How AI is transforming e-commerce?

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Artificial Intelligence (AI) has been a buzzword for a while now, with its potential to transform entire industries often being depicted in near-mythic terms. 

However, regardless of the hype, AI is undoubtedly a powerful technological development. AI-related technologies and processes such as machine learning and deep learning have been used to realize vastly different goals and achievements that were previously considered impossible. 

From creating models to map the evolution of the pandemic, to using the technology to develop self-driving cars or to optimize energy usage – the way humans are combining data with algorithms to produce automated outcomes and solutions is constantly expanding and becoming more sophisticated. 

E-commerce is an area where the application of AI has been particularly active and innovative. Industry giants such as Amazon were some of the first to start using the technology for cross-selling and upselling to their customers, demonstrating the vast power of the technology to grow revenues. 

But in the last several years, smaller businesses and startups have also embraced AI’s potential to improve their product offerings, engage with customers better, optimize their resources, and ultimately punch above their weight in a highly competitive global marketplace. 

In this article, we’ll be taking a look at some of the most important and exciting ways that e-commerce companies are using AI to boost their business – and in the process transforming the way the industry works as a whole. 

Artificial intelligence can drastically boost sales on your e-commerce site
Artificial intelligence can drastically boost sales on your e-commerce site

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Target optimization

Digital marketers have been using AI that allows companies to intelligently identify new potential customers to target with their campaigns. AI-powered software has been developed that tracks online behavior to develop nuanced views of potential target markets that are automated within a customer relationship management (CRM) or customer data platform

This process is particularly relevant for B2B companies, which can use the software to trawl websites on the internet for companies that may be interested in the products they sell. In a similar way, social media platforms like Facebook and Instagram have been using AI to constantly refine how their paid ads can be used to target users based on detailed profiles that are developed through each user’s behavior on the platforms. 

This has given smaller businesses an incredibly powerful toolset for reaching a potentially global customer base that is curated intelligently, reducing the need for mass-reach and expensive ad campaigns.

Subject line marketing

Long considered an area that was inaccessible to the encroachment of AI – which has tended to be associated with crunching and using data – creative tasks such as design and copywriting are now also increasingly being performed by AI. Software as a Service (SaaS) companies have used deep learning to begin to crack some of the most complicated systems that exist: human language and ideas of aesthetic beauty – and the result has been improved conversion rates and successful marketing campaigns. 

Phrasee, a British company that was launched in 2016 has been developing AI technology that can develop subject lines for email marketing campaigns in over 20 languages

This niche business idea was born out of the knowledge that email marketing remains a powerful and often-overlooked tool – even if marketing emails are rarely opened, their mere presence within inboxes is enough to build a relationship with potential customers. So, using AI to fine-tune the language that is used in email campaigns is Phrasee’s sole focus, and it counts large global companies such as eBay and Domino’s pizza among its customers. 

Product Recommendations 

One of the most powerful ways AI has been used to grow e-commerce sales is through product recommendations. Anyone who has ever purchased an item on Amazon will know how this works in practice – when viewing a product, a selection of similar or associated products will also be presented somewhere on the screen. This cross-selling and up-selling reportedly accounts for 35% of the e-commerce giant’s revenues. 

Social media companies have also been at the forefront of AI-driven product recommendations, which has been made possible from the vast amounts of data they gather on individual users’ online activity, from the images they tend to look at the longest, to the types of pages they visit and what they engage with on their platforms. 

However, product recommendation technology has also largely been powered by machine learning, which is an AI process that works by putting data through predefined algorithms, and creating outcomes. Deep learning, a newer, more complex AI process that attempts to mimic the computational system of the human brain, is now being used by companies such as Qubit to take product recommendation technology to the next level. 

As this technology becomes more sophisticated, expect product recommendations that are not only based on past purchasing history or what pages you’ve viewed online, but which are fine-tuned to trigger complex emotional responses that make you much more likely to press ‘Buy’. 

Recommended products increase the average shopping basket of Internet users
Recommended products increase the average shopping basket of Internet users

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A constant challenge facing companies of all sizes is how to build trust, loyalty and personal relationships with their current and potential customers. 

Unsurprisingly, this is one of the e-commerce areas where AI is being tested and deployed most intensely. 

Personalization through AI can take on many forms. The technology is being used to create seamless and consistent omnichannel experiences for customers across devices and platforms, with language and visual cues that can be adapted to the specific customer according to their dynamic data profile. 

AI technology is also being applied for analysing customer reviews, which can give companies valuable insights on what customers think of their products or services – and what can be adapted an improved. 

Chatbots are another AI technology, which have also allowed businesses to be constantly available to their customers. As chatbots has evolved, individuals are becoming increasingly willing to engage with them to find out more information or resolve issues. Powered by AI, chatbots are now able to process voice interactions through Natural Language Processing (NLP), and are also able to improve autonomously using self-learning processes. 

They are also able to use data a company has gathered on a customer to offer them personalized ads and offers based on their past purchase history or behavior on a site – all in all improving how companies can actually address the questions of their customers and deliver value to them.

AI and its related fields of study are allowing humans to reimagine how goals are defined and reached across industries. As AI technology continues to be upgraded and refined, digital marketers will continue finding new and exciting ways to apply the technology within the context of e-commerce, delivering new types of value to customers – and boosting revenues for online businesses. 

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