eCommerce AI: 7 Ways Artificial Intelligence is Transforming eCommerce

The e-commerce sector shows a brighter and more promising future. Its market growth is due to technological advancements, not to mention consumer demands and industry trends.

You probably employ e-commerce marketing automation to drive sales as an online seller. You might even use customer relationship management (CRM) systems to manage consumers and multichannel solutions to improve the customer journey. However, the list won't be complete without leveraging artificial intelligence (AI).

In this blog, we'll delve into the power of artificial intelligence for the eCommerce sector. Learn how AI integration will drive the industry's direction and shape its future. Specifically, we'll cover the following:

• An overview of eCommerce AI;
• Types of eCommerce AI;
• The AI impact of the eCommerce future; and,
• The potential benefits and drawbacks of eCommerce future.

Ready? Let's dive right in!

What is eCommerce AI? 

First things first, what is eCommerce? 

It is simply selling and buying products via the internet, whether through eCommerce platforms, business websites, or social media channels. Think of shopping for goods or items, placing orders, and paying online. These products get delivered to the customers' doorsteps in just a few days.

The eCommerce market has been growing and expanding. According to Statista, its global revenue could grow from $3,647.00 billion this year to $5,307.00 billion by 2028. It's projected to expand at a 9.83% compound annual growth rate (CAGR).

Further, Grand View Research cites that the internet penetration has driven mobile phone users to accept eCommerce widely. The users' technological awareness could positively impact the industry's market growth. Technology indeed plays a crucial role in consumers adopting e-commerce.

Enter artificial intelligence (AI). AI is the simulation of human intelligence into digital tools and technologies. ECDB expects this technology to transform the e-commerce industry.

According to the report, the AI market could grow from $96 billion in 2021 to $1.85 trillion by 2030. This technology, especially ChatGPT and personalized content creation, can enhance marketing and user experience (UX).

Learn the primary types of eCommerce in the next section.

4 Types of eCommerce AI

There are different AI technologies out in the market. Think of AI-powered chatbots for customer service, predictive analytics for sales forecasting, generative AI for content creation, and automated software for data tracking and analysis. 

However, you can categorize all these technologies into four primary AI models:

• Data mining entails collecting, analyzing, and using vast amounts of information. In eCommerce, you can employ data mining using AI tools for product recommendations, customer data management, and sales forecasting and reporting.

• Machine learning (ML) is a subset of AI capable of learning datasets and making predictions based on patterns. As an eCommerce seller, you can leverage ML to develop customer persona, forecast customer service volumes, and predict sales revenues.

• Computer vision (CV) allows computer devices to identify and classify content pieces, whether photos or videos. Online sellers can employ this AI technology to optimize product search and recommendations.

• Natural language processing (NLP) enables digital tools to understand and communicate natural human language. Generative AI, like ChatGPT, is a perfect example of NLP e-commerce sellers can use for content marketing.

Discover the impact of AI on the future of eCommerce in the next section.

7 eCommerce AI Examples to Apply to Your Business

Today, AI technology offers various digital tools that are best for e-commerce functions. Think of AI-powered chatbots for e-commerce customer service and product inquiries. Consider using machine learning (ML) for product recommendations and data analysis. 

Let's look at how AI integration will drive and impact the future of e-commerce:

1. Boost Marketing and Advertising through Generative AI

Content remains king in the digital world. In eCommerce, it resonates well with people and engages with customers. Harness the power of generative AI for consistently producing and publishing content pieces, whether articles, product images, or promotional videos.

Generative AI is a type of AI capable of generating text, images, and audio and video clips. ChatGPT is a perfect example of generative AI, which has become all the rage nowadays. Minta is another example of this technology used for creative content marketing, which is ideal for online brands.

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Remember, however, that you employ generative AI not to create but to assist you in content creation. Below are digital marketing strategies you can implement for your eCommerce business using generative AI:

• Search engine optimization (SEO) is optimizing your website, creating relevant content, and building links. It aims to rank high on the search engine results pages (SERPs). Generative AI can help you with idea generation, article outlines, content research, and more.

• Pay-per-click (PPC) advertising is about producing and displaying ads on SERP; however, you must pay for every successful click from potential customers. Generative AI can help you generate compelling ad copies that connect with your target audience.

• Email outreach campaign entails reaching out to potential and regular customers to promote your business and sell your products. Generative AI can aid in drafting and automating personalized messages for your prospects and customers.

• Social media management involves publishing content on social media and engaging with customers. Generative AI can assist you in generating captions, responding to customers, and more.

2. Personalize the customers' online shopping experience

eCommerce personalization is vital for boosting your conversion. Prospects and customers only respond to personalized messages—not just generic content. They only do business with companies that understand them and value their needs.

Robert Kaskel, Chief People Officer at Checkr sees the value of AI for e-commerce personalization. "AI technology has already started online stores to personalize customer messages. AI-integrated digital tools can offer more amazing features in the future. What's great is that personalized content resonates well with people and influences purchase decisions."

Desai explains how AI could further personalize the shopping experience online:

• Product recommendations: A subset of AI, ML analyzes customer data based on patterns and trends. It can help recommend relevant goods or items for online shoppers.

• eCommerce customer service: AI can aid customer service representatives (CSRs) or act as an artificial CSR. Think of AI-integrated chatbots answering product inquiries and processing order requests.

• Personalized email offers: AI helps segment leads and customers. Then, it can automatically create and deliver customized messages to each segment.

• Exclusive deals: ML identifies loyal customers or prospects who deserve special offers. With AI, you can automatically send promotional messages to encourage customer purchases.

2. Streamline the customer journey on multichannel solutions

The long and winding customer journey happens on multiple channels today. Think of consumers browsing products on websites, asking questions via social media, replying to email promotions, and checking order status through live chat. The challenge is to provide them with a more seamless experience in the future.

Volodymyr Shchegel, VP of Engineering at Clario, suggests leveraging AI for a streamlined customer journey. “AI enables the integration of all channels in a unified platform for easy management. It also automates manual tasks and accelerates the entire e-commerce process. Ultimately, it provides customers with a more efficient and seamless experience.”

To create the best e-commerce customer experience, Shchegel recommends the following:

• Phone: Use computer telephony integration (CTI) with AI features like intelligent routing and automatic dialing. It’s ideal for cold calling and customer service!

• Email: Integrate email into your e-commerce platform and automate features like automatic replies and email sequences. It’s best for cold or warm email outreach! 

• Chat & SMS: Capitalize on chatbot or use AI to assist CSRs. It’s perfect for product inquiries, order processing, and status updates!

• Social media: Leverage social media channels with AI features for e-commerce. You can use Facebook for advertising, Instagram for product promotion, and LinkedIn for e-commerce B2B.

• Website: Incorporate as many AI features into your business site as possible. Doing so takes your e-commerce platform to the next level!

3. Improve customer service for excellent customer experience

Customer service plays a crucial role in providing an excellent customer experience. However, consumers have become more critical than ever before. Therefore, employ effective e-commerce strategies for customer retention and loyalty.

Jim Pendergast, Senior Vice President at altLINE Sobanco, underscores the AI value for e-commerce customer service. “This technology guarantees 24/7 customer support through AI-powered chatbots. It also empowers CSRs to assist customers, making them more efficient and productive. Lastly, it takes the customer experience to the next level, such as virtual reality (VR) and augmented reality (AR).”

However, AI will further evolve to establish an excellent customer experience. Below are some AI features now used for e-commerce customer service:

• AI-powered chatbots: Chatbots work through the natural language processing (NLP) model, allowing them to respond like humans. Leverage them to offer customer service round-the-clock.

• Self-service options: The Interactive voice response (IVR) is a perfect example of an AI technology used for customer service. It allows customers to transact with your e-commerce business via the system.

• AI-assisted CSR: CSRs can take advantage of AI tools when assisting customers. They help accelerate and improve services for efficiency, quality, and customer satisfaction (CSAT).

• Knowledge base: The knowledge base center is a repository of key information vital to your e-commerce business. You can use generative AI to create FAQs, product guides, and troubleshooting manuals.

5. Mitigate Risks through Fraud Detection and Prevention

E-commerce has boomed since the pandemic outbreak. Many entrepreneurs have taken the plunge into online business while consumers have relied heavily on eCommerce stores. But did you know that cybersecurity has become a growing concern as well?

According to Statista, there were about 1802 cases of compromised data in 2022, where over 422 million individuals were impacted. E-commerce platforms are particularly vulnerable to cyberattacks like password, phishing, and man-in-the-middle (MitM) attacks. That’s where AI technology can help.

Here’s how:

• Fraud detection: You can use AI tools or applications to identify security vulnerabilities and potential data breaches. As such, you can take immediate action to address these vulnerabilities and prevent breaches.

• Fraud prevention: AI technology is also capable of monitoring your eCommerce activities. ML-integrated software will notify and alarm you if it sees irregularities in the activities on your eCommerce platform. That way, you can immediately prevent others from committing fraudulent activities.

6. Accelerate targeting, monitoring, forecasting, and reporting

An e-commerce business doesn’t only involve selling goods or items online. You must study, understand, and connect with your target market to boost sales. You must also promote your Shopify store, measure your performance, predict your sales volume, and adjust your sales strategies when necessary.

Jerry Han, CMO at PrizeRebel, recommends harnessing the power of AI for various e-commerce functions. “This technology can simplify, speed up, and optimize your e-commerce processes. It allows you to target customers, monitor your performance, forecast your sales, and generate business reports.”

AI can do a lot more in the future. But for now, here’s how it can streamline and enhance your e-commerce functions:

• Lead and sales targeting: While ML lets you create your customer persona, data analytics allows you to collect leads. Then, AI helps you target prospects and reach out to them.

• Order tracking or product monitoring: AI tools are readily available, enabling you to track orders and monitor products. You can easily and quickly update your customers about the order status.

• Sales forecasting: Data analytics are best for predicting your e-commerce sales during off or peak seasons. They allow you to regulate your stock levels and adjust your sales strategies accordingly.

• Business reporting: AI technology aids in business reporting. You can use digital tools or software apps to record, monitor, and report your e-commerce sales for more informed decisions.

7. Optimize and Streamline Various eCommerce Processes

E-commerce is lucrative and profitable in today’s business landscape. However, the industry requires hard work, discipline, and foresight into the future. Accessing the latest technologies helps optimize e-commerce processes.

Shawn Plummer, CEO of The Annuity Expert, highlights the impact of AI on the future of e-commerce. “Today, AI technology has already become a game-changer in the industry. However, its potential is boundless as far as improving processes are concerned.”

Below are ways in which AI technology could further optimize e-commerce functions:

• Supply chain management involves managing the flow of e-commerce products from material procurement to product delivery. AI could assist in transacting with partner vendors and tracking goods or items. 

• Inventory management entails regulating the stock levels of your online business. AI could help with forecasting the volume of your products and sales.

• Order fulfillment is about processing order requests from customers. Do you allow them to place orders online, or are your CSRs efficient enough to process their requests? AI could offer self-service options or assist your customers in processing orders.

• E-commerce warehouse management involves stocking, sorting, picking, and packaging goods or items. AI tools could help with processing, tracking, and fulfilling customer orders.

• Product delivery requires trucking or shipping products to customers. As with other e-commerce functions, AI could aid product monitoring and customer updates. 

Potential Benefits and Inevitable Challenges of eCommerce AI

AI is transforming and shaping the future of the eCommerce industry. Gartner cites that 80% of business leaders capitalize on  AI technology for various business strategies and decisions.

Sure, this technology comes with several potential benefits for eCommerce businesses. However, it also has its fair share of inevitable drawbacks you should prepare for.

Advantages of eCommerce AI

Here’s how AI proves beneficial to your eCommerce business: 

• More personalized content: AI can automate several eCommerce tasks, such as email outreach, content creation, and social media engagement. That way, you can focus on customizing each and every content sent to your prospects and customers. 

• Increased service efficiency: AI can automate your eCommerce tasks, from data recording to order tracking to sales forecasting. It can get rid of manual steps and speed up processes, making your services more efficient.

• 24/7 customer support: AI-powered chatbots, AI-integrated IVR systems, and self-service portals can be a great addition to your customer service. They can support your eCommerce customers 24 hours a day, seven days a week.

• Optimized e-commerce functions: As explained above, AI can streamline various functions, such as supply chain, inventory management, order fulfillment, and product delivery. With this technology, you do not only improve your products but also your services.

• Data-driven decision-making: ML can offer valuable insights into your eCommerce activities and help you make informed decisions. Think of using ML to create your customer persona and forecast your sales.

• Enhanced customer experience: AI technologies can empower your employees to assist your customers better. They also offer self-service options, allowing customers to resolve their problems. Ultimately, they can help improve the customer experience and increase customer satisfaction.

• Improved business profitability: Investing in AI technology can be costly at the onset. However, it can pay off in the long run, especially when you see significant improvements in customer service. The outcome? A boost in your sales revenues or business profits!

Disadvantages of eCommerce AI

Be wary of the disadvantages of using AI for your eCommerce business: 

• High capital investments: You may need a lot of money to purchase and integrate AI tools and applications. But as mentioned, this technology is worth investing in, as it can help improve your services and increase your profits.  

• Low-quality customer service: You might invest in AI-powered chatbots, IVR systems, and self-service portals. However, they still have some limitations as evolving technologies. To ensure excellent customer service, create a robust team of CSRs while leveraging these tools.

• Data privacy issues: AI and ML heavily rely on datasets for various eCommerce functions. As such, you might compromise customer data and business information. Stay on top of your legal and regulatory compliance while using these tools and technologies.

eCommerce AI is Comming

The use of AI in eCommerce shows much potential now and in the future. As discussed above, the technology can:

• Personalize online shopping experience;
• Streamline the customer journey;
• Improve customer service;
• Boost marketing and advertising;
• Mitigate eCommerce risks;
• Enhance monitoring, forecasting, and reporting; and
• Optimize eCommerce processes;

AI has already improved several e-commerce functions and enhanced the customer experience. However, its constant evolution will offer something more and something new to the table. As an online seller, stay up-to-date with these upcoming trends for eCommerce growth and long-term success!