AI in the Age of E-commerce


Once relegated to the world of science fiction, artificial intelligence (AI) has crossed the threshold into science fact, playing an ever-increasing role in today’s fastest-growing and most innovative companies.


With AI, marketers have an opportunity to understand their customers better. It also allows companies to leverage predictive modeling to determine or forecast how the results of a particular campaign or test will go, via the data they’ve collected.


But it’s one thing to talk about the advances in AI, and another thing entirely to understand the real-world applications of this far-reaching technology.


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Big Box AI

The most well-known brand using AI in e-commerce is Amazon. From its first steps into the world of AI to create personalized recommendations, Amazon has refined its shopping and buyer behavior-targeting algorithms to a highly sophisticated level.


Amazon uses AI to handle its dynamic pricing model, lowering prices when inventory is high and demand is low, and then increasing prices when supply is lower. But Amazon’s use of AI doesn’t just stop at their website. It also uses AI on its Echo Look home device to suggest outfit recommendations to users, turning the Echo into both a personal shopper and stylist.


Only time will tell what’s next for the e-commerce behemoth, but you can bet that whatever it is, it will shake the foundations of e-commerce to their core.


Amazon isn’t the only retailer to take advantage of AI. Starbucks, which has long been known for its personalization of coffee to suit individual tests, has taken what they’re famous for to an entirely new level, using data from readily available sources such as their mobile app and loyalty card to determine what and when customers are purchasing, so that the company can analyze that data to predict ways to increase a customer’s average per-order volume.


Can Smaller Companies Benefit from AI Technology?

Of course, it’s one thing to put the spotlight on the Amazons and Starbucks of the web -- they have nearly limitless budgets and the staff and expertise to scale their operations on levels that are simply unprecedented for small businesses.


Does that mean that small businesses and startups are simply out of luck when it comes to leveraging AI for their own customer retention efforts?


Not at all. In fact, many small businesses can take advantage of AI-powered systems by integrating them into their operations to collect valuable information that allows them to make confident decisions about their target audience and formulate strategies rooted in behavior, not guesses.


"It’s one thing to talk about the advances in AI, and another thing entirely to  understand the real-world applications of this far-reaching technology."  -Click to Tweet-


How Small Businesses Can Glean the Benefits of AI

AI-Powered Search

For businesses of all sizes, one of the most noticeable strategies that allow them to put AI to use is through search. AI-backed search allows online retailers to tap into on-site customer behaviors in order to determine what’s being searched for, when, how often, and many other factors. But even if a customer doesn’t know precisely what they’re looking for, AI can step in to help guide them.


For example, even if a user doesn’t know the name of a particular brand, AI-powered search is intelligent enough to be able to determine what the item is, even if the name is misspelled. Features like autocomplete and autocorrect allow online merchants to reap increased sales and profits from searches that might have otherwise provided no relevant results and caused customers to believe that the item was out of stock or otherwise unavailable.


Automated Ad Purchasing

Beyond small business websites, AI has also transformed how businesses market themselves online. Automated systems powered by artificial intelligence handle the buying and selling of advertisements and enhanced algorithms and data collection monitor customer interactions with these ads to provide real-time optimization of campaigns. The end result is advertising that is better attuned to customer preferences and better aligned to the user’s journey.


possibilities of amazon

Amazon is at the forefront of AI in e-commerce. 

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Sales Forecasting and Predictions

Another area where small businesses can enjoy the many benefits of AI is through the use of sales forecasting. It used to be that buying products or trying out new services required a considerable amount of money to test and guess at what the response would be. These days, undertaking such a plan would be seen as both costly and risky.


Fortunately, with AI predictive modeling, plans and strategies can implement large-scale sales forecasting to determine if a launch will be profitable based on things like historic trends and consumer behavior in order to determine, with greater accuracy, what can happen under various situations -- and without spending the money and effort up-front to make it happen.


The Bottom Line on AI in E-Commerce

As you can see, AI in e-commerce has taken huge strides in the last few years. As innovators like Amazon and other companies forget ahead, smaller businesses can follow in their wake, letting them ride the waves of uncertainty and experimentation, while the benefits ripple out to businesses that are prepared and poised to take advantage of them.

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