How can AI help e-commerce retailers thrive?

In a recent survey, 56% of companies said that they already use artificial intelligence. And a huge 79% of those said that AI reduces their costs and increases their revenue.

That’s a pretty high success rate. Let’s take a look at what AI means for e-commerce, and how it can support both consumers and retailers.

What does AI actually mean?

The term “AI” covers a lot of different concepts these days.

There’s the sci-fi ideal of artificial intelligence: a smart computer that can ask questions, pull together data, and reach conclusions without human input.

In popular culture – and, increasingly, customer service – AI means a computer that will have a conversation with you. From chatbots to virtual influencers, this kind of AI is about consumer relationships.

Finally, there’s machine learning. Machine learning is a specific branch of AI that uses algorithms and data to progressively improve knowledge or systems. For example, you could use machine learning to spot problems in a supply chain over time, and test out different solutions.

As we’ll see, all of these types of AI are being used in e-commerce. But how valuable are they? Which types of AI can really help e-commerce retailers to thrive?

The AI that customers see

AI used to be an obscure technological concept. These days, it’s mainstream. Consumers are increasingly comfortable with the idea of AI – and they expect smart tech as part of their shopping experience.

90% of shoppers say that their online experience should be the same or even better than in person. And what people value about in-store shopping is the level of customer service and personalized recommendations. It’s hard to offer that online, which is where AI comes in.

The most popular use of machine learning in e-commerce so far is shopping recommendations. For example, the start-up Stitch Fix made its name by offering a clothing subscription service with individual, AI-powered fashion choices for each customer. However, those choices are still checked by human stylists – who take ultimate responsibility for customer satisfaction. In other words, Stitch Fix is not a pure AI system.

Other retailers have gone for image over technical details. The hair and beauty brand Olaplex recently made headlines when they announced a new AI team member. The AI (still unnamed) is the new face of the brand, created by blending the voice, gender, accents, and “emotional qualities” of Olaplex’s employees to create the ultimate representative figure.

This is the e-commerce AI that customers see. It’s about showing off tech credentials and offering more personalized recommendations.

But what about the side of e-commerce that customers aren’t aware of? Are there any practical applications of AI behind the scenes?

The answer is a resounding yes. Machine learning, smart algorithms and simulations can all help e-commerce retailers to strengthen their operations management. We’ve seen AI applied to everything from ad buying to instant storefronts to simulating supply chain weaknesses.

Machine learning has three key strengths that can help e-commerce businesses:

Forecasting. Whether it’s predicting demand, delivery routes, or logistical hiccups, AI can gather information and identify problems before they even arise.

Optimization. Machine learning works by constantly using new data to improve your systems. In e-commerce, where margins and timeframes are tight, even small changes can make a big difference.

More data, better data. The biggest benefit of AI is that it gathers a wide range of information and then manages that data for you. Many businesses are slowed down because they struggle to share information between different departments; or they share data, but end up overwhelmed by its volume and complexity.

Machine learning and AI can radically upgrade your supply chain, logistics, and operations experience. That has a knock-on effect, improving customer experience and customer service – even if those customers are totally unaware of the AI working behind the scenes to speed up deliveries and offer personalized recommendations.

These are challenging times for e-commerce brands and retailers. The businesses that thrive will be those that use the latest technology to improve operations for their own teams and for customers.