also increases, as does the chance that they will return to our store again in the future. Time will tell if similar solutions can be introduced in other clothing stores. Similar solutions are offered by a well-known Scandinavian furniture chain – a customer can easily check how a piece of furniture will fit in their own home using a phone and AR technology. In the future, we will have to use our imagination less and less to realize a given vision. A virtual assistant will help and advise the customer at the planning stage. We can therefore expect that in the future, home furnishing will be supported more often by technology than by a designer. Describing products is already within the capabilities of artificial intelligence. This is a significant facilitation when we think about automating tedious processes in our business. AI can independently recognize products in images and describe them correctly. Of course, human supervision is still necessary today, but it is a very promising direction of development, especially with a cognitive approach. For details, we refer you to our article regarding Cognitive Robotic Process Automation (cRPA). Equally interesting seems to be the inventory process using IoT (Internet of Things) technology related to this issue. Resource management using AI may result in better business decisions in the future. This is a technology that is still developing, so it is worth keeping in mind. The ability to search by image is also becoming increasingly better. In the “real” world, it is difficult to expect a salesperson to recognize what item a customer is looking for based on a photo. In the virtual world, artificial intelligence can handle this task quite effectively because it has access to a huge database. We can therefore imagine a situation in which a customer finds a product in our store that they saw, for example, in a movie, and whose name they do not know at all. It is enough that artificial intelligence knows it.
What AI-based solutions are worth introducing to your online store?
The previously mentioned intelligent search on the store’s website is almost the foundation of a well-functioning online business. Equally important is the website’s positioning in the search engine most frequently used by customers. If a potential customer cannot easily find our site or our products, it is an invisible loss. For this reason, it is worth considering AI solutions related to search in your online store. The second solution that deserves our attention is the implementation of a chatbot for customer service. A virtual assistant can significantly relieve a real employee, as well as shorten the customer’s waiting time for assistance. Many of us probably know from experience how difficult it is to get through to a stationary branch during peak hours. When we want to ask about a simple thing, such as delivery time, it would be much easier and faster to have such a conversation with a chatbot. Moreover, its patience and attitude toward the customer remain at the same level regardless of working hours or other factors. It is also worth thinking about properly securing your online business. On the Internet, our business is threatened by different dangers than a traditional business. A popular form of attack is hitting a website with bots. Unfortunately, the usual captcha known to everyone is no longer sufficient, which is why ML can be helpful, as it can detect patterns and all kinds of anomalies and recognize hacker attacks. As with any investment, it is easier to make a decision when we have the opportunity to test the software. In our article on software prototyping, we write exactly how to go from idea to implementation.
How can artificial intelligence change the e-commerce industry in the future?
When a computer passed the Turing test for the first time in 2014, we knew that computers were becoming better at imitating humans. A conversation with a virtual assistant today is much more natural than at the beginning, when this technology was just being implemented. We can expect that the more this technology is used, the more convenient customer service in electronic commerce will become. Already today, the chat GPT developed by OpenAI is generating a lot of excitement. It is worth following this topic to stay up to date with its growing applications. More information how to use OpenAI in business can be found in our article. It is difficult to predict exactly how artificial intelligence might transform e-commerce. However, many of the current solutions presented in this article will certainly be developed further. Will it develop to the point where we shop online more often than in the real world? We encourage those looking for the answer to this question to cooperate with our consultants to find solutions that provide a business advantage today.
