Blog | AI in eCommerce: What’s All The Hype About? | July 17th, 2024

AI in eCommerce: What’s All The Hype About?

AI in eCommerce

Artificial intelligence is called the 'new electricity' as it can analyze customer data and process them efficiently. Therefore, online retailers adopt artificial intelligence throughout the value chain. AI in eCommerce reduces the time involved and maximizes efficiency and revenue generation. AI significantly enhances inventory management, customer service, user engagement, and other operations. Realizing AI's unparalleled value, businesses are developing new use cases of AI in eCommerce. Wondering how to use AI to increase eCommerce sales? Quest Labs discusses eight ways AI influences e-commerce and how popular brands are making it big.

8 Ways AI Influences eCommerce

How to use AI to increase eCommerce sales? If that’s your concern, let’s explore 8 ways AI transforms eCommerce.

1. Maximize Customer Engagement

Generative AI is an impactful tool for improving customer engagement and customer satisfaction. It has helped marketers improve user engagement at product points where engagement is relatively low. Moreover, businesses have been integrating eCommerce AI to enhance user engagement in flash sales, free trials, and discount sales to drive more revenue.

Search functionality is essential in eCommerce websites, and AI ensures that it leaves a positive impression among customers. It analyzes customer queries in real-time and delivers the most relevant and accurate results, enhanced with personalization based on customer data.

M&M: Gamification in Product Customization

M&M uses gamification to maximize engagement by letting users design their candies and packaging. Customers choose the candies' colors and add customized text and images. Once they create the candies, they can select the type of packaging they want. This level of gamification attracts more customers, keeps them engaged, and drives more revenue.

M&M Gamification in eCommerce

2. Generative Personalization

Generative personalization is a marketing strategy that uses generative AI models to create personalized user experiences. Personalization in marketing is not new and has offered positive ROI for over 80 percent of marketers.

Gen AI further empowers personalized marketing, content recommendation, product design, and customer interactions. AI can analyze vast amounts of past user interactions and effortlessly offer content that aligns with user preferences.

Amazon: Personalized Product Recommendation

Amazon ensures that each customer's user experience is unique through generative personalization. Customers get a personalized experience based on their interests and previous purchasing history. Amazon also considers the purchase data of similar customers to make the shopping experience more relatable.

To make this possible, Amazon has to analyze a vast amount of customer data, which becomes effortless using AI. Unsurprisingly, 35% of Amazon purchases come from personalized recommendations.

3. Pricing Optimization

Dynamic pricing has existed for the last few decades. However, Generative AI is taking it to a new level. Online stores can now adjust prices for their products based on demand and seasonal fluctuations in real-time. Businesses that use AI but not in pricing generate 1.7 times less revenue than those implementing AI-powered dynamic pricing. Dynamic pricing strategy starts with AI-powered customer segmentation based on shared user characteristics and purchasing patterns. Machine learning algorithms make customer segmentation precise and consider up to 60 variables for comparison.

Impact of AI-powered dynamic pricing

Amazon: Dynamic Pricing

Amazon's dynamic pricing strategy helps them change prices 2.5 million times daily. At the same time, competitors like Walmart change their prices roughly 50,000 times daily. Dynamic pricing gives Amazon a competitive advantage as it can offer products at the best discounts to customers. Amazon offers most common products at low prices and uncommon products at higher prices. Customers who buy everyday products at low prices tend to believe that uncommon products are also sold at low prices. This approach increases Amazon's revenue as customers spend more money on uncommon products.

4. Improve Customer Service

Automating customer service improves efficiency and allows businesses to focus on high-value tasks. AI assistants for eCommerce collect user data from different channels and consolidate it for easy access and response. AI-powered user assistants can classify queries and direct them to the correct department. Conversational AI for eCommerce can even sense customers' emotions to determine the priority of issues and address them accordingly. AI eCommerce assistant also supports real-time agents in assisting customers and helping them out.

Valyant: Quick Service Restaurant

Valyant has developed a conversational AI dedicated to customer service in the fast food Industry. Their voice-based assistant supports telephone systems, mobile apps, and drive-throughs. It can handle up to 400 customer orders, encouraging businesses to serve customers faster.

5. Data-Driven Customer Segmentation

Traditionally, customer segmentation was highly focused on user demographics. AI customer segmentation further includes browsing history, social media sentiment analysis, and customers' purchasing behavior to make it impactful. It helps create detailed customer profiles and marketing strategies that align with their interests. Customer segmentation can significantly improve user engagement and customer loyalty. It is also the pillar to building impactful marketing campaigns and sales events.

Sephora: Customer Data For Segmentation

Sephora uses data from loyalty programs like Beauty Insider to segment its customers. Customer data has been beneficial for Sephora in finding strategies to target customers effectively.

6. Optimization of Offers And Rewards

Using artificial intelligence technologies to offer a personalized, rewarding experience makes it more effective. AI analyzes the behavior and preferences of individual users to personalize the rewards. Popular brands use eCommerce AI to reward customers during loyalty programs to improve engagement and customer loyalty. Here's what AI considers while personalizing offers for individual customers.

AI-Powered Rewards and Incentives

Starbucks: AI-Powered Personalized Rewards

Through AI integration in personalizing rewards, Starbucks encouraged occasional customers to participate in its loyalty program. Starbucks added 4 million new members to its existing customer base, and the program members also developed a long-term relationship with the brand over time.

Starbucks AI-Powered Rewards

7. Smart Logistics

AI improves customer experience by streamlining order processing, managing inventory, and managing the supply chain. Integrating AI reduces cost involvement and ensures better customer service. Customers can easily track the location of parcels in real-time, increasing transparency between businesses and customers. Seventy-four percent of logistics companies are actively using AI. Still, some avoid AI adoption because of a lack of resources and concerns about privacy and security.

FedEx and Maersk Are Using AI in Logistics

FedEx uses AI to help customers track their packages in real time and to optimize delivery routes. At the same time, Maersk uses AI to optimize its shipping network and improve customer satisfaction. They have developed TradeLens, a blockchain platform to track and manage goods shipping across supply chains.

8. Sales and Demand Forecasting

AI-powered demand forecasting is an advanced method that detects future patterns and trends from a vast data set. AI detects patterns in user data and processes them to predict future demand. This continuous learning process helps businesses understand and face market dynamics. AI can also determine the factors that might affect demand in the future to align offerings accordingly. Moreover, it offers regular real-time updates to meet demands efficiently.

Walmart: Predicts Holiday Season Demand

Walmart has been using AI in its systems since 2019 and has expanded its use of eCommerce AI to forecast holiday season user demands. Walmart uses sales data, weather reports, industry data, and other valuable metrics to predict and meet holiday season demand.

How To Integrate AI in eCommerce Like A Pro?

1. Determine What You Wish To Accomplish Through AI

Before integrating AI, eCommerce businesses must determine what they want to achieve through AI integration. Here are five AI objectives most companies have.

  • Enhanced Customer Experience
  • Personalized Marketing
  • Efficient Inventory Management
  • Advanced-Data Analytics
  • Improved User Engagement

2. Find The Perfect AI Use Cases In eCommerce

After determining the objectives, a business can identify the perfect AI use cases in eCommerce. Here's how AI helps business achieve their goals.

AI use cases in eCommerce

3. Team Up With Quest Labs

After identifying AI use cases, eCommerce businesses should focus on making them go live. Here's how Quest Labs gives you the perfect AI solutions.

  • AI-Powered User Assistance:

    Quest Labs' chatbots efficiently improve customer experience and simplify shopping.

  • Generative Personalization:

    Quest Labs offers personalized recommendations, content, and offers for each user to build a unique shopping experience.

  • AI-Powered User Segmentation:

    Quest Labs segments users beyond traditional data to direct them to the right features.

  • Feedback and Surveys:

    Quest Labs helps you collect user feedback at the right instances to optimize strategies and make users feel valued.

  • Gamified Engagement:

    Quest Labs introduces challenges, streaks, leaderboards, and more engaging elements to make the shopping experience enjoyable.

Transform eCommerce Experiences With Quest Labs, Exceeding User Expectations

Takeaway

Artificial intelligence improves the operation of eCommerce businesses at every step. It helps them understand individual users' preferences and meet their requirements efficiently. We have discussed how leading brands integrate AI to maximize revenue through personalization and simplify routine tasks. Businesses that adopt AI in eCommerce are miles ahead of others that don't. AI adoption improves not only the speed of operations but also operational efficiency. AI can simplify everything, from user onboarding to conducting user exit surveys and optimizing products. Quest Labs understands that different eCommerce businesses have unique requirements. Therefore, we don't adopt a one-size-fits-all solution. That is why you need to talk to us to determine how we can help you improve your services. So book a free demo.

Ignite eCommerce Growth Through Enhanced Customer Engagement

Frequently Asked Questions

  • How can AI be used in shopping?:

    AI makes the shopping experience better through personalized recommendations, real-time assistance, and dynamic pricing.

  • What is the current situation of AI in eCommerce?:

    84 percent of eCommerce businesses are actively using AI or at least plan to incorporate it into their operations.

  • What is the role of AI in shaping consumer demand in e-commerce?:

    AI can predict consumers' demands, help businesses prepare for their needs, and prevent overstocking.

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