How and Why Artificial Intelligence is the Next Breakthrough in E-commerce

By Mariya John on June 29, 2017

E-commerce or cyberspace retail is one of the fastest growing industries, with a multi-trillion dollar worth. Hence, it is also one of the most competitive of sectors. In this age of Instagram and Snapchat, where the consumer’s attention span is getting shorter by the minute, e-commerce businesses are in a neck-to-neck competition with each other, vying for these customers who are themselves caught in the vast noise that is the cyber world. An average shopping cart is abandoned 68% of the time, and this is where artificial intelligence or AI comes in handy for the e-commerce businesses.
AI has changed and will keep changing the face of e-commerce in varied ways, a few of which will be discussed in this blog. According to the Business Insider, 85% of customer interactions will be handled without a human involved, by the year 2020. This suggests the huge increase in AI driven solutions that can be expected in the next couple of years.
The most distinctive and major role that AI plays is in analyzing vast data that has been collected over time and from different platforms. This ‘big data’ is then effectively used by AI tools to identify patterns regarding the customers’ buying preferences which are then put to use in myriad ways.


AI targets information at customers who are in need of that specific information, in the form of personalized product recommendations. AI tools analyze customer behavior- what they have bought earlier, what they have in their wish lists, etc, in order to predict what they will want in the future, and thus suggest those items in advance – a mind reading of sorts. Even region or category wise predictions can be done, taking into account colors and materials preferred in a region or category, and recommending them to consumers, even before they know they need these exact products. Online media and video streaming giant, Netflix, provides such personal recommendations based on previous streaming habits of the users. A user who has been watching horror movies will get suggestions of more of the same, although they also take care to drop in a few from other genres, to prevent any monotony, leaving options open.
This is taken a step further by AI tools that can even record “dwell time”- the time that a customer lingers by a product, which suggests interest in the product. Such customer behaviors are also analyzed and utilized and a remarketing of these products are done to the same customers, which can serve to be the final push that convinces them into clicking that Buy Now button.


Proactive virtual assistants that manage your shopping for you are the indisputable future of e-commerce. In lieu of the notifications that pop up on the customer’s smart phone when there is an airfare drop, a virtual buying assistant would keep an eye out for these drops, compare them with the customer’s schedule and book the tickets. Instead of a mere notification about the fare drop, in the future, these assistants would take over the process of shopping, at the end of which, a ticket will be sent to the happy customer. Imagine the possibilities if this were to be applied on e-commerces like Amazon which routinely change their prices. Voice powered, these virtual buying assistants will provide an entertaining and engaging experience for the users.


AI also helps businesses save precious time and money by replacing human customer services with interactive and highly intelligent chat bots. Michele Lindstrom, Director of Digital Marketing at Whole Foods says, “Chat bots will be valuable when they can operate autonomously on a variety of contexts”. These chat bots, with NLP (Natural Language Processing) integrated in them, will improve the customer experience dramatically, taking the ‘business’ concept out of the interaction, thereby making it more satisfactory- like asking a friend for her suggestion regarding the item you are about to purchase. Data from previous searches, purchases and other history will provide information that can be used by these bots in order to create richer conversations which are not ‘artificial’ or formulaic. If not completely avoid human interaction, these chat bots can definitely minimize them to a great extent.


The most common interaction between a client and the retailer is that facilitated by the search button- the binary of the query and the search results. It is in fact the essence of every online retail experience. And AI is geared to improve this process by using visual searches, where a customer only needs to upload a photo of what they want to buy, and the engine would zero in on the product, by taking into account the color, shape, size, fabric, text written on the product, etc. This process is much more seamless than the usual keyword search where unless the keyword in the query matches the keyword in the item description, it is a long hassle, which includes multiple rephrasing of the query for the customer to pinpoint their product- something that visual search rewrites. With visual search, convenience and accuracy take center stage, leading to a hassle free shopping experience.
The future of search engines also invloves integration of NLP or natural language processing into the run-of-the-mill searches of today, whereby the engine is able to derive contextual meaning from the search words provided. This human element added to the search engine brings about an understanding of what the customer is really after, as opposed to the mere computing of words in a vacuum that happens with an ordinary search engine.
Purely from a retailer, behind-the-scenes standpoint, AI enables other features such as autonomous replenishing systems, which will take care of the logistics part of the business as well. IBM’s supercomputer Watson, which makes use of NLP, indicates the products that need to be ordered and replenished.
Minor disadvantages that are attributed to an overemphasis on AI in the e-commerce business, such as personalized recommendations doing more bad than good by inadvertently removing too many items from the customer’s lists, and the more philosophical criticism that AI, or machines that can think will one day get more powerful than its creators, fade to insignificance in light of the tremendous advantages that AI has to offer.
Snapdeal, Flipkart and Amazon have all invested in AI development. Image recognition and chat facilities are on the cusp of becoming a common reality. Flipkart’s messaging service, Ping which will serve as a shopping assistant, and an automatic supply chain which will considerably reduce shipment time are next in line. Myntra, owned by Flipkart, is building a chat bot that can accumulate fashion related information from across channels and integrate it into the customer experience. Snapdeals’ $100 million investment in their multimedia research lab in Bangalore is testimony in itself to AI’s significance in the future of the e-commerce business.


AI will be instrumental in changing both the customer experience as well as the retailer’s. Sales charts will bear witness to the magic that AI can bring about to these businesses soon enough. Customer satisfaction and efficiency are what AI promises and there is no doubt that they will be delivered. The integration of AI into e-commerce is sure to culminate in the greatest transformation yet, forever changing the way we view cyber retail.

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