As the demand for personalized content reaches an all-time high, ecommerce becomes closely linked to the development of artificial intelligence.
Brands are increasingly adopting AI-powered tools as the technology helps online retailers to understand customer needs much more precisely, form the most satisfying offers, and deliver optimal solutions.
At the core of a successful retail strategy lies a positive customer experience. It is in the digital space of online retail that the latest technologies come into use most rapidly. Managing customer expectations and their interaction with the brand with the help of artificial intelligence is the most prominent case that works.
AI is set to go into drive in the next couple of years with major tech firms such as Google, Microsoft, Facebook, and IBM already investing heavily in the new AI initiatives.
For businesses, there’s more focus than ever on going beyond the expected product or service to deliver a customer experience that truly differentiates.
Use Artificial Intelligence. Get Real Sales
“State of the Connected Customer” report published by Salesforce Research says that 76% of consumers out of over 6,700 surveyed expect companies to understand their needs and expectations.
Online shop customers demand convenience and personalization. The latest advancements in the development of artificial intelligence enable shopping experience customization. That is the reason why ecommerce businesses are actively including AI in their arsenal as a means of attracting and retaining customers.
Any effective AI-based marketing strategy is about timely offering the customer what they most probably dream of and need. In other words, AI-based tools do not merely help to know customers’ wants but help to anticipate their desires.
The ultimate advantage of AI for online retailers is to help develop and maintain long-lasting relationships with customers.
Make “Lucky Guess” Through Machine Learning
Online retail is the niche where the potential of machine learning is most evident. By using recurring patterns of customer behavior, the technology enables ecommerce businesses to accurately define what their target audience is interested in now and in the future.
Here’s how machine learning works, in a nutshell:
- Step 1. Collecting various scenarios of customer behavior;
- Step 2. Processing the information and identifying patterns;
- Step 3. Improving analysis algorithms and predictability features.
By collecting and processing data about customer experience, the machine learning capabilities of AI make it possible to form individual recommendations and special offers in real-time. As a result, the offers that are of particular interest to your customers come by exactly when they are interested in the purchase the most.
On the one hand, AI allows you to facilitate personalization and flexibility of shopping to your customers, while on the other hand, to make shopping experience predictable for you and your business.
Artificial Intelligence and The Diderot Effect
The Diderot effect helps explain a spiral of consumption which leads buyers to acquire more new things and creates the spontaneous desire to purchase something in addition to the original item. According to customer experience research studies, the Diderot effect is motivated by the “I deserve it” and “I can afford it” triggers of consumers.
Here’s an example for you to get the idea. When shopping for a new suit or dress, a customer may question if shoes or accessories that they already own match the new purchase. Despite the fact that they only needed one specific item, the customer decides on additional purchases and acquires more stuff.
In online retail, the Diderot effect can be multiplied significantly by the use of artificial intelligence, as AI-powered tools are able to recognize and analyze customer behavior patterns on your website.
Some of the most common patterns that AI can “catch” and process include:
- Which items the user clicks on;
- Which items the user stars or adds to cart;
- Amount of time the user spent studying a product;
- Which products the user has skipped;
- Which products are stored in the user’s order history.
Through the analysis of this information, AI helps ecommerce merchants to pretty accurately guess what could interest buyers most likely and leads them to make some extra purchases. Consumers are excited about pleasant coincidences.
In addition, by getting valuable tips from a dedicated AI system, retailers are able to timely adjust their business and communication strategy to all the latest changes on the market and the recent developments made in their respective niches.
Customize Offers. Personalize Experience
By leveraging the AI technology, online retailers increase the diversity of offerings for clients. The Deloitte Consumer Review shows one out of every three consumers says that they want customization and the ability to personalize a product. Moreover, people are willing to pay 20% more for a personalized product or offer.
From the structure and content of a website’s product catalog to custom email newsletters, the possibilities for AI-powered personalization are virtually endless.
Artificial intelligence and machine learning-driven systems today can help you to:
- Personalize descriptions: Personalize product description texts and adapt them to the needs of a potential buyer;
- Personalize email newsletter: Personalize your email newsletter depending on the expectations of your customers and the history of interaction with them;
- Adjust navigation: Adjust the website’s navigation structure according to the visitor’s purchase history and their individual socio-demographic factors;
- Adjust product catalog: Adjust the structure of the product and service catalogs;
- Configure geo-location: Configure proper geographical location and redirect your customers to the specifically designed pages, based on where the customers are currently based in;
- Process customer reviews: Scan and analyze customer reviews to identify the most popular products;
- Generate tailored offers: Generate custom and individualized offers for different groups of target audience;
- Provide consultations and onboarding: Provide consultations and timely solve customers’ problems, talking in an online environment right on your website through chatbots or voice assistants.
Major AI Applications in eCommerce
Giants of online retail such as Amazon, Alibaba, and Flipcart are actively using the benefits of AI to engage customers and build long-term loyalty.
Among the popular AI applications dominating in eCommerce today, we have selected our top 3 ways that AI can help your online retail business thrive.
1. AI for Image Search
With the recent advancements in AI development and image recognition, we are starting to see the adoption of image search. Questions like “what is this?” or “what goes with this?” are hard for Google to answer. This is exactly where AI-based image search works best, answering questions that are hard to put into words, complex to describe, or specific enough to return consistent search results.
The growing popularity of search by image has already been successfully used by popular brands like Zalando, Otto, and ASOS. We consider the image search to be an AI use case that is definitely worth taking note of.
2. AI for Communicating With Your Business
Ecommerce retailers are using chatbots and virtual assistants to provide 24/7 support and immediate answers to customer queries. As chatbots are built using AI tech, they are increasingly getting more intuitive in interactions. Chatbots with machine learning capabilities are able to continuously learn from customer queries and become more and more accurate when responding to customer questions.
Apart from delivering customer support, chatbots help:
- Interpret voice messages through natural language processing;
- Address consumer needs through deeper insights.
3. AI for Trend Forecasting and Price Monitoring
Get ready for AI-based fashion as it’s used today to predict fashion trends through monitoring social media and digital press. The algorithms of such an AI tool are trained through existing data on consumer behavior. Merchants that use AI for trend and demand forecasting get an opportunity to determine the categories of goods in demand and shape efficient marketing strategies.
By using open-source data, AI algorithms help analyze prices set by your competitors and predict price dynamics. Based on the results, AI recommends the ideal price for you to maximize your profits.
Consumers don’t want brands to define their journey. Instead, consumers want brands to design experiences that help them create their own unique and exciting journeys. AI-fueled platforms and tools can offer that.
Artificial intelligence has already become an integral part of businesses in the ecommerce sector, analyzed millions of interactions, and created a new level of personalization.
Today, AI in customer experience is not about if and when, but how to use it.