Artificial Intelligence, which in part is the emphasis on creating advanced algorithms to handle complex data, is evolving and improving by leaps and bounds in the modern era. Its impact on different areas, from research to our daily life, can be seen even on the products we commonly use.
A report by Forrester Research predicts that AI-related investments will grow by about 300 percent in 2018, with businesses (using big AI?) becoming more competitive by 2020 and gaining $1.2 trillion per year.
When it comes to e-commerce, AI is allowing companies to better understand data and behaviors of their customers. This allows them to save money on research and increase their bottom line. Below we will point out 5 different ways in which AI is currently affecting e-commerce businesses.
Understanding your customer – predictive analysis
As an e-commerce company continues to grow and expand, the needs for automated systems and machine learning solutions that assists them to streamline their operations becomes a top priority.
A few of the most revolutionary changes to e-commerce will be in how online retailers and B2B companies analyze customer journeys and based on that, make marketing and merchandising decisions. Predictive analytics allows AI to take over recognition and prediction of future behavior work that was previously assigned to an employee.
Predictive analytics use pattern recognition technology to process and detect patterns in large amounts of data. They are often so large and diverse that many marketers and merchandisers would overlook them. Once AI can detect these patterns, programs can be taught to display these findings to merchandisers to act upon.
Three big areas are affected in predictive analysis.
- The propensity to purchase. One example would be that this analysis allows a marketer to see how many digital interactions such as page views or emails sent before a stagnant customer will reactivate and make a purchase. Another action can be to recognize customers who were close to purchase but did not, and therefore offering discounts to motivate them.
- Product sales analysis: Predictive analytics can analyze previous sales data to allow a merchandiser to see what products are likely to sell next month if they are put on sale.
- Integrated digital marketing analysis: Predictive analytics will allow marketers to see what customer journeys are leading to conversions and which ones do not, helping save on costly advertisements.
AI Driven insights from Big Data
For a company It’s all about actionable insights. AI will drive faster business decisions in marketing, e-commerce, product management, and other areas of business by closing the gap of insights to action.
One of the biggest advantages is the ability to tidy up and consolidate data. This cleanup process can be quite expensive and time consuming to perform without AI and in some instances not even possible to perform, for example when you want to measure a customer’s engagement based off variables like email campaigns combined with special holidays which resulted in sales. Combining data from multiple sources to get an understanding of customer behavior is one of the benefits from consolidating Big Data.
Insights from Big Data are driven by the desire of businesses to have more relevant information for decision-making in order to provide more effective actions.
A great benefit of using Big Data with AI is real-time targeting which has the potential to generate an increase in sales opportunities. Companies have instant access to data at the moment it was created, while simultaneously leveraging machine learning functionality to plan for the future.
Artificial Intelligence provides a much better customer experience by improving on product recommendations. It helps to drive sales by providing customers with products that they desire and are more likely willing to buy.
AI helps improve e-commerce core operations to increase conversion rates with algorithms for demand forecasting, product search ranking, recommendations, merchandising placements, A/B ads testings and much more.
Machine learning algorithms can alter the recommendations based on the stage or channel a customer is shopping in. For example, prioritizing similar products may be used on a product details page, while prioritizing other complimentary products may be used on the cart and checkout pages.
Chatbots to improve customer service
Chatbots, such as those found on social media messenger applications, give shops the ability to offer 24/7 customer support to visitors, while collecting data such as tracking behavior and immediately providing customized recommendations of products. By having an effective automated chatbot, businesses can further increase conversion rates by tailoring the online experience with minimal effort.
Chatbots can be used through major messaging applications to act as customer service agents without needing a human. Making it easy and fast for customers to reach retail businesses.
AI technology gives owners crucial information about factors that drive demand. It provides predictive analysis for what future demands are likely to come into the market. The longer a company uses AI, the more it learns about the customers, visitors and their behaviors.
Shop owners are then able to more accurately predict real-time and future inventory needs for their business.
AI algorithms thus help with reducing stock depletions and maximizing stock levels based on multiple factors such as special dates or events.
So what does this all mean?
Finally, all of this means that Artificial Intelligence helps grow and improve e-commerce businesses to satisfy the needs and interests of their visitors and end customers. Businesses are now able to recommend products or services in an effective manner that is relevant to consumers as well as improve the customer service experience.
According to a report by the Boston Consulting Group, businesses that include personalization strategies have seen sales gains of 6 to 10% at a rate faster than other retailers.
Artificial Intelligence is changing e-commerce on all fronts for both the customer and the business. It is adding value to the marketplace where retailers not only advance their business practices but also free up their time to be able to focus on other important tasks.
At Exponea, we implement Artificial Intelligence in our set of tools that help you to measure the impact of your business design decisions and to find opportunities for improvement of acquisition, engagement, retention and monetization of your customers.