How AI in e-commerce makes vendors more responsive to customers

AI tools are giving a boost to personalization in e-commerce as vendors find machine learning tools can make ads and experiences more relevant to their customers.

Retail and commerce always seem to be on the front line of change when technologies arise. The advent of efficient mail brought about the mail-order catalogs. The widespread use of telephones gave rise to phone orders. The internet accelerated the pace of e-commerce, and mobile phones have made always-on commerce a reality.

Artificial intelligence is now making significant changes to the way people buy and sell online, and there is no doubt we're experiencing the next wave of transformation enabled by cognitive technologies

Conversational commerce: Enter the chatbot and voice assistants

Regardless of how technology is changing the way commerce is done, at its core, commerce is still about buying and selling goods. However, when there are too many choices or the products or services are complicated, buyers may need help with the purchase process. That's where AI in e-commerce comes in.

Retailers are increasingly looking to automated conversational chatbots and messaging technology to help with these needs. Known as conversational commerce, the use of natural language technology, which supports back-and-forth interaction with an intelligent bot in voice or text, has gained widespread acceptance among retailers and consumers alike. Chatbots and virtual agents are helping customers work their way through sales transactions that have lots of options.

Companies as diverse as H&M, Macy's, Domino's Pizza and Lowe's are using chat interfaces to expedite sales, assist with customer support and facilitate multistep commerce transactions. Domino's Pizza lets you build your pizza, order it and track it all from within Facebook Messenger. H&M's chatbots can help you find your perfect clothing combination, and the Macy's bot helps you navigate a sea of options to find the products that best suit your needs.

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Lowe's has taken the bot experience one step further, testing a physical bot called the LoweBot, which roams the store interacting with customers and providing assistance.

Voice assistant tools such as Amazon Alexa, Google Home, Apple Siri, Microsoft Cortana and Samsung Bixby are encouraging this movement to conversationally enabled commerce by making it simple to find, order and pay for items through voice-enabled devices.

Uber, 1-800-Flowers and Starbucks have placed big bets on this technology. Uber lets you order a ride using Alexa and other devices with a simple command. 1-800-Flowers lets you place flower orders using Alexa Skills, and Starbucks recently launched the My Starbucks Barista, which lets you place orders for pickup via voice assistant devices.

Research firm OC&C Strategy Consultants predicts that voice shopping will grow to over $40 billion worldwide in 2022, up from $2 billion in 2018.

Furthermore, retailers and sellers are leveraging the power of conversation bots to simplify customer support and improve customer satisfaction. Rather than waiting for a call center rep, consumers are increasingly looking to interact with always-on, 24/7 chatbots that can help them locate orders that have not yet been received or address issues with orders. AI-enabled chatbots can communicate effectively with customers and provide customer support at all times.

Improving customer responsiveness

Retailers are also using AI in e-commerce to help improve the way they respond to customer needs. AI systems are capable of analyzing customer behavioral patterns to determine which products generate the most interest, as well as which price points seem most effective for those products.

Amazon and Walmart have long experimented with different product descriptions, pricing and promotions on their sites based on personalized customer data. AI systems bring this to another level by customizing the entire consumer experience. E-commerce sites will soon start to look very different on a person-by-person basis based on what these systems know about you and your preferences.

Some retailers are also paying attention to your online shopping behaviors. If you spend more time on a specific page looking for details on a certain item but don't ultimately purchase it, you might find an email in your inbox or receive a notification during your next visit providing an offer or incentive to purchase that item.

AI systems and big data are combining to provide predictive analytics to optimize sales transactions. Companies like The North Face are using systems like this to help customers finalize their transactions and to motivate customers to purchase highly seasonal items.

Some retailers are further pushing the AI-enabled boundaries by using image recognition technology to help customers find products that interest them. Pinterest recently updated its Chrome extension with a new feature that allows you to select any online photograph and find products currently available for sale that match those items. Other systems enable you to color-match paint or furniture based on uploaded or scanned images.

Online real estate listing site Trulia is using computer vision tools to identify objects in listing photos, such as granite countertops, in order to surface personalized listings based on users' preferences.

AI in e-commerce helps improve processes

AI is not only helping with the front end of the buying process; it is also helping with the entire order and logistics process from beginning to end.

Managing the thousands, or even millions, of products that are available for purchase online usually requires armies of people. AI systems are helping by using computer vision and natural language processing to assist with these processes.

AI tools can classify, interpret and automatically tag images, speeding up the process of adding products to online catalogs. Likewise, these systems can also suggest descriptive text for the products, finding information from online providers and intelligently summarizing it.

Additionally, retailers are using AI systems to help with their supply chain operations. AI systems are providing more accurate inventory forecasting by predicting purchasing patterns in real time and forecasting future inventory needs. In this way, companies can respond quickly to changes in the market and evolving needs.

Similarly, companies can evaluate which suppliers are having more customer support-related problems and adjust their purchasing processes to find suppliers that get higher customer satisfaction ratings and that offer a lower cost of return.

E-commerce companies are also adopting AI to help combat the problem of fake product reviews. Amazon uses AI systems to identify which product reviews might be fake and which five-star ratings might not be genuine. Using proprietary technology that the retailer might later make available via its platform, its machine learning system determines the authenticity of customer purchases and identifies which patterns fit that of real reviews and which are outliers.

Enabling new forms of payment

AI is even making inroads into the way customers make payments. Retailers are experimenting with using facial recognition technology to authorize and make payments.

CaliBurger in Pasadena, California, is already rolling out this technology. Now, with a simple smile at the screen, you can pay for your burger. Payment is then taken from a credit card on file, only requiring the customer to confirm the three-digit CVV code as a final authorization step. Other companies are using different forms of biometric control, including voice recognition, to simplify payment transactions.

While privacy advocates might struggle with companies storing and using personal information and biometrics, it's clear that consumers and retailers alike are flocking to the use of AI in e-commerce.

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