How Is AI Transforming E-Commerce? Top 6 Use Cases of AI Technology

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Coming up with intelligent automation, artificial intelligence is quickly transforming the e-commerce industry. Voice assistants, AI-based chatbots, cybersecurity software, AI-enabled robots are examples of AI software solutions that are being widely adopted globally.

There are many advantages of AI technology for e-commerce. With AI software systems, it is possible to address various challenges, for instance, relieve employees from performing manual and routine tasks, ensure efficient inventory management and warehousing, as well as safeguard sensitive data. IBM reports that retail and consumer products companies expect that intelligent automation could contribute to annual revenue growth by up to 10%.

In this article, we will consider the main AI use cases in e-commerce to demonstrate how you can benefit from using this kind of software.

Top 6 AI Uses Cases in E-Commerce

1. Personalization

Personalization is among the most popular AI applications in e-commerce. By providing personalized services, it is possible to boost user engagement and increase the conversation rate. Instead of messages designed for public consumption, an organization delivers recommendations tailored to the needs and preferences of each customer.

For this purpose, a company can build machine learning algorithms analyzing user behavior, including search, watch, and purchasing histories. Based on this research, an AI-based solution can automatically make product and content suggestions.

How Personalization Helps Market Players Generate Revenues:

• Analysts at Epsilon surveyed 1,000 shoppers and found that 80% of participants are more likely to interact with a brand if it provides a personalized experience while 90% say that personalization is great.
• According to Segment, 49% of consumers have made a purchase that they didn’t intend after receiving personalized advice from an organization.
• Forrester revealed that 77% of respondents chose, recommended, or spent more for a company that delivers personalized services.

Since personalized experience adds value to customers, their level of satisfaction increases. As a result, they buy from your online store more often.

2. Customer Service

AI-enabled chatbots are one of the most popular AI software solutions for the e-commerce industry. They can assist consumers in various tasks, from data and product search to answering frequently asked questions. According to IBM, chatbots can answer 80% of routine questions.

Since AI bots are programmed to perform certain scenarios, they can replace employees in a range of manual operations allowing them to devote time for more creative activities.

Unlike people, AI technology can simultaneously process numerous requests, reducing response waiting time and delivering client support 24/7. Analysts at IBM found that the use of bots can improve response time by 99%. Therefore, by creating an AI-based chatbot, businesses can enhance customer service, boost productivity, and reduce costs.

3. Voice Assistance

Artificial intelligence is rapidly evolving, producing new use cases for the e-commerce sector. Smart speakers such as Siri and Amazon Alexa are AI software solutions that are being widely introduced worldwide. Nearly 28% of US households had at least one voice assistant in 2018. Statista predicts that this share will reach about 75% by 2025.

As more homes and offices adopt such assistants, more customers start actively using voice search for online shopping and food ordering. Experts at OC&C Strategy Consultants forecast that 55% of US consumers will make purchases using their voices in 2022. The voice shopping market is anticipated to grow to $40 billion in the USA by 2022.

4. Inventory Management

By establishing efficient inventory management, e-commerce businesses maintain the level of inventory required to satisfy market demand preventing idle stock and product shortage.

However, it may be challenging to control inventory, especially for large companies that aim to supply commodities to different cities or countries. With the view of fulfilling consumer needs and generating profit, organizations have to plan procurement and delivery of goods.

E-Commerce Businesses Can Employ AI-Enabled Software To:

• analyze market trends for different periods
• make projections regarding changes in product demand and sales volume
• identify and assess potential issues that may negatively affect the level of stock

With valuable market insights and forecasts, AI technology can allow you to efficiently manage inventory within an organization. By integrating AI software, it is possible to increase efficiency, minimize risks, and reduce costs.

IBM predicts that 85% of retail and 79% of consumer products companies planned to integrate intelligent automation software for supply chain planning through 2021.

5. Warehouse Automation

In today’s competitive business environment, companies have to provide same-day or next-day delivery to meet consumer expectations, increase customer loyalty, and earn a profit. In these circumstances, warehouse automation is crucial. To satisfy market demand, organizations should migrate away from traditional warehousing practices of utilizing forklifts, clipboard-bearing, as well as stock management.

By integrating AI-powered robots, it is possible to accelerate operations while preventing inventory losses. When a user makes an order, the data is sent to the necessary warehouse software system that communicates with robots. Robots, in their turn, quickly find the required goods, pack and prepare them for shipping. The main advantage of AI technology is that it isn’t tired and doesn’t need lunch hours.

Through Warehouse Automation, E-Commerce Businesses Can:

• optimize labor costs
• provide faster shipment of goods
• prevent loss of goods, inventory, etc.
• minimize risks of human injuries and stock damage
• increase employee productivity and boost the overall efficiency

Unlike human employees, AI-enabled robots can pack and retrieve stocks and commodities around the clock. Employing AI software solutions, you can provide services such as same-day or next-day delivery much easier.

6. Cybersecurity

Cybersecurity is one of the most essential AI use cases in e-commerce. Operating with sensitive customer, payment, and enterprise data, businesses need to safeguard information and protect against hacker attacks, malware, viruses, and other threats. AI can perfectly serve these purposes.

Companies employ machine learning solutions to monitor IT infrastructure to automatically identify, assess, and prioritize risks. By analyzing app and user behavior, it is possible to instantly detect anomalies such as suspicious activities, and notify users. With AI-based software, an organization can prevent data breaches and enable enterprise-grade security.

The State of E-Commerce. What’s Next?

Driven by digital transformation, the e-commerce industry is rapidly growing. Grand View Research projects that the worldwide e-commerce market size will reach $27.15 trillion by 2027, rising from 10.36 trillion in 2020.

At the moment, we are witnessing an unprecedented increase in AI software solutions, mobile shopping applications, and augmented reality software. Personalized recommendations, voice assistants, and chatbots have already become a new normal.

Datareportal informs that 51% of customers used smartphones to purchase products online in 2020. In 2021, mobile commerce is anticipated to value at $3.5 trillion, making up nearly 73% of internet shopping.

Read our article to explore the key e-commerce trends for 2021. Also, find out how our e-commerce software development company created a mobile app for food pre-ordering and an online marketplace that was included in the list of “TOP 5 startups in Russia”.

Final Words

AI software solutions can address various challenges of e-commerce businesses. By investing in AI software development, organizations can deliver personalized services, automate mundane tasks, make sales projections, ensure data security, optimize inventory and warehouse management.

As a result, it is possible to improve customer engagement, increase sales, boost employee productivity, and cut down expenses. Providing market players with so many opportunities, artificial intelligence is rapidly transforming the e-commerce sector. To fight off competition and become a market leader, companies need to adopt cutting-edge technologies such as AI.

If you have an AI product idea or want to find the best way to resolve industry-specific issues, drop us a message. Our AI experts will contact you within 24 hours and help you accomplish business objectives using innovative software. Project consultation is for free.

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