The rising inflation has made today’s business environment quite hostile. Business owners are struggling with rising commodity prices and an increasingly demanding consumer base. So, how can they overcome these hurdles and make it all work out? Well, the answer lies in the use of generative AI.

Generative AI is a type of artificial intelligence (AI) that uses algorithms to create new content like text, images, audio, and videos. Some of the most popular generative AI models include ChatGPT, Dall-E, and Sora, with ChatGPT amassing 180.5 million users and 1.63 billion visits in February 2024 alone[1]. These models use billions to trillions of parameters to understand language and code, enabling them to build applications and hyper-personalized user experiences.

The e-commerce sector is set to benefit immensely from this breakthrough technology. Forward-looking companies like Amazon are already integrating AI-driven tools in their day-to-day operations with stellar results[2]. But you don’t have to be a multi-billion tech company to enjoy the rewards of AI-driven technologies. Even small e-commerce platforms can leverage AI to elevate.

In this article, we’ll highlight ways e-commerce platforms can use generative AI to boost operations. We’ll also examine some key strategies for applying artificial intelligence in e-commerce.

How generative AI is applied in e-commerce

The role of generative AI in e-commerce can be summarized in two ways: Increasing operational efficiencies and delivering top-tier customer experiences. Since this is a novel technology, use cases of artificial intelligence in e-commerce are still emerging. However, here are a few ways you can apply generative AI in e-commerce:

Streamlining operations

E-commerce platforms can use AI technology to streamline their operations, ensuring enhanced productivity and efficiency. They can do so in the following ways:

• Analyzing product quality

Generative AI can analyze product images during production to check for defects, anomalies, and other issues. That way, e-commerce businesses can ensure high-quality products for improved customer satisfaction and a better brand reputation. Moreover, AI technology can integrate this information with analytics to enhance research and development (R&D) efforts, contributing to overall product improvement.

• Crowd-sourcing customer feedback

E-commerce businesses can use AI to search customer reviews at scale across multiple platforms. This gives them insights into what customers really feel about their products and services so they can make necessary improvements. AI can summarize the crucial pain points and even directly interact with customers to get feedback.

• Improve product descriptions for SEO

Generative AI can help create product descriptions that are not only persuasive but also align with SEO best practices. That way, e-commerce stores can rank higher on search engine results pages and attract more site visits and, hopefully, customers.

Read more: AI Solutions for Retail Industry

Optimizing supply chain operations

Logistics is one of the most critical aspects of e-commerce. E-commerce platforms can use AI technology to streamline supply chain operations by:

Predicting supply chain disruptions

AI models can analyze external factors, such as weather, natural disasters, and geopolitics, that could impede the supply chain. That way, e-commerce stores can make the necessary arrangements to avoid a backlog of orders, a flock of angry customers, and a lot of negative reviews.

Smart inventory forecasting

AI technology can analyze past inventory data to predict future inventory needs based on market trends, seasonality, and other factors. This helps ensure that e-commerce stores don’t understock or overstock but have just enough inventory to meet demand.

Improving product discovery

Generative AI can help customers find relevant products that match their preferences. Below are some ways e-commerce stores can use AI-powered tools to enhance product discovery:

Streamlining content creation

E-commerce platforms can use AI technology to create content for their e-commerce site. Generative AI can suggest relevant topics and write SEO-friendly content for the said topics in a matter of seconds. This includes blog posts, instructional texts, guides, and a lot more.

Creating personalized recommendations and searches

Generative AI technology can evaluate customer data to understand their preferences and interests better. The technology can understand a customer’s intent and reasoning and helps e-commerce platforms create dynamic product searches with personalized results and accurate recommendations.

For instance, a customer might want to decorate their homes like one they saw in an Architectural Digest issue. All they have to do is upload the images of the home to your platform, and AI technology will create a personalized shopping list that includes all the decor elements in the image. This is much easier than browsing product listing pages for hours only to end up with the wrong items.

Improving the post-purchase experience

A pleasant post-purchase experience is vital for building customer loyalty and building brand reputation. E-commerce sites can use generative AI technology to enhance the post-purchase experience.

For instance, they can create digital avatars to interact with customers. These digital avatars are virtual representations of customer service reps[3]. Customers can interact with these avatars, just like they would with a regular customer service agent, and get the help they require. Artificial intelligence tools can also expedite shipping and optimize the returns process.

Enhancing fraud detection

Scammers are getting craftier, coming up with new tactics to defraud e-commerce platforms every day. In 2023 alone, e-commerce platforms lost a staggering $48 billion to fraud[4]. AI solutions can help put an end to this mess with improved fraud detection.

AI technology can detect unusual patterns and learn scammers’ behavior to stay one step ahead of these bad actors. That way, they can detect fraudsters and put out a red alert to keep other branches and e-commerce platforms in the loop.

Refine routine purchases

It’s not uncommon for customers to purchase specific items routinely, maybe daily, weekly, or monthly. For instance, a customer buys the same type of cereal weekly from an e-commerce store.

Your e-commerce store can use AI technology to create hyper-personalized add-to-cart suggestions or even generate bespoke shopping lists for the customer. The store can take it up a notch and implement order automation with the customer’s consent. This simplifies routine purchases and offers an unmatched level of service that improves brand loyalty.

Improve team productivity

Behind shiny e-commerce sites lie personnel teams, including designers, product managers, web developers, and others. The productivity of these teams is crucial to the success of e-commerce platforms. These platforms can leverage AI technology to boost productivity and ensure profitability.

Generative AI technology can automate redundant tasks and, in fact, saves employees a couple of hours every week. For instance, AI technology can automate content creation and email marketing, saving employees hours so that they can focus on other activities. Web developers, on the other hand, can use AI to generate code faster and improve innovation. AI can also analyze data to suggest ways to improve productivity and simplify workflows.

Read more: Generative AI in Retail: Uses Cases

10 ways generative AI transforms e-commerce

The impact of generative AI on e-commerce is nothing short of revolutionary. Most consumers are finding it hard to resist the convenience and flexibility of online shopping, with a projected 2.71 billion online shoppers in 2024[5]. It’s no secret that AI technology is set to change the e-commerce space in different ways. And with emerging applications every day, here are a few ways AI-powered tools will revolutionize online shopping:

Improved profitability for e-commerce websites

E-commerce platforms are set to make a huge killing with generative AI. These platforms can use AI to improve profitability by plugging cash leaks and optimizing cost-cutting measures. Task automation frees up employee time so they can focus on other profit-making duties.

Improved inventory forecasting also reduces wastage, and personalized recommendations and searches increase the likelihood of purchase. This means e-commerce stores spend less on operations and earn more revenue, resulting in increased profit margins.

Increased conversions

Generative AI analyzes customer data to understand customer needs and preferences. It also uses algorithms to generate personalized recommendations and targeted marketing campaigns to tailor offerings. The result is improved customer satisfaction, which translates to increased conversions.

Another way AI can improve customer experience is through virtual try-ons. One downside of shopping for clothes or makeup online is that the clothes don’t always fit correctly or the makeup doesn’t match your skin tone. Virtual try-on is an AI tool that uses computer vision and deep learning to fit clothes and try makeup virtually.

Customers simply use their webcams to capture images of their face or body. AI will then use augmented reality to virtually overlay clothes or makeup over the body and face, respectively. The virtual overlay tool will update the image in real time as the customer moves, so they can know how they’ll look from different angles. That way, they can make more confident purchase decisions, which leads to better customer satisfaction.

Better efficiency

Improved efficiency is at the heart of AI implementation in e-commerce. Standard workflows are manually oriented, which wastes a lot of time and resources. With AI technology, e-commerce platforms can free employees from these mundane tasks so they can focus on more strategic initiatives that propel the business forward.

Let’s say an e-commerce site needs to generate product descriptions to educate its customer base on its product offering. The platform’s marketers can spend hours looking for the right words to use, or it can use AI to generate these product descriptions in seconds. By relieving this burden, the marketing team can focus on improving their organic marketing campaigns or brainstorming ways to improve their reach and expand their customer base.

Improved inventory management accuracy

The use of AI tools also streamlines supply chain and inventory operations through data-driven insights and automation. That way, e-commerce platforms can ensure optimal stocking levels and ensure products are available as needed. AI technology can also optimize shipping routes and delivery schedules based on real-time data like traffic patterns, weather conditions, etc., to ensure the timely delivery of goods and minimal wastage of resources.

Innovative enhancement

Today’s e-commerce landscape is highly competitive. E-commerce sites can use AI to get an edge over their competitors. For instance, they can use large language models to create content curated to their customer bases and in line with the latest trends. As mentioned, clothing stores can combine artificial intelligence with augmented reality to deploy virtual try-on tools and gain a strategic edge over competitors.

More accurate data analytics

Data is critical to the success of e-commerce platforms, allowing them to understand their customers better and optimize operations to suit their needs. AI tools allow e-commerce platforms to gain deeper insights and make more informed decisions based on their data. AI can recognize patterns, identify anomalies, and create easy-to-understand data visualizations. With more accurate data analytics, e-commerce platforms can make better data-driven decisions and thrive in their niches.

More personalized shopping journeys

Generative AI is set to improve customer journeys, making them more personal and engaging. Customers will no longer waste time scrolling through product listings to find what they want. Instead, they’ll get accurate recommendations based on real-time behavior, location data, browsing behavior, and other factors. This not only improves customer satisfaction but also makes customers feel more valued and understood.

Bespoke product customization

AI technology allows e-commerce platforms to create products tailor-made to individual customers. AI algorithms can generate and optimize product designs based on customer requirements and feedback. This includes adjusting dimensions, colors, materials, and features to create personalized products that meet specific preferences. E-commerce sites can also utilize AI configurators that allow customers to customize their products in real-time to match their unique tastes.

Reduced cart abandonment

As of 2024, the average cart abandonment rate is 70.19%[6]. The reasons for this behavior include unexpectedly high costs and a frustrating shopping experience (e.g., reentering credit card information). The cart abandonment rate is set to plummet thanks to generative AI. AI technology simplifies the checkout process and automatically updates customer information. It also helps display relevant promotions and discounts so customers can afford what’s in their carts.

Better customer service

E-commerce platforms can also use AI to smarten their chatbots or create digital avatars to assist customer service reps. Customers can interact with these AI-powered tools just like an ordinary customer service agent. They can ask questions, request recommendations, and even air grievances and initiate returns. These tools will tap into vast amounts of data and use deep learning algorithms to give accurate and helpful responses.

Implementing generative AI in e-commerce

Clearly, AI technology is rewarding and opens up a universe of new opportunities for e-commerce sites, large and small. However, without the right AI implementation strategies, e-commerce sites may face considerable hurdles or fail to realize the full potential of this cutting-edge technology. Below are some strategies for making the most of artificial intelligence in e-commerce:

Market research and competitor analysis

AI can use data from different sources to uncover valuable insights. As such, it can identify emerging market trends and consumer preferences and also create competitive strategies to help e-commerce sites stay ahead of the pack.

That way, e-commerce sites can anticipate demand shifts and optimize their product offerings and marketing campaigns to specific customer segments. This intelligence empowers e-commerce businesses to refine their strategies, remain unique, and capitalize on market opportunities.

Build and optimize your e-commerce site

E-commerce sites can utilize generative AI tools to create dynamic web pages and refine their online stores. AI-driven design tools can optimize website layouts and visual elements to maximize usability and aesthetics for a better user experience.

Generative AI models can also assist in A/B testing and optimizing web pages by analyzing performance metrics and refining design elements for optimal conversion rates. That way, e-commerce stores can create dynamic, user-centric web pages that drive traffic, engagement, and sales effectively.

Boosting online store SEO

AI-driven technology can help boost online store SEO (Search Engine Optimization) for e-commerce sites by automating and enhancing certain aspects of content creation and SEO. For starters, e-commerce websites can use generative AI tools to generate high-quality, SEO-friendly content. This content includes product descriptions, blog posts, and metadata that aligns with relevant keywords and user intent. The result is improved organic search visibility and higher rankings on search engine result pages (SERPs).

Generative AI can also analyze and optimize website structure, internal linking, and schema markup to enhance search engine crawling and indexing. E-commerce sites can also leverage AI to conduct keyword research, identify trending topics, and optimize on-page elements such as title tags, meta descriptions, and image alt texts for better search engine performance.

AI in voice shopping

E-commerce sites can enable AI-powered voice assistants that understand and respond to customer queries and commands. This allows a hands-free shopping experience where customers can shop only with voice commands, improving accessibility. AI tools can also leverage contextual understanding to provide personalized product recommendations based on customer preferences and past interactions.

E-commerce sites can also use AI-driven voice search capabilities to enhance product discoverability. Generative AI models can accurately interpret natural language queries and give relevant search results. Moreover, these sites can optimize conversational interfaces to guide customers through the shopping journey, answer questions about products or promotions, and facilitate seamless transactions.

Final thoughts

The integration of AI technologies holds immense promise for revolutionizing e-commerce. E-commerce stores looking to get ahead of the game should leverage AI-driven tools and strategies to unlock a universe of opportunity and endless possibilities. In doing so, they can enhance operational efficiencies, deliver exceptional customer experiences, and drive growth in an increasingly competitive market environment.

However, it’s worth noting that AI implementation is no walk in the park. E-commerce sites are bound to experience a few hurdles along the way, but thanks to the intuitive interface of most generative AI tools, they’ll only be a speedbump on the journey to success. E-commerce sites can also seek expert help from computer experts for smooth integration of AI into their day-to-day operations.

References

[1] Explodingtopics.com. Number of ChatGPT Users (May 2024). URL: https://tiny.pl/dfhp6. Accessed on May 16th 2024
[2] Aboutamazon.com. 8 ways Amazon is using generative AI to make life easier. URL:
https://www.aboutamazon.com/news/innovation-at-amazon/how-amazon-uses-generative-ai. Accessed on May 16, 2024
[3] Researchgate.net. Self-representation through avatars in digital environments. URL:
https://www.researchgate.net/publication/361093419_Self-representation_through_avatars_in_digital_environments,.  Accessed on May 16, 2024
[4] Mastercard.com. Ecommerce fraud trends and statistics merchants need to know in 2024
URL: https://b2b.mastercard.com/news-and-insights/blog/ecommerce-fraud-trends-and-statistics-merchants-need-to-know-in-2024. Accessed on May 16, 2024
[5] Sellerscommerce.com. General E-commerce Statistics. URL: https://tiny.pl/dfhp3. Accessed on May 17, 2024
[6] Baymard.com. Cart Abandonment Rate. URL: https://baymard.com/lists/cart-abandonment-rate,Accessed on May 17, 2024

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