AI in the e-Commerce sector: The trends you need to know about


According to builtin.com, ‘Artificial intelligence (AI) is wide-ranging branch of computer science concerned with building smart machines capable of performing tasks that typically require human intelligence. AI is an interdisciplinary science with multiple approaches, but advancements in machine learning and deep learning are creating a paradigm shift in virtually every sector in the tech industry.’ According to Nasdaq, ‘95% of purchases will be facilitated by e-Commerce by 2040.’


No doubt, AI will be transforming retail digitalisation.


There are many examples of Artificial intelligence being put to good use in our day to day lives. Some of these that you may be familiar with are highlighted below.

  • Smart assistants (like Siri and Alexa) which you may have in your home.

  • Optimised and personalised recommendations. This could be product recommendations. For example, in the banking and finance sector, smart AI enables the bank to propose specific financial products to you based on your demographic and/ or your background. You may notice this when you log into your bank account, or when you get a tailored marketing email. Some credit score providers can recommend credit cards or loans that you’re more likely to get accepted for, based on the data they hold on file for you, without any hard credit searches at that stage.

  • Online conversational chatbots, providing you with customer service 24/7.

  • TV show recommendations from Netflix based on your viewing and search behaviour.

AI is becoming very popular in the e-Commerce sector. Many e-Commerce businesses are already using AI. AI enables businesses to provide their customers with improved customer service experiences which are likely to lead to increased customer loyalty and increased revenue.


Below we have listed four AI trends that you really need to know about;


Big data to predict customer behaviour

Online retailers gather and process a lot of data. This data needs to be analysed and understood to bring value to both the business and the customers. Big data can help with sales forecasting and getting a return on investment (ROI). Predicting customer behaviour not only helps businesses to improve on their customer experiences, it also helps the business to predict what their customers will want in the future, so that the business can recommend certain products to them. This is a growing trend and businesses who want to be competitive and grow are making use of big data and AI to get ahead of the competition.


AI Recommendations (also known as recommendation solutions) – Take note of Amazon and Netflix

Amazon uses AI. One way that they make use of AI is by using their ‘recommendation engine.’ It provides millions of users with a personalized webpage when they visit Amazon.com. This webpage also shows recommendations to the customer when they log in, showing items that they may wish to buy based on previous search history or purchase behaviour. This increases sales revenues.


Netflix saves ~$1 billion yearly due to AI-powered systems. They are known to provide 75% of content to their customers through targeted recommendations. They will show you what you may like to watch, based on what you have previously watched for example. You can also see what is popular in your country each day. In a nutshell AI can provide customers with products, services and even tv shows when they are likely to want them!


Demand forecasting – for risk management and an improved supply chain

e-Commerce demand forecasting is the process of predicting the future demand for products. This helps with your business supply chain. According to a survey by Gartner they found that, ‘demand forecasting is the most widely used machine learning applications in supply chain planning.’ In this study they also mentioned that 45% of companies are already using the technology and 43% of them are planning to use AI-powered demand forecasting within two years.


According to Mckinsey, AI-powered forecasting can reduce errors by 30% to 50% in supply chain networks. The improved accuracy leads up to a 65% reduction in lost sales due to inventory out-of-stock situations and warehousing costs decrease around 10% to 40%.


Demand forecasting applications also help with risk management strategies. You can also create pricing and digital marketing strategies that reflect demand.


Chatbots to drive customer service and increase loyalty

David Cancel, CEO of Drift Bots says that a chatbot, ‘makes it easier for people to buy the way they want to, when they want to and that should be the goal of any business.’


On that note here are some stats on chatbots;

  • 80% of businesses are projected to integrate some form of chatbot system by 2021. (https://outgrow.co/blog)

  • Chatbots can answer 80% of standard questions. (IBM)

  • 53% of service organizations are going to use chatbots within the next 18 months. (SalesForce)

  • 58% of users say chatbots have changed their expectations of customer service. (SalesForce)

  • 64% of agents who use chatbots are free to spend their time solving more difficult and complex problems. (SalesForce)

  • Three in five millennials have used chatbots at least once in their lives. (Forbes)


These statistics show us that chatbots are a growing trend in the e-Commerce sector. If you’re in this sector you should really be considering getting a chatbot to help you with your business growth goals.


Microsoft, IBM, Google have invested heavily into both AI acquisitions and AI related research and development due to the growing demand for AI and how valuable it is, especially in the e-Commerce sector. Furthermore, according to Gartner, ‘when the world returns to a degree of normality, adoption of digital channels, including conversational AI technologies, is likely to continue at a much higher rate than before the pandemic. Companies already on the way to adopting these technologies will therefore have an advantage. AI is particularly important for e-Commerce businesses.


A report by digitalcommerce360.com found that, ‘on average, e-Commerce companies using AI solutions enjoyed 18% year-on-year sales growth in 2017, 30% more than those that were not using AI.’ Furthermore, a study by BusinessInsider suggested that as much as, ‘85% of customer interactions will be managed without a human by as soon as 2020.’ Now that we are in 2021, this is an ongoing trend. A large proportion of these interactions are being handled by AI driven chatbots.


Dmexco.com states that, ‘the future of e-Commerce is being massively influenced by the use of artificial intelligence. AI in online retail is already contributing to a significantly improved user experience by offering personalized buying experiences.’ By using AI, e-Commerce sites are able to create more personal customer experiences. Personalised marketing using AI is also being used successfully by companies like Amazon and Netflix.


AI is creating new opportunities by delivering impact in durations which were unimaginable in the past.


At AtomX Digital we work with ambitious leaders to translate AI into business outcomes, at Speed and with Certainty. Whether we are implementing chatbot platforms, enabling an omni-channel live chat or providing customer interaction analytics and insights, our focus is to make a step change in the way you achieve your business objectives and KPIs, keeping your outcomes at the heart of our approach.


Speak to the team (info@atomxdigital.com) today to find out how we can help.



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