2020 was quite a year for the eCommerce sector. Retail eCommerce sales grew by 27.6% touching a solid $4.280 trillion in revenue. While the retail sales figures globally suffered a setback, eCommerce had made its point loud and clear. It was not only here to stay, but was all poised for unprecedented growth. All major markets saw abnormal standout growth as Artificial Intelligence (AI) and eCommerce converged to keep pace with the one thing that matters the most - the forever-changing consumer behavior.
Considering that Gartner had already predicted that at least 60% of organizations will adopt artificial intelligence for digital commerce by 2020, the disruption that AI is causing comes as no surprise at all. AI has ushered in a wave of innovation in both the B2B and B2C sector, taking the eCommerce world by storm.
So after covering the dynamics of the fashion and apparel eCommerce industry in our previous blog series, we come with yet another exciting series that goes deeper to examine the role and impact of AI in eCommerce. It will look into the many nuances of AI and how it is the gateway to success for your online business.
AI-powered eCommerce is using AI technology to analyze different sources of business and customer data to come up with insights to make strategic decisions.
These decisions help you and your eCommerce platform in creating personalized and relevant customer experiences. When used properly, these insights also help you speed up your routine tasks by either automating them or eliminating unwanted steps.
Traditional eCommerce involves doing most of the operations manually or using some basic level of automation. It isn't personalized or doesn't optimize unless you do. You can't use the power of data to derive insights or optimize efficiency.
One of the most important factors that set AI-powered businesses apart from traditional ones is their ability to fully track the business. AI-powered business models are a fresh departure from traditional models. The business owners know exactly what their customers want, where they come from, what age group they belong to, things they recently purchased, and what's currently on their minds.
Data mining and harvesting were unknown territories to the traditional world, and analysis was rather crude. Then came AI and business owners saw an enormous opportunity here to come up with data-heavy strategies. They could now inspire shoppers on a personal level, enticing them with products that would have been lost in the clutter on an overly crowded online shelf.
Armed with frequent and fresh algorithms and AI eCommerce personalization, they could now reach out to their customers with better products and stellar service. They could learn from the past to predict future outcomes.
AI gave them the niche to create their own world that would have been impossible to achieve for most in the traditional world of retail. The beauty of AI is that it does not require you to be big and bold to be seen. It just needs you to be relevant and proactive to become the showstopper on a global runway.
The biggest challenge in a world driven by consumers is keeping up with the constantly changing consumer behavior.
With the Amazon effect lurking on our heads at all times, it becomes important to monitor shopping patterns closely. The modern customer has high expectations and is quick to switch loyalties to get what they want.
McKinsey confirms 75% of American shoppers altered their brand preference during the pandemic, while Forrester research says 52% of shoppers consider free shipping as a major incentive when making shopping choices.
Same-day deliveries are now becoming a norm and contactless delivery is preferred. Customers want to know where their order is. Constant visibility via live tracking and mobile apps is helping eCommerce fulfill customer expectations better and build strong relationships. Consumer delivery expectations are changing constantly, causing focused fulfillment models.
AI helps you anticipate the needs of your customers.
For instance, if a customer is keen on using sustainable products, it is obvious that she would prefer sustainable delivery solutions. If a customer is buying stuff from a nearby vendor, letting them know how you could fulfill their orders more quickly will give you an edge. If a customer is keen on same-day deliveries, inventory should be shipped from the nearest store.
Now, none of this will be possible unless you have relevant data to make quick decisions.
As customer expectations evolve, eCommerce businesses face the challenge of providing genuine experiences in the digital world. There is a constant need to come up with creative and strategic solutions that can make up for the absence of visual and other cues like the smell, touch that usually facilitates purchase decisions.
AI is facilitating virtual try-on through augmented reality applications while enabling a more robust value chain with the help of distributed blockchain technology.
Ray-Ban is offering an augmented experience through a virtual mirror to help customers choose the right sunglasses while IKEA allows users to visualize their products within a space with IKEA Place, an AR application.
But most importantly, AI is helping the fashion industry and others solve the biggest problem that has plagued them for quite some time now - the rising cases of product returns.
Says B-Stock’s EMEA Director, Ben Whitaker, "One UK department store is said to have claimed that any online order under the value of £30 is unprofitable. Now, consider that between 30 percent and 50 percent of items purchased online are returned: how do you even begin to recoup the loss? Taking control of your reverse logistics processes is one way to help.”
No doubt free return policies are a huge draw among online shoppers. But making the shopping experience appealing and a win-win for all is entirely in your hands. Before the tendency of buying with the intention of return cuts into your profits, the onus is on you to use AI to create a frictionless, cohesive shopping experience for all.
Handling returns is also costly from a shipping perspective. Do you simply put returned goods back into the inventory or hand them over to other companies to manage them through off-price channels?
As a business owner, you would want to ensure your customers are too happy to return goods, and even if they do, you use it as an opportunity to build loyalty with better service. AI will help you understand how often customers purchase, how quickly they return, and what influences their choices. You can plan your promotions and advertising campaigns accordingly.
Everyday objects are conversing today thanks to the Internet of Things. This would also mean you can hyper-personalize your marketing campaigns with relevant messaging based on incredible insights about customer behaviors. When you analyze the buying habits of customers and provide real-time, point-of-sale notifications and targeted ads, you can expect much deeper connections on a more personal level.
As per a Gartner poll, 47% of AI investments remained unchanged despite the pandemic while 30% of organizations are keen on increasing them. AI-enabled chatbots paved the path for communication on various fronts and machine learning (ML) models helped brands pivot away from the effects of the pandemic towards survival and self-sufficiency. Clearly, AI comes with a world of benefits.
Some of the most important ones include:
Explains Gijs Verheijke, the founder and CEO of high-end streetwear e-store OX Street, "There is so much opportunity now to marry media, social, gaming, and shopping. The whole categorization of companies between retail, marketplace, and media is going to get upended, and a lot of the parts of that disruption machine are powered by AI.”
With AI and other technologies in the picture, it is so much easier to offer engaging experiences across social media channels and eCommerce platforms.
AI-driven data is making you smarter with every click and purchase, giving you insights into what your customers are most likely to buy. AI can help customers find what they are looking for on digital shelves quickly. It will help you come up with resilient and sustainable paradigms to not just sell products but also overcome margin and inventory constraints.
Going forward, we will dig deeper into the many nuances of AI and why it is no longer just an 'essential' but the very key to your survival in the eCommerce world. AI is what you need for communication, collaboration, and customization. Stay tuned to understand its scope, benefits, and capabilities in our upcoming blogs.
What is AI-powered eCommerce and how is it different from traditional eCommerce
