Artificial intelligence in eCommerce: facts, use cases (2023)

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Artificial Intelligence is really taking over the world. AI is everywhere now, especially in e-commerce sector; what we are focusing on today in this article. Read on to learn more about the importance of artificial intelligence in eCommerce.

Artificial intelligence in eCommerce: statistics & facts

First, let’s look at the e-commerce industry in general:

Source: emarketer

Impressive, right? E-commerce is definitely worth looking at. Let’s continue with Artificial intelligence to see how they are actually linked.

Today, companies like Alibaba, Rakuten, eBay, and Amazon are using Al for fake reviews detection, chatbots, product recommendations, managing big data, etc. and later on we will look at it more in details.

(Video) 6 Ways to Incorporate Artificial Intelligence in eCommerce

Now, let’s go over some interesting data from a recent Ubisend report:

• 1 out of 5 consumers is willing to purchase goods from a chatbot.
• And these consumers are opened to spend up to £314.74.
• 40 percent of consumers use chatbots to look for offers and deals.
• Google invested £400 million acquiring DeepMind; Artificial intelligence company

Artificial intelligencehas 3 key elements: data mining, NLP, and ML. These elements help e-commerce businesses improve results. With Artificial Intelligence, machines are learning how to assist us and how to perform manual tasks and what is fascinating is that they are doing their job incredibly good, allowing us to focus more on a strategic level of business. Now, finally we have that time that we hadn’t have before, now we can focus on creating something more and forget about doing repetitive tasks.

Artificial intelligence is a trend, yes, definitely, but it gives us so many opportunities that it is just impossible to cover them all in one article. Let us focus on the most powerful and trendy solutions. And one of them is visual and voice search:

Search engines are also working hard in this field, improving the image search technology. This new feature really pushes the apparel and fashion e-commerce forward, and not only that! Look at retail and pharma industries. For smaller companies this is a huge push towards growth, an opportunity they haven’t had before. And in this case, it is not that much about the technology, rather about the rankings in search engines and marketplaces.

For years, metadata and tagging were one of the strongest indicators for search engines to identify the right image or document. And yes, in most of the cases it was done manually. But when it comes to AI, it automates image classification and product tagging, ensuring greater alignment in search results based on improved attribute identification. If we think about that, actually, images themselves become a data source.

Have you heart of “visual listening”? Well, just to give you a very simple example, now brands can identify all images and videos related to their brand, not just those that have the brand tag, but all those that actually feature the brand. Today, many consumers share their brand experiences; both positive and negative through images, videos, etc., however, they don’t always tag those images. According to Forbes, 80 percent of social media images that include a brand’s logo do not mention the brand or product in the accompanying text. Until now it was a problem, but with AI, brands can forget about this issue and can successfully collect all the data in an automatic way.

Artificial intelligence in eCommerce: use cases

There are other ways of using artificial intelligence in eCommerce and in this article, we will show you powerful and practical ways to do that!

Well, as you may guess, most popular usage of artificial intelligence in eCommerce is to better understand customers, generate new leads and provide an enhanced user experience. As e-commerce has become the standard method of purchasing goods and services, leading eCommerce brand intensively invest their money in exploring how AI can enhance brand competitiveness and customer loyalty.

So, let’s look at the most popular applications of artificial intelligence in eCommerce so far ( source: techemergence):

(Video) The Future of Ecommerce: 9 Trends That Will Exist In 2030

1. AI assistants and chatbots
They help brands with responding to customer inquiries: as written as voice ones. Also, they are used providing product recommendations through NLP ( good examples can be Alibaba and eBay)

2. Smart logistics
AI automates warehouse operations and delivery process. ( JD.com is one of the examples )

3. Recommendation engines
Artificial intelligence is capable of analyzing customer behavior on websites. It uses algorithms to predict what products may be liked by customers and provide recommendations. ( Amazon can me a brilliant example).

Artificial intelligence in eCommerce: case studies

Amazon
Alexa is one of Amazon’s most popular and most famous AI product. It helps drive the algorithms that are essential to Amazon’s targeted marketing strategy. AI allows Amazon to predict what products will be the most demanded to provide customized recommendations based on customer searches. And according to rejoiner, Amazon’s recommendation engine drives 35 percent of total sales.

JD.com
Beijing-based JD.com partnered up with Siasun Robot & Automation Co Ltd. to use automation technology, such as robots, to improve warehouse operations. The key idea was to improve the speed and efficiency of product sorting and delivery in warehouses, cutting down the costs and increasing revenue. JD.com aims to use Artificial intelligence to reduce the number of employees from approximately 120,000 to 80,000 over a decade to increase efficiency, by reducing manual work and therefore increase the profit margin.

Alibaba
As for Alibaba, probably, first what comes to our mind are AI assistants – Tmall Genie and Ali Assistant. Basically, by using AI, Alibaba wanted to enhance its competitive edge. It’s customer service chatbot processeses 95 percent of customer inquiries, both written and spoken ones, and it is very powerful now. What is more, Alibaba says that AI algorithms help to drive internal and customer service operations including smart product and search recommendations. Also, Alibaba uses AI to help map the most efficient delivery routes. Works quite well! And Alibaba claims that smart logistics have resulted in a 10 percent reduction in vehicle use and a 30% reduction in travel distances. Seems like it was the right investment for them!

eBay
eBay sees AI as a way to maintain consumer interest and a competitive edge. The eBay Shopbot helps users easily find products that they are interested in using NLP. Also, customers can communicate with the bot via text, voice or using pictures taken with their phone. Right now, machine learning is an integral component of eBay’s business strategy.

ASOS
Fashion retailer ASOS continues investing in AI and voice recognition systems to influence buyer behavior. Also, it has already heavily invested in image recognition technology by introducing a visual search capability which allows ASOS app to match users’ photos with similar clothing sold online.

Rakuten
Japan’s largest e-commerce site, Rakuten, continues to invest in AI to better predict customer behaviors as it is critical to the e-commerce success. Right now, with their Rakuten Institute of Technology, they are able to analyze their 200 million products to forecast sales with a high degree of accuracy. Now they are also capable of segmenting buyers more accurately using real-time data. In Rakuten Fits Me app, they use Image-recognition technology with the objectives to improve customer satisfaction and sales productivity.

Artificial intelligence in eCommerce: benefits

And now let’s look at the main benefits of using AI in e-commerce.

1.Customer-centric visual search
Consumers are often disappointed with e-commerce experience because the product results showed are often irrelevant. To tackle this problem, AI uses natural language processing to narrow, contextualize and improve search results for online shoppers. Also, it allows to have visual search capabilities, finding and matching products. Also, AI enables shoppers to discover complementary products and enhance customer experience. Now, consumers may take a picture of a friend’s new shoes or new gym clothes, upload it and then AI enables consumers to easily find similar items through e-commerce stores. Sounds cool, right? Well, we have it, it is available for us! For example Amazon has this option, which allows you to point at product that you like and Amazon will identify it and give you the results you will most probably like because it will be exactly what you were searching for. I believe, that AI makes it as easy as possible for us to purchase products that we love online!

(Video) Ai in Retail and E-Commerce Sector

2. Retarget potential customers and improve the sales process
According to Conversica, at least 33% of marketing leads are not followed up by the sales team. This means that pre-qualified potential buyers interested in a product are just left behind. Also, many teams are overloaded with unmanageable customer data that they do little or nothing with. And that’s when AI is a real necessity. Artificial intelligence could help with enhancing the sales cycle, by tailoring your problem-solving solutions and creating a strong sales message that reaches consumers at the right time on the right platform. Nowadays, there are many AI systems that enable NLP and voice input, for example, Siri, Alexa, etc. This allows a CRM system to answer customer queries, solve their problems and even identify new opportunities for the sales team.

To better understand what I mean, let’s look at a very good example – The North Face, a large e-commerce retailer. They use IBM`s AI solution Watson to better understand their consumers. They can help their users find their perfect clothes, by asking the customer questions such as “where and when will you be using your running clothes? “and customers can answer by saying it or writing it. IBM’s software then scans hundreds of products to find perfect matches based on real-time customer input and does additional research to find out the weather conditions in the that area, etc.

3. New level of personalisation
Now we can find a lot of AI solutions, for example one of the them that I really want to mention is Boomtrain. This company analizes different touch points to help the business analyse how customers are interacting online: via mobile app, web, email, etc. And AI engine is monitoring all devices and channels to create a universal customer view. So, not just one channel, but all the channels. And of course, it helps e-commerce retailers to deliver a seamless customer experience across all platforms. It will help to send relevant messages at the right time.

4. Chatbots and virtual assistants
E-Commerce is now focused on user experience. The use of artificial intelligence through the application of “chatbots” is just one way to drive the conversation in the era of conversational commerce. And it is actually more than that, chatbots can automate order processes. Also, they are an effective and low-cost way of providing 24/7 customer service and collect valuable data and track behavior. With chatbot, e-commerce sites can increase conversion rates by tailoring the online experience for the consumer. Again, one of the most famous examples is, of course, Amazon’s virtual assistant, Alexa. It has integrated into Amazon’s own products as well as products from other manufacturers. Virtual assistants are expected to impact customers purchase and provide a creative opportunity for e-commerce retailers to take advantage of.

7. Improve recommendations for customers
Let’s highlight this benefit again: with AI brands can more intelligently and efficiently predict customer behavior and demand, and offer relevant and helpful recommendations. Excellent example is Starbucks, it uses AI to analyse all the data it has gathered to deliver more personalised suggestions. The algorithm takes into account: customer’s information, customer preferences, purchase history, third-party data and contextual information.

8. Intelligent agents
New intelligent agent negotiation system has become a popular tool used in e-commerce. There are 3 main use cases: matching buyers and sellers; facilitating transactions; and providing institutional infrastructure. And guess what?! Everything in an automatic way!

9. Filter fake reviews
Unfortunately, fake reviews became an issue for online retailers and e-commerce shops. And according to Dimensional Research’s 90% of respondents said that positive online reviews influence their buying decisions. Also, 86% said that their buying decisions were influenced by negative online reviews. However, as we know there are fake reviews published by competitors, bots, etc. So, how AI can manage this problem? Nowadays, many e-commerce business use artificial intelligence to fight astroturfing by putting more emphasis on verified and helpful reviews. For example, Amazon uses AI to combat fake product reviews and inflation of their popular star ratings. Their AI focuses on prominence and weight of verified customer purchase reviews and boost them. AI also takes into account hose reviews that are marked as helpful by other users.

10. Automation
AI doesn’t mean that the robots are taking over. Nowadays a lot of people are scared that everything will be done by robots in the nearest future. No, not really! Robots offer opportunity to retailers to provide exactly what the customer wants, when they want it, by using technology and algorithms. As firms in the e-commerce industry continue to expand and that means having a growing number of customers, automation becomes a must and became one of their top investment priorities for e-commerce stores. What is more, as we know, when eCommerce business starts growing, the number of repetitive tasks grows as well. Robots can take them over; everything from publishing new products on multiple channels to scheduling sales, giving discounts to loyal customers, etc.

According to Martechtoday, Ocado reportedly planned to spend £175 million ($232 million) for its robotics and automation system this year, Amazon committed $5 billion in its tech investments in India alone, and Alibaba is looking into pouring $15 billion into research and development spending over the next three years.

To find more info about the benefits of AI in e-commerce, read Ubisend article.

Artificial intelligence in eCommerce: conclusion

In conclusion I want to say that AI is on the rise in the e-commerce industry, however, it is still far from being perfect. E-commerce firms continue to improve their AI tools to better match market demand. They also partner up with other companies to merge their competencies in AI and create more sophisticated solutions. We believe, that Artificial Intelligence in eCommerce will impact transactions, customer retention, satisfaction, efficiency and many more. AI is changing the way we buy and sell online.

(Video) Machine Learning Use Cases for Retailers

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FAQs

How artificial intelligence AI can be used in e-commerce? ›

AI plays an enormous role in adding better customer experiences and innovative solutions in the eCommerce industry. Product recommendations, personalized shopping experiences, virtual assistants, chatbots, and voice search are some of the most distinctive uses of AI in eCommerce.

What are the 5 challenges being faced by artificial intelligence? ›

These are the most common problems with AI development and implementation you might encounter and ways in which you can manage them:
  • Determining the right data set. ...
  • The bias problem. ...
  • Data security and storage. ...
  • Infrastructure. ...
  • AI integration. ...
  • Computation. ...
  • Niche skillset. ...
  • Expensive and rare.
2 Jun 2022

Which one is the most common application of AI used by e-commerce? ›

1. Chatbots. Let's start with one of the most common AI-based solutions that has emerged in eCommerce. Chatbots are conversational tools aimed at facilitating interactions between computers and customers.

What are the examples of using AI in ecommerce applications? ›

Artificial intelligence is transforming e-commerce and retail industries through purchasing recommendations, voice-enabled shopping assistants, personalized shopping experiences, robotic warehouse pickers, facial recognition payment methods, anti-counterfeit tools and more.

What is the benefit of artificial intelligence? ›

AI drives down the time taken to perform a task. It enables multi-tasking and eases the workload for existing resources. AI enables the execution of hitherto complex tasks without significant cost outlays. AI operates 24x7 without interruption or breaks and has no downtime.

How AI affect our day to day life? ›

From morning to night, going about our everyday routines, AI technology drives much of what we do. When we wake, many of us reach for our mobile phone or laptop to start our day. Doing so has become automatic, and integral to how we function in terms of our decision-making, planning and information-seeking.

What is the importance of artificial intelligence? ›

Today, the amount of data that is generated, by both humans and machines, far outpaces humans' ability to absorb, interpret, and make complex decisions based on that data. Artificial intelligence forms the basis for all computer learning and is the future of all complex decision making.

What are 3 negative effects of artificial intelligence? ›

Here are some key ones:
  • AI Bias. Since AI algorithms are built by humans, they can have built-in bias by those who either intentionally or inadvertently introduce them into the algorithm. ...
  • Loss of Certain Jobs. ...
  • A shift in Human Experience. ...
  • Global Regulations. ...
  • Accelerated Hacking. ...
  • AI Terrorism.

What is the impact of artificial intelligence on society? ›

Artificial intelligence's impact on society is widely debated. Many argue that AI improves the quality of everyday life by doing routine and even complicated tasks better than humans can, making life simpler, safer, and more efficient.

How is artificial intelligence used in marketing? ›

AI marketing uses artificial intelligence technologies to make automated decisions based on data collection, data analysis, and additional observations of audience or economic trends that may impact marketing efforts. AI is often used in digital marketing efforts where speed is essential.

What is application of e-commerce? ›

E-commerce applications

These include email, online catalogs and shopping carts, Electronic Data Interchange (EDI), file transfer protocol, web services and mobile applications. These approaches are used in B2C and B2B activities, as well as other types of outreach.

How can AI support sales? ›

AI in sales can be used to help manage and predict customer behavior, identify cross-selling and upselling opportunities, automate repetitive tasks, and improve forecasting accuracy.

How do you implement AI on a website? ›

To get started, you can do one of two things: Hire a web developer. They can build a personalized chatbot for your website, and can even program it to learn. Use an AI chatbot tool.

How is e-commerce helpful to the consumer explain using practical example? ›

A customer can shop 24×7. The website is functional at all times, it does not have working hours like a shop. Electronic commerce also allows the customer and the business to be in touch directly, without any intermediaries. This allows for quick communication and transactions.

How artificial intelligence will change the future of marketing? ›

With AI-powered tools, marketing teams will be able to automate certain cognitive tasks. They will also be able to spot current trends, as well as predict them for the future, thereby helping to ensure the success of their marketing campaigns.

How can we improve artificial intelligence? ›

There are four ways it can be done.
  1. Synergize AI with Scientific Laws. ...
  2. Augment Data with Expert Human Insights. ...
  3. Employ Devices to Explain How AI Makes Decisions. ...
  4. Use Other Models to Predict Behavior.
13 Jul 2022

Is AI important for the future? ›

Artificial intelligence is shaping the future of humanity across nearly every industry. It is already the main driver of emerging technologies like big data, robotics and IoT, and it will continue to act as a technological innovator for the foreseeable future.

How can artificial intelligence benefit our future? ›

According to a research by scientists at the University of Oxford, Artificial Intelligence will be better than humans at translating languages by 2024, writing school essays by 2026, selling goods by 2031, write a bestselling book by 2049, and conducting surgeries by 2053.

Where is artificial intelligence used? ›

Artificial intelligence is widely used to provide personalised recommendations to people, based for example on their previous searches and purchases or other online behaviour. AI is hugely important in commerce: optimising products, planning inventory, logistics etc.

How is AI changing our lives? ›

Today, AI-powered devices can complete the tasks faster and more efficiently than the best of human teams. Entrepreneurs are applying machine learning and deep learning technologies in multiple industries. Artificial Intelligence also enhances service-based sectors.

How does AI reduce human error? ›

Artificial intelligence (AI) can effectively combat human error by taking up the heavy lifting involved in parsing, analysing, drilling down, and dissecting impossibly large volumes of data.

What is the most commonly used type of AI today? ›

Limited Memory AI

This type of AI uses historical, observational data in combination with pre-programmed information to make predictions and perform complex classification tasks. It is the most widely-used kind of AI today.

Is AI a problem or solution? ›

Ultimately, AI is a powerful tool but not a solution unto itself; its responsible development and use should reflect this.

Is AI helpful or harmful? ›

Automation of jobs, the spread of fake news and a dangerous arms race of AI-powered weaponry have been proposed as a few of the biggest dangers posed by AI. Destructive superintelligence — aka artificial general intelligence that's created by humans and escapes our control to wreak havoc — is in a category of its own.

What are the benefits of artificial intelligence in business? ›

Business benefits of artificial intelligence
  • save time and money by automating and optimising routine processes and tasks.
  • increase productivity and operational efficiencies.
  • make faster business decisions based on outputs from cognitive technologies.

How does AI benefit the economy? ›

It can increase the efficiency with which things are done and vastly improve the decision-making process by analysing large amounts of data. It can also spawn the creation of new products and services, markets and industries, thereby boosting consumer demand and generating new revenue streams.

What are advantages and disadvantages of artificial intelligence? ›

Artificial intelligence refers to the simulation of human intelligence in a machine that is programmed to think like humans.
...
Advantages and Disadvantage of Artificial Intelligence.
Advantages of artificial intelligenceDisadvantages of artificial intelligence
1. It defines a more powerful and more useful computers1. The implementation cost of AI is very high.
5 more rows
24 Aug 2022

Who invented artificial intelligence? ›

Stanford's John McCarthy, seminal figure of artificial intelligence, dies at 84. McCarthy created the term "artificial intelligence" and was a towering figure in computer science at Stanford most of his professional life.

What is the most powerful artificial intelligence? ›

Meta unveils AI Research SuperCluster, the world's most powerful artificial intelligence supercomputer.

What is artificial intelligence and its examples? ›

Artificial intelligence is the simulation of human intelligence processes by machines, especially computer systems. Specific applications of AI include expert systems, natural language processing, speech recognition and machine vision.

What is artificial intelligence with real time example? ›

Facial Detection and Recognition

Using virtual filters on our faces when taking pictures and using face ID for unlocking our phones are two examples of artificial intelligence that are now part of our daily lives.

What is the most advanced AI in 2022? ›

It is one of the most remarkable Artificial Intelligence trends in 2022. The most powerful language model ever constructed has been in the limelight since OpenAI debuted GPT-3, which is considered the world's most advanced language model.

Who owns the most powerful AI? ›

Facebook's parent company, Meta, is building the world's most powerful AI-specific supercomputer to develop better speech-recognition tools, automatically translate between different languages and help build its 3D virtual metaverse.

Where is artificial intelligence used today? ›

Where Is AI Used? These artificial intelligence examples merely scratch the surface of the volume of applications of AI today. The technology is currently deployed in numerous sectors, including transportation, manufacturing, finance, health care, education, and urban planning.

How do you implement AI on a website? ›

To get started, you can do one of two things: Hire a web developer. They can build a personalized chatbot for your website, and can even program it to learn. Use an AI chatbot tool.

What are the 4 types of artificial intelligence? ›

Artificial intelligence research is one of the most exciting fields in tech. There are a lot of ongoing discoveries and developments, most of which are divided into four categories: reactive machines, limited memory, theory of mind, and self-aware AI.

Who invented artificial intelligence? ›

Stanford's John McCarthy, seminal figure of artificial intelligence, dies at 84. McCarthy created the term "artificial intelligence" and was a towering figure in computer science at Stanford most of his professional life.

How artificial intelligence will change the future? ›

Artificial intelligence is shaping the future of humanity across nearly every industry. It is already the main driver of emerging technologies like big data, robotics and IoT, and it will continue to act as a technological innovator for the foreseeable future.

What is the impact of AI in social media? ›

An AI-powered social monitoring tool or social listening tool can deliver insights from your brand's social media profiles and audience. This often involves using the power of AI to analyze social data at scale, understand what's being said in them, then extracting insights based on that information.

Who is the father of AI? ›

If John McCarthy, the father of AI, were to coin a new phrase for "artificial intelligence" today, he would probably use "computational intelligence." McCarthy is not just the father of AI, he is also the inventor of the Lisp (list processing) language.

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