The Impacts of AI in Ecommerce: How to Leverage AI to Scale Your Brand

The rise of AI in ecommerce brings with it exciting new possibilities for business owners. By harnessing AI, you have the opportunity to personalize your marketing efforts, learn more about your customers, optimize your pricing, and boost productivity. These changes can supercharge your efforts to scale your brand and maximize the value of your business.

With great opportunity comes risk, however. Any business owner who wishes to leverage the power of AI to scale their brand also needs to skillfully navigate the potential pitfalls this new technology creates.

In this article, we discuss several key elements you need to know about how AI impacts your ecommerce business, including:

• Understanding four different kinds of AI technology
• Eight ways you can use AI to scale your ecommerce business
• How AI is changing the ecommerce space
• The limitations of AI in ecommerce

Related Article: How Much Is My Ecommerce Business Worth? Here’s How to Find Out

Understanding The Four Types of AI Technology

Innovators have made astonishing advances in the artificial intelligence field in the past few years. The result is a range of powerful new technologies that bring untold promise in a wide range of fields.

Before we jump into how you can use AI to scale your business and drive growth, let’s first take a look at what we actually mean when we discuss AI technology.

For the purposes of this article, AI can be broken into four main categories, each serving a different function. These include:

• Machine learning
• Natural language processing
• Data mining
• Computer vision

Below, we’ll take a brief look at each of these technologies to get a better understanding of how they can benefit your ecommerce efforts.

Machine learning

Machine learning underpins much of what we think of AI today. Given this, “machine learning” and “AI” are often used interchangeably.

In short, machine learning allows computers to intake and analyze data. They can then make associations or observe connections within the data. It can use its knowledge of these relationships to make predictions or decisions in real-time.

Does this sound familiar? It should. Machine learning algorithms mimic the way that humans observe and learn from the world.

Given the raw power of the best computers being used in machine learning and the newness of the industry, its full range of benefits is still unknown. What is clear is that it has the potential to drastically alter a wide range of fields, including ecommerce.

“Machine learning algorithms mimic the way that humans observe and learn from the world.”

Natural language processing

Natural language processing (NLP) allows computers to understand human language in much the same way that a human does. NLP-enabled programs can understand the content, sentiment, and intent of a person’s communication. At the same time, they can communicate back to the speaker in a coherent way, much the way a human being would.

NLP programs achieve this incredible feat by combining several capabilities. These include computational linguistics, machine learning, deep learning, and statistical models.

Data mining

Data mining is a type of artificial intelligence whereby a large amount of data is collected, stored, and analyzed. Through this process, it is possible to distinguish patterns in the data and recognize relationships. Once these relationships are established, the programs can draw conclusions or make predictions. 

Computer vision

Computer vision is a type of artificial intelligence that allows a computer to recognize and understand objects and people in images or videos. As with other forms of AI, computer vision aims to replicate the way humans understand and interpret data.

“If there is one word that sums up how AI can best assist ecommerce businesses, it is “personalization”.”

Eight Ways You Can Use AI to Scale Your Ecommerce Business

Let’s take a look at the specific ways you can use these new technologies to scale your ecommerce business. AI makes it possible to:

• Use customer experience tools to improve online shopping
• Gain actionable customer insights
• Launch individualized marketing campaigns
• Initiate personalized retargeting advertising
• Implement dynamic pricing strategies
• Automate customer service processes
• Create smart inventory management

Each of these tasks may require individual tools or programs to initiate. At the same time, you can make excellent use of ChatGPT, perhaps the most well-known AI model, to save time on a number of common tasks.

Use customer experience tools to improve online shopping

If there is one word that sums up how AI can best assist ecommerce businesses, it is “personalization”. AI brings the possibility of creating highly personalized shopping experiences at a vast scale.

There are several AI tools that serve to increase the personalization of the shopping experience. This helps to increase shopper satisfaction and can lead to more conversions.

First, powerful imagery tools allow shoppers to gain a clear idea about how a given product would look in the situation they intend to use it. For example, if a shopper is interested in buying a shirt, they can upload a photo of themselves and immediately see how the shirt would look on them.

This removes a lot of guesswork as to how the shirt would fit or whether the style would match their preference.

This technology is applicable to a wide range of scenarios. Shopping for a piece of wall art? Simply upload a photo of your room, and see how the art would look in your own space. Or, see how a new table would look in a corner of your living room.

AI-powered chatbots can also improve the customer shopping experience. Utilizing advanced AI, these chatbots can interact in near-human-like ways with your customers.

AI chatbots can play several helpful roles when it comes to personalizing the shopping experience. They can answer customer questions and provide round-the-clock customer support. This can reduce customer service costs and help answer customer queries in a timely manner.

Chatbots can also collect customer data. They can then provide live personalized recommendations or promotions to your shoppers. When your customer is ready to check out, they can assist in the process. Some chatbots can even process simple orders, leading to a more efficient sales process.

Gain actionable customer insights

You can also make use of AI to gain actionable customer insights and learn about your products. This is made possible by ChatGPT, the most well-known example of AI technology today.

For starters, ChatGPT can quickly analyze your product reviews. This allows you to efficiently determine how your customers feel about your products and services. This can save you time while unlocking helpful insights into the thoughts, feelings, and views of your customers.

At the same time, you can feed ChatGPT your competitor’s reviews in order to determine their strengths and weaknesses. This can be useful when designing or choosing new products to add to your lineup.

In order to have ChatGPT analyze reviews, you must first provide it with a useful prompt. Then, feed it with the reviews that you want it to analyze. Be specific in your prompt, and don’t be afraid to use trial and error until you find one that works for you.

ChatGPT can also be helpful for conducting customer research about a product. Let’s say you are considering launching a new product. You can ask ChatGPT to clarify the different customer segments who would be interested in buying that product.

At the same time, you can ask ChatGPT to tell you the specific problems that those customer segments are trying to solve. This helps you understand their pain points or motivations for buying the product.

Launch individualized marketing campaigns

Artificial intelligence is making it possible for businesses to create individualized marketing campaigns.

By using purchase history data and customer behavior analysis, AI tools allow you to create campaigns that target thin customer segments or even individual customer profiles, in order to be able to better connect with their wants and needs.

This targeted marketing can give you a competitive advantage over rivals and help boost your sales. The better you are able to connect with your customers, the more likely they are to buy from you instead of competing online retailers.

“Artificial intelligence is making it possible for businesses to create individualized marketing campaigns.”

Initiate personalized retargeting advertising

Ecommerce websites that use personalized retargeting advertising also gain a leg up on the competition. By analyzing customer interactions, historical sales data, and other relevant information, AI can generate customer insights that allow you to create highly specific retargeted advertisements.

Implement dynamic pricing strategies

Getting pricing right is always a challenge for an ecommerce business owner, but AI unlocks the ability to instantly vary your prices across multiple channels based on a variety of relevant factors.

AI programs can take into account:

• Current customer behavior,
• Your product supply
• Current industry supply and demand
• Competitor information

They can then use this information to select the best real-time price for your products. And it can vary your pricing across ecommerce platforms based on the current customer data from each platform.

For example, if Amazon sees an influx of traffic for a specific product type, AI can calculate the price that would maximize sales and profits. But when doing so, it can take into account competing product pricing. This allows you to automatically price match when needed.

Automate customer service processes

AI can also bring benefits to your customer service processes. It can do this with the help of powerful AI chatbots and AI-powered virtual assistants. These allow you to continue to field customer questions or concerns. A the same time, you are able to reduce your need for customer service representatives.

AI chatbots do currently have limitations. Given this, it may be prudent to restrict your AI chatbots to handle relatively simple customer interactions. A human customer service agent may still be better able to deal with complex situations.

Create smart inventory management

AI provides you with tools to better manage your supply chain and improve your inventory management. AI can analyze huge amounts of relevant data to more accurately predict inventory shortages, when to order more inventory, transit times, and more.

ChatGPT prompts to save time on common tasks

Along with the benefits discussed above there are a number of tasks that can ChatGPT can handle more efficiently. And with the right prompts, ChatGPT can quickly write:

• Emails
• Product listings
• Email campaigns
• Social media posts
• Paid advertising copy

Of course, you will want to look over the copy to ensure accuracy and correctness. When used in this way, however, ChatGPT can save you valuable time. This makes your workflow more efficient and frees up your time and energy for other more important tasks.

Five Additional Ways AI is Changing the Ecommerce Industry

Advancements in AI are bringing significant improvements to the ecommerce industry as a whole.

These improvements often affect entire ecommerce platforms or fulfillment and shipping service providers.

Recent improvements include:

• Enhanced product search
• Personalized product recommendations
• Smart delivery mapping and logistics
• Counterfeit detection
• Fake review detection and filtering

Enhanced product search

By now, it should be clear that one of AI’s main superpowers is the ability to analyze vast amounts of data. And by doing so, AI can create a more personalized shopping experience for every customer. Also, the same is true when it comes to product searches.

Ecommerce platforms can make use of a range of data points to create customer-specific search results. Based on a customer’s purchase history, previous product interest, and other relevant information, ecommerce platform search engines can provide individualized search results for each customer.

This helps customers more efficiently learn about products that they may be interested in. At the same time, it can boost ecommerce sales overall.

Personalized product recommendations

Using similar technology, AI can help ecommerce platforms make more targeted and useful product recommendations for online shoppers.

For example, when you search for a product on Amazon and click on a listing, you will get a number of recommendations for related products, likely lower down on the page. With the help of AI, these product recommendations can be made more personalized to each shopper.

The more targeted and personalized these recommendations are, the more likely a shopper is to find a product that meets their needs.

“AI analysis can identify inefficiencies in current delivery routes and suggest more efficient routes and schedules.”

Smart delivery mapping and logistics

Another area where AI is improving ecommerce is in the logistics and delivery sphere. AI algorithms can create more efficient warehouse management practices.

At the same time, AI analysis can identify inefficiencies in current delivery routes and suggest more efficient routes and schedules. This helps to reduce shipping costs, remove vehicles from the road, and improve delivery times.

Counterfeit detection

Counterfeit products can be a major headache for hardworking ecommerce business owners. Fortunately, AI programs have gotten quite good at spotting counterfeit products online. Once a potential counterfeit product has been identified, ecommerce platforms can investigate and remove the product if appropriate.

Fake review detection and filtering

Likewise, fake reviews can also be a major source of frustration within the ecommerce industry. Customers rely on reviews to make better purchasing decisions and find quality products. Naturally, this attracts some business owners to solicit or create fake reviews for their products.

This harms both consumers and other business owners who are playing by the rules. Obviously, ecommerce platforms have an interest in preventing and removing fake reviews. These platforms have been battling fake reviews since the beginning of ecommerce, with tactics and counter-tactics always evolving.

AI provides ecommerce platforms with a powerful tool to analyze and identify fake reviews on a massive scale. AI algorithms can efficiently evaluate vast numbers of reviews, identify patterns that correspond to fake reviews, and report them to the platform for further evaluation and follow-up.

Understanding the Limitations of AI in Ecommerce

Despite its impressive abilities, AI programs do come with some limitations. In order to make the most of AI without causing undo harm, it is important to understand how AI can go wrong.

Typical limitations or drawbacks to AI in regard to ecommerce include:

• Accuracy and skill
• Customer service degradation
• Customer data and privacy concerns
• Cost and ROI

“In order to make the most of AI without causing undo harm, it is important to understand how AI can go wrong.”

Accuracy and skill

It only takes a few minutes of playing with ChatGPT to recognize the brilliant generative capabilities of AI programs. However, even these programs can produce errors. At times, these errors can even include lies or misinformation.

When using AI to scale your ecommerce business, be sure to check the output for errors. Even if there are no factual errors, review the output to make sure that it meets your quality criteria. Sometimes, text generated by AI will need to be optimized before being put into use.

Customer service degradation

We have all had frustrating experiences while talking to a robot or chatbot assistant. Despite the recent advances in these services, make sure you take the necessary steps to ensure that you don’t sacrifice quality if you switch to automated customer service bots.

Customer data and privacy

As AI develops, there is widespread concern regarding how user data is handled. If you are implementing new AI programs within your business processes, be sure to take data security and customer privacy into account.

Cost and ROI

Implementing new AI programs can be costly initially. This is true both financially and in the time it takes to learn how to use the program effectively. Be discerning about which areas of your business will actually benefit from AI before embarking on implementing a new software or program.

Conclusion

As recent advances in AI become implemented throughout the world, many industries will undergo changes. As an ecommerce business owner, it pays to understand how these developments will shape your business and industry.

By becoming informed about current AI capabilities and how they can benefit your ecommerce business, you position yourself to harness the coming changes, drive growth, and scale your company.