As an eCommerce business owner, you know your brand’s success largely depends on an accurate analysis of your target audience, their shopping behaviors, and an in-depth understanding of how to delight your customers.

Artificial Intelligence (AI), combined with Machine Learning (ML), has the power to massively improve the competence of your business in all the areas we mentioned above. Naturally then, it’s no surprise that AI has disrupted the eCommerce industry.

But what might astonish you is that AI is estimated to power 95% of all customer interactions by the end of 2025, and in a way that customers won’t even be able to spot the bots!

Despite these trends, most eCommerce business owners are yet to go beyond the basic AI use cases. In addition to implementing a chatbot, automated support, voice search, etc., to your website/application, there’s much more you can do with AI to take your business to the next level.

In this post, we take a detailed look at the crucial benefits of AI in eCommerce and present some use cases to harness this wonderful technology.

Let’s dive in!

Benefits of Leveraging AI for an eCommerce Business

There are several benefits of using AI for eCommerce processes, including increased customer retention, higher conversions, and reduced operational costs. Let’s take a detailed look at each of these benefits below:

1. Increased customer retention

Until about a decade ago, eCommerce businesses relied on tools like third-party cookies to store information about who the customer is. And this basic demographic information about the customer shaped the business’s future strategies for promotions and offers.

However, now, AI has made it possible to mine data on what a customer does. Based on past customer experience, AI enables you to predict customer price sensitivity, churn rate, which customers are likely to return and who were just one-time visitors, etc.

With this predictive data, you can focus more on the customers who are likely to be return customers. Personalize your future offerings to suit their preferences better and watch them become loyal customers of your brand.

This Mckinsey research confirmed, “There is a 10-15% increase in revenue and retention from omnichannel personalized strategies.”

2. Higher conversions

With the help of machine learning, AI enables you to predict future events or outcomes that may affect the demand for your products or services. These predictive insights can help you take a proactive approach to sales and marketing. And hence, your store has a better chance of converting a user whose buying behavior has been influenced by an event.

Additionally, AI facilitates smart sales and customer support solutions that can potentially increase customer engagement and shorten the response time to their queries.

Intelligent sales bots are one of the greatest examples of how AI can directly help your business with revenues. Relatively new in the industry, these AI-powered sales bots can narrow down product inventory to a few options that meet the customers’ needs and preferences.

Leverage NLP (Natural Language Processing) the right way to facilitate seamless conversations between prospects and sales bots. The right conversations can have a strong positive impact on your brand’s conversion rates.

3. Reduced operational costs and increased productivity

One of the biggest advantages of AI is how it has made automation highly advanced and comprehensive. Especially in the case of an eCommerce business, the number of tasks your team has to manage can be daunting if it weren’t for AI-enabled automation.

Automation plays a central role in team efficiency by eliminating the need for manual effort for several processes. For example, you don’t need to invest in human resources for document management, business intelligence, fraud detection and prevention, etc. As a result, your operational costs decrease significantly.

Additionally, automation increases your team’s overall productivity and allows employees to focus more on the strategic aspects of your business.

AI Use Cases in the eCommerce Industry

The benefits mentioned above result from a hundred things AI can do for your business. Let’s look at some of the more significant use cases of AI in eCommerce.

1. Facilitating autosuggest for search queries

The search bar doesn’t take up significant space in an eCommerce app, true. However, if you implement AI-powered search options, especially autosuggest, the chances of conversions will likely increase.

Therefore, eCommerce companies leverage Natural Language Processing (NLP) algorithms to provide options for auto-completing user search queries.

NLP facilitates autosuggest and more accurate search results in the following ways:

• It can identify the importance of words to better understand what results will most likely lead to a conversion.
• By matching the search queries with their synonyms, it can serve more relevant results to the user
• It can also correct phonetic misspellings, punctuation nuances, and eliminate character typos to further enhance the relevancy of search results.

2. Offering personalized user experience and product recommendations

In general, many platforms can collect a ton of information and store a ton of information about your customers. For example, Google Analytics provides information about a user’s location, device, browser, and time spent on each web page. Such information is easily available and reliable but sometimes not useful.

To facilitate effective personalization, your teams need access to data about customer buying journeys and shopping behaviors. AI and ML have been widely adopted to store and analyze these data to offer highly personalized marketing messages and product recommendations.

ML takes into account the smallest piece of information about every hover and every click to get customer insights on a deeper level. This is almost like the system can read your site visitors’ minds!

In this way, AI and ML enable your eCommerce app to offer smart and accurate personalized product recommendations.

For example, clickstream data identify visitors’ clicks, add to carts, and actions while browsing a shopping website. By analyzing such data in real time, a clickstream-based product search can show products that are most likely to be attractive to shoppers.

As AI technologies continue to advance, they will require less involvement from data scientists to collect data, analyze it, and use it to deliver an excellent personalized user experience.

3. Managing warehouse and inventory

It is hard to handle inventory manually since there is a growing number of products and changing customer demand. With the adoption of AI, eCommerce inventory management has become easier.

As we mentioned, a deep analysis of shoppers’ behavior allows eCommerce business owners to plan more accurately for stocking. Additionally, some AI tools also help with the following inventory management tasks:

• Predicting and analyzing market changes that can affect sales
• Studying past sales data and creating a forecast report to meet the changes in the demand
• Identifying and quickly solving vendor issues

Thus, AI can equip your business to meet customer expectations with the right product at the right time.

4. Streamlining logistics

The predictive analytics and data mining capabilities of AI and ML are also valuable for managing logistics. Various AI-powered software can smoothen the entire supply chain process for your eCommerce business in the following ways:

• Logistics aggregators and smart logistics intelligent platforms leverage AI-based courier recommendation engines to find the right shipping vendor for your business.
• AI-driven tools enable your team to track order shipments and identify any SLA breaches that might have occurred during transit.
• You can mine accurate data for every aspect of logistics – from order information to delivery timelines and performance – using AI-based tools.

In the transport and logistics industry, 40% of respondents state that AI has helped them improve inventory and logistics management. AI has the potential to understand complex real-time inventory control dynamics, recommend actions, and predict scenarios.

5. Omnichannel customer experience

Omnichannel marketing is all about offering customers an excellent shopping experience by providing consistent, contextual, and unique touch points across different channels, including marketplaces, websites, and social networks.

AI is a powerful tool for improving on-site customer experience and can also be used to process the behavioral data that your customers provide you.

Simply put, you can delight your customers with personalized content that reaches them at the right platform and at the right time. With AI-based product search and discovery platforms, it is possible to collect and use data on other platforms to build a powerful omnichannel customer experience.

Conclusion

From intelligent visual search, automated product tagging to self-managed warehouse processes and improved fraud detection, AI use cases have carved a huge, lasting space for themselves in the eCommerce industry. It will reshape the industry to meet both consumer demands and business goals.

These trends indicate that you can’t escape leveraging AI for your eCommerce business if you want to build a strong relationship with your customers.

To stay at the top in the ever-competitive eCommerce industry, consider using eCommerce development services from a reliable technology partner who can guide you on maximizing the benefits of AI for your brand.

Author Bio:- Hardik Shah is a Tech Consultant at Simform, a digital product engineering company. He leads large-scale mobility programs that cover platforms, solutions, governance, standardization, and best practices.