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.
In daily life, we usually regard AI as its technologies and applications.
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-fuelled chatbot for now.
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.
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.
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.
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 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:
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.
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 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:
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.
AI has become a game-changer in almost every industry, and eCommerce is no exception.
With its ability to analyze vast amounts of data and make intelligent decisions in a timely manner, AI has transformed how eCommerce merchants and online retailers operate and succeed in the highly competitive digital marketplace.
There are various use cases of AI in eCommerce, from forecasting to boosting sales.
Still, on this page, we’ll focus on the most conversion-optimizing and beneficial ones for online shoppers.
Searching is an excellent signal for purchase since searchers already have a product in mind to look for. That's why eCommerce merchants are investing more and more in an optimized site search engine.
The spark that ChatGPT ignited has put AI-powered search at the forefront of consumers’ and businesses' minds. AI Search uses Natural Language Processing, Named Entity Recognition, and other advanced Machine Learning algorithms.
With those superpowers, AI-fuelled search can improve search result accuracy, auto-detect synonyms, and handle long-tail queries with typos.
The power of AI in search functionality on an eCommerce website is truly remarkable.
Let’s see: with instant search capabilities, AI algorithms can predict and display search suggestions as users type, providing a seamless and intuitive search experience.
What’s more? On-site search results powered by AI can deliver highly relevant and accurate product recommendations, helping customers quickly find what they're looking for and increasing the likelihood of conversion.
Picture this: a shopper types "comfortable running shoes" into the search bar. With semantic search, the engine doesn't stop at the keywords; it delves into the customer's intent. It understands that the shopper is looking for shoes that provide comfort during running, even if the exact phrase isn't used. Talk about a search engine that truly gets you!
✨ Semantic Search in eCommerce is a search approach that focuses on understanding the meaning and context of user queries rather than solely relying on keyword matching.
Is Semantic Search AI-powered Search?
Short answer: Yes.
Long answer? Yesssss, but here are a few more things:
Semantic search is a type of AI-powered search. It employs natural language processing (NLP) and artificial intelligence techniques to comprehend user queries in a human-like manner.
By considering context, word relationships, and overall meaning, semantic search delivers highly accurate and relevant results, enhancing the search experience with its advanced understanding of user intent.
For Shoppers: Effortless Discovery
Your shoppers no longer need to struggle with irrelevant search results or waste time on unproductive searches. With Boost’s Semantic Search, users effortlessly discover products that precisely match their intent, even when they search with their “daily lingo.”
This advanced search technology understands shoppers' needs, preferences, and context, delivering tailored results that align with their actual intent.
➜ As a result, site visitors save time, find what they're looking for faster, and enjoy a seamless and enjoyable shopping experience that makes them feel understood and valued as customers.
For Merchants: Amplified Visibility, Revenue Boost
Integrating the advanced Semantic Search system in Boost AI Search & Discovery is a game-changer for your business.
By harnessing the power of Semantic Search, you gain a deeper understanding of your customers' intent and unlock new opportunities to boost your revenue.
Since our release, we have been thrilled to witness the remarkable impact of our refined AI-driven search capabilities, particularly our Semantic search feature, on stores like yours:
Product recommendations are crucial for boosting sales and increasing average order values for retailers.
However, irrelevant items showing up on the recommendation widget can damage the credibility and effectiveness of the tool.
On the other hand, manually picking recommended products takes too much time and effort, especially if your inventory is huge.
✨That’s where AI Recommendations can help.✨
The AI/ML algorithms behind AI Recommendation models analyze the store's catalog and other history data like past purchases to identify which products are related, which are alternative, or which products are frequently bought together.
AI-powered product recommendations leverage vast data pools in real-time to generate deep insights into customer preferences and behavior, aiding in the presentation of items that shoppers are likely to be interested in.
⭐ Learn from the best examples for eCommerce product recommendations!
When it comes to online retail, many refer to Merchandising as the practice of altering search results to promote high-profit products, or "Searchandising.”
However, we see it as a form of Visual Merchandising, especially with the Boost app's flexibility. Our tool enables retailers to rearrange product listings on search result pages and, more importantly, collections pages alike.
Advanced merchandising tools using AI can adapt the rankings and auto-update top products based on shopper behavior.
For example, when the AI model detects a shopper profile tends to click through items for women, it will show products for this specific gender on top positions.
Imagine a search engine that understands your customers' preferences and how to showcase your star products with finesse.
With Product Performance Ranking, your search results become a captivating display of your most sought-after items, capturing the attention of potential buyers like never before.
When shopping online, customers expect a personalized experience that caters to their unique preferences. AI technology is the perfect solution for this.
By analyzing customer behavior, purchase history, and click patterns, AI-powered systems can create tailored experiences that provide targeted recommendations and relevant promotions and predict future purchasing patterns.
This results in a seamless and enjoyable shopping experience that keeps customers returning for more.
In this chapter, we are going to learn how eCommerce companies and online retailers of all sizes can leverage the immense potential of AI in eCommerce. By doing so, you can enhance their decision-making abilities, leading to increased profitability and growth.
👉 Check out this AI in eCommerce for SMBs guide to debunk the most common misconceptions about AI and expert tips on how small and mid-size businesses can unlock the potential of AI power.
Now, let’s get strategic with AI.
🔑 Tips before you jump in:
Don’t let the FOMO creep into your mind and jump on the AI ship, then ride the AI waves without a clear vision in mind.
Before implementing a full-scale AI solution, avoiding hasty decisions that can result in wasting significant time and resources on ineffective actions or false starts is crucial.
AI is not a one-size-fits-all magic wand for all niches and businesses, especially considering your size.
You need to identify the relevant use cases for your eCommerce business.
For example, an online fashion retailer can leverage AI to optimize product recommendations based on customer preferences and browsing behavior. By using AI algorithms that continually improve, the retailer can enhance the customer experience and drive higher sales conversions.
It's important to start with careful strategizing when embarking on your AI journey. This process helps you outline your AI game plan and execute it effectively.
Take the time to delve into your specific goals and determine what you aim to achieve through AI implementation.
Do you want more sales with AI? Or do you want to upgrade your site to be more sufficient for you to manage? Or do you want to impress your shoppers with some AR/VR touch of technology? 👉 Choose your goal wisely so you can choose your weapon wisely.
We can’t emphasize it enough: Avoid the temptation to force AI into every aspect of your business without a clear purpose. Instead, focus on drilling down on your goals and gradually build upon them in the future.
Now, let’s look at how you can use AI effectively for your eCommerce business. Here are the six basic but essential steps:
The first step is to determine the specific problems or challenges that your business wants to solve using AI.
Various types of AI technologies are available, such as machine learning, natural language processing, and computer vision.
Select the technology that best suits your business needs.
AI algorithms require large amounts of data to learn from and make accurate predictions.
Ensure that your online store’s data is high quality and properly formatted.
Once your data is prepared, you can train the AI model using machine learning algorithms. Feed the model with the collected data, allowing it to learn patterns and make predictions.
After training the AI model, integrate it into your eCommerce platforms and start using it. This may involve developing or integrating custom software with existing systems and processes.
It is crucial to monitor the performance of your AI solution and make necessary adjustments to optimize its effectiveness. This may involve updating the data used for training or fine-tuning the model itself.
Ever felt overwhelmed by the multitude of tasks involved in running an eCommerce store manually?
Here come top AI tools for eCommerce, designed to simplify your life, save time, and optimize various aspects such as marketing, content creation, customer support, and search engine optimization.
The best part? These user-friendly and cost-effective tools are here to make your eCommerce conquering journey smoother.
This section will take a quick look at some of the top AI tools tailored specifically for eCommerce stores that you should consider incorporating into your operations.
Are you ready to tap into the incredible potential of Shopify AI tools and take your store's performance to the next level?
We understand that the multitude of AI-powered tools available can be overwhelming, so we're here to simplify the process by introducing you to some of the best Shopify apps that harness the power of AI.
⭐ AI feature to try: Image-to-Layout
With a user-centric approach, GemPages aims to enhance the customer experience by simplifying high-converting Shopify store page building with intuitive features and AI optimization.
Image-to-Layout is the first AI feature developed by GemAI - GemPages' powerful artificial intelligence engine that aims to revolutionize e-Commerce store owners' experience.
Explore more: How GemPages' first AI-powered feature helps you build faster
⭐ AI feature to try:
AI-powered MBC Bundle Products app allows you to create high-converting product bundles in minutes. No more hours of manual work.
Make minor setups, and you're ready to start selling. Enhance your AOV and drive revenue effortlessly. Gain valuable insights through AI-driven recommendations and track your top-selling products.
⭐ AI feature to try: Fera helps you easily collect, show & grow and manage (with AI!) your store's customer reviews, photos & videos.
Use Fera's built in AI feature to moderate your reviews! Fera's AI can automatically detect unsavory language or hate-speech and decline reviews based on that. Not only that, but Fera's AI will approve all reviews that meet your brand's guidelines!
Start using Fera to manage, show and grow your reviews!
⭐ AI feature to try: Shopify marketing automation
AiTrillion is a comprehensive marketing automation platform designed for e-commerce stores.
AiTrillion bridges the gap between Shopify store and marketing activities to boost customer engagement and retention with automation. It offers a wide range of features including email, SMS automation, loyalty program, reviews, web push, recurring memberships, affiliate marketing, and more all in one platform.
With over 186,000 users and growing, AiTrillion is a proven solution for automating marketing and increasing sales.
Explore more on Experience eCommerce Marketing Automation Powered with Actionable Analytics & Artificial Intelligence
Now, you know that AI is smart, efficient, convenient, burden lifting of manual labor... blah blah blah, and it WILL transform the eCommerce world completely.
You also got a glimpse of how to apply AI in your eCommerce store.Let’s see the real-life examples of using AI in eCommerce to inspire yours!
AI has made its way to the eCommerce world for a long time. World-famous brands have been using this intelligent technology to seal a deal faster and serve demanding online shoppers better.
AI is essential for Amazon, the leading digital retailer.
For example, Amazon is well-known for implementing AI in product recommendations, but do you know that it also applies advanced technologies for a dynamic pricing strategy?
Amazon uses AI/ML models and big data analytics to update the prices of millions of products multiple times daily.
The marketplace giant can adjust its product prices a remarkable 2.5 million times daily with advanced technologies.
The algorithms consider demand, competition, stock availability, and customer behavior to identify trends, make accurate predictions, and optimize sales volume and price.
Zara powers its agile supply chain with AI in the fast fashion industry. The company's adoption of AI, including algorithms and real-time data collection, has allowed it to understand customers better and enhance its supply chain efficiency.
The input of this AI-driven approach involves using personal digital assistants to gather shopper preferences. For example, when are they available to pick up or receive a package? This data is then processed to produce the best Send time for the supply chain.
AI enables Zara to forecast consumer behavior, offer personalized product suggestions, and efficiently cater to customer preferences.
By employing a quick-response business model with vertical AI integration, Zara achieves short cycle times of design, sourcing, manufacturing, distribution, and retailing, allowing them to deliver affordable, medium-quality fashion clothing to their stores twice a week.
Tidio, a popular chatbot app on the Shopify app store, has just released an AI chatbot named Lyro.
Lyro leverages Tidio's in-house AI mechanism to understand, predict, and generate human-like content while incorporating Large Language Models to ensure the AI's honesty, helpfulness, and harmlessness.
What's more interesting is that Tidio's customer service team was the first user of Lyro. And the team has achieved some outstanding results with its own product.
Lyro's automated responses achieved a success rate of 50-70%, with a 75% reduction in first response time after implementation. This can lead to increased customer satisfaction and sales.
After several years of brewing, Boost released AI models for Shopify storefront search and product recommendations in April 2023.
The new Boost AI Search and Discovery employs AI/ML to reduce the manual work needed to set up optimized and personalized search and product recommendations.
Natural Language Processing combined with Named Entity Understanding helps the search engine understand searchers’ intention to match more accurate results.
With AI/ML powers, Boost AI can also auto-suggest suitable synonyms for your online store.
Thanks to the AI Synonyms, merchants don’t have to spend much time digging into the search terms analytics or spying around the competitor sites for ideas to reduce “No results” searches.
AI-driven search engine of Boost auto-detect similar meaning words for “office chair” in this Wellness store. When shoppers search for “desk chair,” the search engine will shuffle results that contain “office chair.”
Product recommendation is another area in which Boost AI can help reduce manual work.
Besides five statistic-based recommendation types like Trending products, Newest arrivals, etc., users can implement AI-based recommender systems to create Frequently Bought Together and Related Items widgets.
Once activated, the AI-powered recommendation will get automatically trained and updated with the latest store data thanks to ML algorithms.
Therefore, the recommended products are “fresh” daily, although you don’t lift a finger.
This store displays Related Items as YOU MAY ALSO LIKE widget and Frequently Bought Together as CUSTOMERS ALSO BOUGHT widget on the product pages. Both widgets are backed by AI/ML.
🗒 Friendly reminder: You might want to buckle up for a wild ride into the future of AI in eCommerce!
It’s crystal clear that in 2023, AI technologies will be pivotal in operating eCommerce websites. What the future holds with AI in eCommerce?
🔑 The answer: AI will be everywhere.
The global AI market is anticipated to experience a remarkable compound annual growth rate (CAGR) of 21.4% from 2022 to 2030. As a result, AI will become increasingly pervasive, extending its presence beyond eCommerce to various facets of everyday life.
Moreover, the AI capabilities we witness are set to become even more advanced and sophisticated.
As these advancements continue, we can expect exciting new use cases to arise. For instance, generative AI can already produce high school essays, leading to more advanced and accurate virtual assistance tools for audio and text generation.
Additionally, AI integration in augmented reality (AR) and virtual reality (VR) will enable immersive shopping experiences, allowing users to virtually try on products and see how they look on themselves, just like in a physical store.
As AI actively collects user data for personalization and sales improvement, data protection must be done responsibly.
Adhering to privacy regulations, providing transparent data usage information, obtaining user consent, and implementing strong security measures are essential.
Unfortunately, data breaches can occur, impacting market growth. Privacy concerns act as a significant restraint in the AI market.
AI offers numerous benefits to the eCommerce ecosystem, including but not limited to personalized customer experience, intelligent and automated customer support, efficient product recommendations, advanced analytics, and many more.
All of these result in a better online shopping experience and help boost your store's overall revenue.
Everything lies in AI algorithms which analyze customer data to deliver personalized shopping experiences, tailored product recommendations, and targeted marketing campaigns based on individual preferences and behavior.
You might need to dive into a whole new world of knowledge to understand AI algorithms.
Hint to start: machine learning and other specific AI algorithms such as decision trees, neural networks, and deep learning.
Yes. AI algorithms can analyze market dynamics, competitor pricing, and customer behavior to optimize product pricing in eCommerce, helping businesses maximize revenue and profitability.
Every weapon has its drawbacks. AI is no exception: its implementation has raised data privacy concerns, ethical considerations, the need for robust data infrastructure, and ensuring the accuracy and reliability of AI algorithms.
Integrating AI in eCommerce brings forth several privacy and ethical considerations, including data privacy violation or breach, excessive data collection, intrusive profiling, and potential manipulation of consumer choices.
