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Artificial Intelligence. The driving force behind eCommerce

Lee Densmer
11 May 2021
4 min read
Artificial Intelligence. The driving force behind eCommerce

It should come as no surprise that we’re using eCommerce more than ever. The online retail industry was steadily growing prior to COVID-19, and the global pandemic has only helped to create more demand for digital shopping options. Emarketer reports that eCommerce grew by 28% in 2020 and as the need grows, the technology that drives eCommerce also grows and adapts to better suit the needs of the consumer.

One of the core technologies driving the online retail boom is artificial intelligence (AI). It sits in the background, analyzing vast amounts of data so that eCommerce platforms can quickly serve their customers in ways that fit when and how they shop online.

Here are 10 ways AI helps eCommerce continue to grow.

1. Intelligent recommendation engines

Online retailers can recommend items to customers based on their previous buying patterns and preferences and products they’ve viewed. This is done with technology known as deep learning, an AI function that processes data and creates patterns for decision making in a similar way to the human brain. For Amazon, 35% of their $21 billion in revenue comes from using intelligent recommendation engines.

2. Conversational chatbots

AI powers natural language processing (NLP), which can understand language as it’s spoken and not just written. Chatbots can now understand consumers more easily, which allows them to react more accurately. The result is an intelligent virtual customer service team that can operate in multiple languages, 24/7. Juniper research predicts chatbots will save businesses more than $8 billion annually by 2022.

3. Computer vision

On large retail sites like Amazon and eBay, thousands of images are uploaded daily. Checking all of them to make sure their quality is perfect and not detrimental to the retailer’s brand would be an ongoing task for a large team of employees. But AI can scan thousands of images quickly to maintain the quality of the site’s “shop window”.

4. Machine learning (ML) analytics

Maintaining a strong online retail platform requires not only a strategic implementation, but constant review and adjustment. AI and ML analyze data, providing the digital retailer with intelligent insights they can use to fine-tune their activity. ML is also used to process large amounts of data and look for anomalies that indicate fraudulent activity, so companies can be alerted to it early and minimize damage to customer loyalty and their brand.

5. Image recognition

If a customer has an image of what they want, it can be easier for them to upload the image to an eCommerce site as a search. It’s common for online shopping sites to have large image banks, and AI scans these images banks and either pulls out matches or makes alternate recommendations. Online retailers also use image recognition to find inappropriate content. For example, with logo recognition, a legitimate brand can scan large image banks for counterfeit products and request they be removed from an online retail site.

6. Augmented reality (AR) and virtual reality (VR)

Both AR and VR use AI technology. AR adds elements to what already exists, so if someone wants to paint their kitchen a new colour, they can upload images of their kitchen and change the wall to a retailer’s colour of paint. Or maybe they want to try a new hairstyle; they could see what it looks like on their head. VR creates environments from scratch and through the use of a headset, consumers can see things come to life and actually experience what it would be like to be immersed in a new reality.

7. Automation

AI powers a number of marketing and administrative functions that keep eCommerce businesses running. The uses vary widely, from speech recognition with voice devices, to personalized marketing campaigns that have the ability to specifically target individuals, to reviewing inventory so that product availability is up to date. With automation, the latter function brings together both the digital and physical retail worlds, ensuring operations are accurate and seamless.

8. Virtual personal shoppers

One element of the physical shopping experience that is hard to replicate online is the guidance and advice from customer service representatives and personal shoppers. However, with AI, virtual personal shoppers exist that guide the customer through an online store. The AI technology can monitor the customer’s actions and the virtual personal assistant can make recommendations tailored to the customer’s activity. An example is “Vera” created by Piktorlabs, which provides clothing recommendations inspired by current fashion trends and helps customers explore online shops in the same way they would if they were in a physical shop.

9. Dynamic pricing

This is a function of AI that makes the best use of data to move stock at the optimum price. The technology tracks a retailer’s inventory and analyzes what’s selling and at what price. If an item isn’t selling quickly enough, it will drop the price. If an item is selling too quickly, it will see an opportunity to maximize profits and increase the price. Airlines commonly use dynamic pricing to alter the price of seats based on the type of seat, the number of seats remaining and the amount of time before departure.

10. Speech to text and text to speech

Another use of NLP is to convert voice to text so consumers can navigate the shopping experience with voice. The use of voice is steadily growing as we get used to interacting with voice-enabled devices like Amazon Alexa, Google Assistant and Apple Siri. In eCommerce, it allows consumers to shop on their own time, even if they are doing something else such as walking the dog or driving. AI also converts text to speech, so our voice devices can read information to us. Translation tools open up further global options with the ability for the voice to be in the language of our choice.

These are just ten ways AI is currently aiding eCommerce. The technology will continue to adapt and be a key driver in taking not only eCommerce, but many other industries forward too. Finance Digest reports that, “by 2025 AI will power 95% of all customer interactions, including live telephone and online conversations that will leave customers unable to ‘spot the bot’.” So, AI is here to stay, and savvy businesses would do well to embrace it and be ready for this future.

Click here if you'd like to learn more about how RWS can help you build your AI-powered eCommerce platform.