Ecommerce and AI: The Leaders to watch in this space

Artificial intelligence Sep 08, 2020

It is no secret that ecommerce has experienced exponential growth since its boom in the 90’s with the rise of ecommerce giants like Amazon, Alibaba and Ebay. This industry is showing no signs of slowing down with the global retail market expected to reach almost $30 Trillion USD by 2023. Having said that, ecommerce retailers can’t become complacent; they must continually push the boundaries to grow, stay innovative and remain focused on finding new ways to address consumer needs.

Many e-com giants have successfully leveraged the power of Artificial Intelligence (AI) for decades and are using it to differentiate themselves by offering a better customer experience and through deploying applications that enable manual tasks to be automated and personalised at scale. AI has become a driving factor for success for these companies. We’ll be taking a closer look at some ecommerce retailers that are utilising Artificial Intelligence to their advantage and how they are overcoming some of the age old challenges in the retail industry.

It is impossible to overlook Amazon when considering e-commerce and AI. Amazon leverages AI across virtually every step of their ecommerce operations to achieve superior efficiency, provide a better service and gain an advantage against their competition. Amazon wrote the playbook on how to use data to create the ultimate online marketplace; presenting an irresistible offering to hundreds of millions of people around the world and reinventing the traditional multi-billion dollar brick-and-mortar industry that was retail - and they aren’t done yet. Amazon is one of the biggest players to watch not only in retail and e-commerce but as pioneers in AI and business strategy; Amazons’ path of disruption will not start or finish with the retail sector.

But what did Amazon do so different to everyone before them? In a nutshell, they effectively leveraged data to create insights that enabled them to better market and sell to customers. Amazon placed the customer at the centre of their business model and made the commitment that every action should maximise customer value. Recommendation engines have a massive impact on Amazon’s overall revenues with 35% accredited to cross selling and up selling. Their first recommendation engine was born out of their desire to create a product discovery section on their website that was unbiased and focused on the customer experience. They use Collaborative Filtering and Next-In-Sequence models to make predictions and recommendations as to what their customers may be interested in purchasing next based on their buying and search history. All of this is of course is made possible by their huge database of consumer search and purchase behaviour. This focus on the consumer has driven the rise of Amazon and even see them surpass Google as the preeminent search engine for products back in 2015.  

Don’t let Amazon’s success fool you into thinking you need to be an ecommerce giant run by the worlds richest man to take advantage of AI. Smaller ecommerce retailers are also leveraging the benefits of AI to stay ahead of the competition by introducing AI across different business operations, from personalising their communications, customer service and offers to consumers to automating tasks that are capable of being performed by a machine.

Take The North Face, who uses AI to personalise the online shopping experience for their customers in the pursuit of offering the same level of customer service online as instore. By combining Big Data and AI, the North Face have made online shopping more streamline and tailored to customer needs despite the lack of face-to-face interaction, improving engagement and increasing the likelihood the customer will complete the checkout process. This has been achieved by using a dialogue-based recommendation engine that makes product suggestions to customers based on their needs and intent. For example, if a customer is browsing for a jacket, the AI tool might ask a customer questions such as where and when they plan to wear a jacket and automatically filter options based on the customers response, taking into account the weather forecast, product specifications and the intended purpose behind the purchase. This level of personalisation saves the customers from scrolling through hundreds of options and ensures the recommendations are fit for purpose; improving the online shopping experience, increasing the likelihood of a sale, reducing the chance of a product return and improving customer satisfaction. All online.

A common problem for ecommerce brands in nearly any product category is the high volume of customer returns. Buying online does not quite inform consumer expectations in the same way as physically being in the store and interacting with the product. High street brand Zara have deployed Artificial intelligence to help solve this issue. Zara uses AI to make better product recommendations based on customers clothing size and preferences which in turn leads to less product returns, an increase in repeat purchases and greater customer satisfaction every time. This level of personalisation is all made possible by AI.  

So far, we have seen that AI has helped the ecommerce industry by using patterns of AI known as predictive analytics, automation and personalisation. However, these have only just scratched the surface of what AI can achieve. The limitations of AI begin where human creativity and ingenuity ends. If you see the opportunity to innovate and disrupt your industry, take it before the chance is taken for you. AI can help address a multitude of different challenges in the e-commerce industry, but the initiative to take actions begin with you. Business leaders from all sectors need to recognise the importance of this ever-growing phenomena in order to stay relevant to customers and not be squeezed out by innovative new competitors.

Written by Alana Finnerty

Brainpool AI

Brainpool is an artificial intelligence consultancy specialising in developing bespoke AI solutions for business.