Artificial Intelligence: The Digital Brains Driving Ecommerce Success

The holy grail of all ecommerce data analysts is the ability to predict the future behavior of online consumers and, therefore, anticipate market demands.

Those reaching this elusive goal will be able to micro-manage inventory flows, optimize logistics, monitor shopping behavior on websites, and track variables such as weather conditions and consumer trends that could affect the future of online shopping.

The result: customers get to enjoy a first-class shopping experience that fosters loyalty, reduces the bounce rate, and ultimately leads to increased sales revenues.

If you’re wondering if this can ever be humanly possible, the answer is “yes”, with a little help from digital online shopping and AI technology.

Let’s face it. Even if a company were to employ an army of the brightest analysts around, artificial intelligence will always be countless steps ahead of them when it comes to the accuracy, speed, and reliability of the data analysis process.

To be blunt, the only way ecommerce enterprises will be able to stay abreast of the ever-changing online landscape is by following the trends and incorporating AI strategies into their operations.

The Intelligent Future of Online Shopping

A Gartner study predicts that 75 percent of businesses will be using AI technologies by 2024. Think about it: in just three years, three-quarters of all businesses will have adopted one or more AI systems into their operations. Only 25 percent will still be relying exclusively on human brainpower.

These smart technologies, according to the researchers, will include the following:

1. Chatbots

When a study reveals that 65 percent of millennials would rather interact with a chatbot than a live human being, you know that the face of online shopping has changed forever.

For retailers, this piece of information is music to the ears because bots have the following advantages over humans:

• They can operate 24/7 without getting tired, no matter what the weather
• They don’t take holidays, need medical insurance, or call in sick
• They can be programmed to offer recommendations and services
• They can handle many queries at the same time
• They actually learn—and become more intelligent—from each customer interaction.

2. Voice Search

Although this technology still has some way to go, more and more consumers are making online purchases using voice search applications such as Google Voice Search, Cortana, Siri, and Amazon Echo.

One study shows that more than half of smartphone users engage with voice search technology and that spending on voice search solutions will hit $40 billion (USD) by 2022 in the US alone.

3. Churn Prediction

Churn prediction is a case in point where AI outperforms human intelligence every time. By analyzing how customers use a service, machine learning will detect which ones are likely to cancel a subscription or leave an online platform.

Armed with such knowledge, the customer service department can get to work trying to woo the waverers back into the fold. For any business, it is less costly to retain existing clients than to acquire new ones.

4. Personalized Shopping Experiences

It stands to reason that if people feel that they are being treated by a business as valued customers—even online—their shopping experience will be enhanced

An Epsilon survey found that 80 percent of customers are more likely to do business with a company if it offers personalized experiences.

This is where AI comes into its own. By engaging customers at every point, it can capture patterns of shopping behavior—and even learn from the information. That allows the ecommerce company to direct its ad spend and product promotions more accurately.

By using AI technology, online businesses are increasingly introducing ‘recommendation’ services. As a customer selects an item for purchase, a recommendation engine displays similar products based on the customer’s shopping history and what is currently in the basket. Often these hints prove too tempting and the recommended items end up in the basket along with the original product.

Best-in-Class: The Netflix AI Algorithm

Streaming service Netflix is regarded as having the most successful machine learning engine around. Known as the Netflix Recommendation Engine (NRE), it is made up of algorithms that filter content according to individual user profiles.

With the ability to filter more than 3,000 titles at a time based on user preferences, the NRE is so accurate that its personalized recommendations are adopted by viewers 80 percent of the time.

Furthermore, the data gleaned from the engine enables Netflix to decide where to channel resources as it seeks to add to its ‘original content’ catalog, which already comprises more than 13,600 titles. In other words, it gives company managers a clearer idea of the potential ROI in the competing genres.

How AI is Transforming Supply Chain and Logistics

When it comes to controlling inventory, there will soon come a time when warehouse managers will not be able to do without AI. Already, the following technological innovations have been widely introduced in fulfillment centers and warehouses as part of machine learning warehouse optimization.

Machine learning

This type of AI in the supply chain can process the enormous amount of data collected in a warehouse and identify order and inventory patterns. The information gleaned allows managers to assess which items are selling and therefore in need of restocking. It can also predict customer demand based on orders and returns and estimate the likelihood and length of shipment delays, thereby improving customer service.

Voice picking technology

Although voice picking has been a feature of warehouse management for some time, the latest technological advances improve the picking rate and accuracy by integrating voice recognition.

In this process, pickers are fitted with a headset and microphone that is connected to a warehouse management system.

The system guides the warehouse operative to the item’s location and tells her/him what to pick. The operative picks the item and then verbally repeats the item number and quantity—which is then recorded in the system. Those using this technology claim that it can reduce picking errors by up to 90 percent.

Cognitive Robotics

Robots have been part of warehouse systems for decades but recent advances in AI technology have seen the emergence of what has been dubbed cognitive robotics.

These smart machines can not only shift inventory within a warehouse and pick and load orders, they can also detect anomalies, assure quality through monitoring of pictures and video, and extract information about an item’s size and weight from a picture.

Transport/delivery

Transport managers can optimize route planning through AI technology that takes into account historical and real-time data, weather and traffic conditions, predicted wait times, driver behavior, maintenance halts, and safety precautions. This upgraded transportation planning process shortens delivery times, saves resources, and ultimately, cuts costs.

Using AI Intelligently

Although investing in AI technology is probably beyond the reach of small and medium-sized businesses, many third-party logistics providers specialize in the field so there is no reason for SMEs to lose out. Ecommerce and logistics technologies that predict and even direct customer behavior are these days accessible to companies big and small.

The future of AI is not a robot with an inscrutable face that can lift heavy loads, woo customers in a stilted voice, and pick and load accurately in the warehouse.

It is a scheming, thinking, smart machine capable of replicating human intelligence and outperforming humans in terms of speed, accuracy, and effectiveness when it comes to data analysis.

Too Smart for our own Good?

Suspicions remain about allowing machines to acquire too much intelligence. The late Stephen Hawking, an influential physicist and cosmologist, warned that machines, through AI, will eventually surpass the human thinking processes.

A Stanford University study launched in 2014, however, has so far not unearthed any evidence that AI will pose any “imminent threat” to humankind, as Hawking feared.

So, there is no escaping it: The future growth of ecommerce lies with AI technology.

Businesses that don’t recognize this will be left in the cyber-dust as their managers struggle to understand why customers are leaving in droves in search of a more personalized and efficient online shopping experience elsewhere.

Those that do harness the power of the ‘super-brains’ will operate more intelligently, economically, and efficiently. It’s official—online shopping and AI are now inseparable bedfellows.