Whenever mentioning AI, you can immediately link to the image of a crazy man-made machine that wants to take over the human world (the Matrix and Terminator series to blame).
However, AI in eCommerce and in our digital world nowadays is not that evil.
What is AI?
In daily life, we usually regard AI as its technologies and applications.
Artificial intelligence (AI) is a field of science concerned with building computers and machines that can reason, learn, and act in a way that would normally require human intelligence or involve data whose scale exceeds what humans can analyze.
For example, an AI-powered search system employs Machine learning (ML) and Natural language processing (NLP) to generate more accurate and personalized results.
ChatGPT uses Reinforcement learning and Human feedback (RLHF) to train its model, making it seemingly the most efficient AI-fueled chatbot for now.
How does AI work?
The ultimate goal of AI is to develop a computer system that can mimic human behavior and thinking patterns to tackle intricate problems (no, it won't become self-aware and then launch a nuclear war like Skynet does, though).
An AI system combines large data sets with intelligent and intuitive processing algorithms to achieve this. The ideal result is it will be able to perform multiple tasks rapidly in a short time.
The first step is Input, where engineers collect the necessary data readable by the algorithms for AI to perform its functions.
Next comes the Processing step, where the model interprets the inputted data and uses the learned behaviors to recognize similar patterns in real-time data.
The technology predicts the Outcomes based on this processing, determining if it's a success or failure. Then, during the Adjustment phase, outcomes may shift to reflect a more desirable outcome.
Finally, once AI has completed its assigned task, it moves to the Assessment stage, which analyzes the data and makes inferences and predictions. The technology can also provide helpful feedback before rerunning the algorithms.
Then, what is AI in eCommerce?
AI in eCommerce refers to integrating artificial intelligence technologies and algorithms into online retail platforms to enhance various aspects of the customer experience and optimize business operations.
AI enables eCommerce websites to provide personalized product recommendations tailored specifically to individual shoppers, creating a unique and tailored shopping experience.
📝 In short, AI in eCommerce revolutionizes the online shopping space by enabling personalized product recommendations, conversational search capabilities, and automation of various processes.
It empowers online retailers like you to deliver outstanding customer experiences, make data-driven decisions, and optimize business operations.
The impact of AI on eCommerce
While AI may not have the same adorable wagging tail and wet nose as a dog, it can certainly bring the same values as your trusty canine companion at home: reliability, intelligence, personalization, security, efficiency, adaptability, playfulness (bet you have heard of VR and AR), and companionship to the world of eCommerce.
Undoubtedly, AI can automate workflows and processes, working independently or alongside human teams.
It monitors and analyzes network traffic automatically in the online shopping environment. Email automation and auto-reply texts reinforce customer engagement in eCommerce stores.
Furthermore, AI gives us a free hand in repetitive tasks. As a result, human capital is freed to work on higher-impact problems. Advanced technologies can perform manual processes like verifying, transcribing, or answering simple customer queries.
Needless to say, AI processes information much faster than humans.
Its unlimited capabilities, backed by machine learning, deep learning, etc., make AI an efficient eCommerce tool for finding patterns and discovering relationships in data that a human might miss.
In the customer service sector, AI can improve the customer's experience and reduce the workload of customer service agents.
Did you know?
According to Salesforce, around 23% of customer organizations were using AI chatbots in 2019, and another 31% planned to implement them in the next 18 months.
Inventory management is a significant field that takes advantage of AI for automation.
👉 By analyzing sales data and customer demand, AI algorithms can predict when specific products will run out of stock and automatically reorder them. This can improve efficiency and reduce the likelihood of stockouts.
Last but definitely not least is its ability to reduce human error. Automating tasks and using algorithms that follow the same processes every time eliminates manual errors in data processing, analytics, and assembly in manufacturing.
One of the most significant and common ways to utilize AI in eCommerce is through personalized product recommendations.
AI algorithms analyze customer browsing and purchase history to deliver recommended products matching the customer's interest.
Thus, from the shoppers’ perspective, it's like having a shopping buddy who knows exactly what you're into!
AI can also improve search results on eCommerce websites. Site search is such a crucial feature of online stores that it can boost conversion by up to nearly 30% when optimized.
AI-powered search leverages Natural language processing and auto-recognizes similar meaning word algorithms to offer relevant results even in case of misspellings.
Fraud detection is another helpful application of AI on eCommerce websites. It efficiently analyzes customer data and purchase history; therefore, suspicious activity can be detected, and the website owner can be alerted.
AI in eCommerce: Statistics, Facts, and Trends
AI in eCommerce is not merely a recently trending phenomenon, as the concept of artificial intelligence has been around for nearly seven decades.
The term "artificial intelligence" was coined in 1956, making it almost 70 years old.
2023 marks the year when AI shook up the world and officially engraved in everyone’s mind its start as the future of technology. The 2023 AI wave began with a chatbot called ChatGPT.
To walk you through and understand how important AI is in eCommerce, let’s quickly browse through these mind-blowing numbers:
AI adoption in eCommerce statistics:
According to a report released by Gartner, the adoption of AI by businesses has witnessed a significant surge in the past four years, with a remarkable growth rate of 270%.
Approximately 62% of consumers and business buyers express a willingness to embrace the utilization of AI as a means to enhance their experiences, according to Salesforce
A notable 84% of eCommerce businesses have prioritized adopting AI solutions, actively working towards its integration into their operations.
AI impact on eCommerce sales statistics:
Personalization in eCommerce tailors the shopping experience to individual customers based on their needs and preferences. It includes features like showing recently viewed products, personalized email campaigns, curated product lists, and many more.
AI adds a personalized touch to your customer’s shopping experience.
When customers visit an eCommerce site and leave without buying anything, an AI tool can analyze their browsing history and recommend products based on what others who viewed the same item purchased.
With AI algorithms, your eCommerce stores can quickly analyze customer data to identify trends.
AI-Driven Insights (More data = Better Analytics)
AI in eCommerce has the potential to collect vast amounts of your customers’ personalized data, enabling businesses to gain deeper insights into customer behavior and preferences.
By analyzing this data, AI algorithms can provide more accurate and detailed analytics of your eCommerce store, uncovering valuable patterns, trends, and customer segments.
Also, let’s not forget that AI has become essential in managing and analyzing large amounts of data that humans alone cannot handle effectively.
AI-driven data analysis connects the dots in various ways, providing valuable insights for your campaigns.
These AI-driven insights are crucial for a successful eCommerce store you’ve been dreaming of:
- AI-driven insights help businesses make data-driven decisions, optimize marketing strategies, and deliver highly targeted and personalized experiences, ultimately leading to improved performance and customer satisfaction.
- Through AI, you can improve customer service, boost sales conversions, and reduce costs.
Generative AI: AI-Powered Content
While visual AI-generated content is a future possibility, written AI-generated content currently dominates (Look! ChatGPT is waving at you across the street)!
Recently, Shopify rolled out Shopify Magic, the ultimate solution for new merchants looking to streamline their store launch process by automating the content creation process for product pages.
Crafting compelling product pages and descriptions is crucial for early success but can be incredibly time-consuming. Shopify has developed Shopify Magic as an innovative tool to revolutionize your store's content.
With Shopify Magic, you can effortlessly enhance your product descriptions and boost conversions. This is the perfect example of how you can use AI-generated content to automate the mundane tasks of managing your online store.
- The AI wave in 2023 marks the dawn of a new era for AI in eCommerce. The increasing adoption and impressive predictions reflect the transformative power of AI across all aspects of online commerce.
- AI has significantly impacted eCommerce, revolutionizing customer experiences through personalized product recommendations, efficient inventory management, automated customer service, and more.
- To stay ahead, businesses must continuously update and embrace new AI technologies while responsibly prioritizing protecting users' private data.