How AI is Shaping the Future of eCommerce

The above image was generated by Adobe Firefly.

Artificial intelligence (AI) isn’t just science fiction anymore; it’s rapidly transforming the landscape of eCommerce. Beyond simple algorithms, AI is weaving its way into every facet of online shopping, from product discovery to delivery.

While the term “AI” is all the rage in technology right now, equating it to routine algorithms would be a misnomer. True AI represents a paradigm shift: machines capable of learning, adapting, and mirroring human cognitive functions like reasoning and decision-making. This evolution, much like the internet’s early days, carries profound implications for industry and society. Though its full impact remains under exploration, AI’s potential for transformation is undeniable. Prudent business leaders will approach this developing technology with both caution and strategic foresight, recognizing its potential to redefine landscapes and disrupt established norms.

The current state of AI in the eCommerce Industry

AI is rapidly evolving into a cornerstone of eCommerce. From search experiences to delivery routes, AI is injecting intelligence into every step of the online shopping journey, and the impacts are accelerating.

Here are some examples of how AI is already reshaping the eCommerce landscape and the transformative potential it holds for the future:

• Precision Search & Navigation: Generic rules-based search engines in eCommerce are showing their age and are quickly being replaced by AI search engines that analyze customer behavior, purchase history, and buying intent. This intelligence powers personalized product recommendations, surfacing relevant products with improved accuracy, especially for retailers with vast catalogs. It’s a win-win: customers find what they want faster, and businesses boost sales and satisfaction. Some popular AI search engines for eCommerce retailers include Klevu, Algolia, Elasticsearch, and Bloomreach.
• Data-Driven Insights: eCommerce generates mountains of data, and AI is being used to predict future inventory needs, identify friction points in the customer journey, and build more complete customer profiles. Companies that leverage these insights gain a critical operational edge over competitors, optimizing everything from pricing to resource allocation. Some examples of AI tools being used in this space currently include IBM Watson Customer Insights, Microsoft Azure Customer Insights, Adobe Experience Cloud, Einstein Discovery, Shopify AI, and Retalon AI.
• Conversational Commerce: AI-powered chatbots are revolutionizing customer support, offering 24/7 assistance and efficiently handling simple inquiries. This frees up human agents to address more complex issues, creating a seamless and personalized customer experience. But the future holds even more potential. Virtual assistants like Alexa and Siri are poised to become powerful shopping companions, potentially influencing product selection and purchases through voice-activated commands. Some current popular AI-powered chatbots for eCommerce retailers include Ada, Drift, and Intercom.
• Web Content & Design: AI is currently being used to help enhance creative workflows, such as generating multiple design templates for web pages or ad campaigns that align with the brand. Generative AI is being used by retailers to add imagery to their stores and fill in dynamic backgrounds within product images as well as personalize product descriptions to individual customers, enhancing engagement and reducing returns. In the realm of fashion, AI-powered virtual try-on tools and personalized fitting apps promise to revolutionize online shopping, offering improved customer experience and reduced returns. A few examples of AI tools for creating web content include Adobe Sensei, Outfit Anyone, Copy.ai.

The Future of AI in eCommerce

The eCommerce landscape is on the cusp of a seismic shift powered by AI, and while the technology is rapidly evolving, the impact on retailers is clear, requiring attention and strategic adaptation as the technology develops.

Many of the cutting-edge AI technologies will continue to show up first with the largest eCommerce retailers such as Amazon, Walmart, and Target. This will impact retailers that sell through these larger marketplaces as their products are promoted or demoted based on AI, potentially having a significant impact on marketplace sales.

The above image was generated by Adobe Firefly.

Virtual assistants will continue to evolve as well, likely becoming an increasing part of the purchase journey as customers start using virtual assistants to build shopping lists, plan parties and vacations, or tackle new home improvement projects. The products and services that are suggested by these assistants will gain valuable market share, with the product selection process often being delegated to AI.

B2B companies will increasingly utilize AI to improve the purchase experience by using AI to segment their audiences and provide more personalized and efficient purchasing paths, saving time and money for their customers.

Many of the technologies used by B2C and B2B companies today, such as search, product recommendations, catalog, and inventory management will continue to mature to use more AI technologies, improving results over simpler algorithm-based methods. Businesses that can effectively implement these more advanced AI solutions will provide a better customer experience than competitors and have an operational advantage, helping them gain market share.

With increasing data privacy laws, AI will become increasingly important in filling in data gaps when direct observational data is restricted. This will impact analytics tracking, marketing campaign optimization, and commerce targeting. Companies that use AI technologies to fill in these gaps will be better able to optimize their campaigns and win over competitors in advertising and lead acquisition.

Empowering the Future: AI as a Strategic Partner

In conclusion, AI is not just a trend; it’s an evolving part of the future of eCommerce. Companies that embrace AI strategically, harnessing its power while addressing potential risks, will thrive in this rapidly evolving landscape. Likewise, those who don’t risk being left behind or losing ground to competitors.

AI is not a replacement, but a powerful partner for eCommerce companies building towards the future. By combining human ingenuity with the force multiplier of AI, we can create a future of personalized, efficient, and ultimately delightful online shopping experiences.

If you have any questions about AI and how it might impact your business, reach out to us. We’d be happy to discuss it with you!

***

This article is the first in a series of articles Human Element will be publishing about AI.

Up next: The Risks of AI

*AI was used to assist in the writing of this article.