Naturally the best person to ask was Chat GPT and here’s what it came up with…with my comments in bold…:
AI brings several key advantages to e-commerce, helping businesses improve customer experiences, streamline operations, and boost sales. Some of the main potential benefits include:
1. **Personalized Shopping Experiences**: AI can analyze user behavior, preferences, and past purchases to recommend products tailored to individual customers, enhancing engagement and driving conversions. (Quite well established now as a focus area and there are some seriously good offerings from third party platforms such as Nosto, Klevu, Bloomreach and Dynamic Yield among many others, while main eCommerce platforms such as Adobe Commerce have also been making good progress catching up with their in-house product recommendations tool. Results tend to be very impressive but there can be page load issues sometimes to upset Google’s core web vitals. The future - certainly for multi-brand/product merchants - is probably hyper personalisation - presenting almost a completely different user experience for shoppers based on their behaviour).
2. **Enhanced Customer Service with Chatbots**: AI-powered chatbots and virtual assistants provide real-time customer support, handling inquiries, helping with orders, and resolving issues 24/7, reducing the need for human agents. (Perhaps it’s just me but I’m somewhat sceptical about the future of chatbots for handling customer queries. If it’s just a “where’s my order” enquiry - which tends to constitute a high proportion of contacts - then fine: AI can probably interrogate shipping partner systems to come up with an estimated arrival time. However I really appreciate merchants who take the trouble to contact you in person - from a named CX agent. Better still a personal apology from the boss almost always placates an unhappy customer. Certainly if the customer has a complaint it really makes sense to handle and resolve it in person and I just don't see AI improving on that. If a business wants to see customer service as a cost to reduce rather than an investment leading to higher return purchase rates, better reviews and word of mouth then good luck!)
3. **Improved Search and Discovery**: AI-driven search engines, including image and voice search, help customers find products more easily by understanding natural language queries and user intent better than traditional methods. (Current site search engines are certainly getting better with help from AI - predictive text showing suggestions with images are fairly commonplace and getting better. Start typing into the Osprey site search for example and you can see predictive product images as you type. With Google offering reasonably useful voice search I wonder how it will be before merchants are able to add that to site search functionality. As for Google, Bing etc the AI arms race is well under way of course with Bing offering GPT4 for free if you make it the default search. The benefits for consumers and marketers - beyond obvious improvements to relevance and improved ROI - are still largely theoretical. I have no doubt that Apple Intelligence will move things forward in a user-centred way - image searches on the phone’s camera for example seem to be a use case which could take off).
4. **Dynamic Pricing**: AI can analyze market trends, competitor pricing, and demand fluctuations to automatically adjust prices in real time, maximizing sales and profitability while staying competitive. (I suspect this will be a very niche use case - for most brands and retailers pricing is an integral part of the brand and controlled carefully as such. There are clearly some businesses where treating pricing and margin as fluid within a pure market structure would work - Ticketmaster stands out already although seemingly more disliked by the day, and travel and holidays may adopt this more. As ever the FT has a nice summary. There are multiple vendors, most of which are platform agnostic - I met Pricing Hub recently who have a nice product).
5. **Inventory Management and Demand Forecasting**: AI helps optimize inventory by predicting demand more accurately, reducing overstock or stockouts, and improving supply chain efficiency. (I have no doubt the major ERP providers are working flat out on this. So much forecasting is based on experience and feel rather than pure data - and has always been as much art as science - but I look forward to seeing how AI can impact accuracy. Obviously evergreen products should be far more predictable than seasonal one-offs so maybe most of the impact will be felt there. There are also so many externalities which can affect seasonal sales periods - anyone who’s been trying to forecast Black Friday sales during recent times (cost of living crises, Covid, Brexit) will know what I mean).
6. **Fraud Detection and Prevention**: AI algorithms can detect unusual patterns in transactions and identify potential fraudulent activities, offering enhanced security for both customers and retailers. (This has been an increasingly major focus for payment providers and most already have reasonably good algos for spotting fraud - but bot fraud such as “carding” can cause real problems if timed for the weekend for example. If next generation AI can stamp this out fully then most eCommerce teams will sleep better at night)
7. **Targeted Marketing and Advertising**: By analyzing customer data, AI enables more precise marketing campaigns, optimizing ad spend by delivering personalized ads to specific audience segments most likely to convert. (Obviously a huge area of discussion. It’s interesting to see digital marketing teams who were initially reluctant to hand over control to Google’s Performance Max gradually migrate more of their budgets over - the data doesn’t lie. AI generated ads are logically a large part of this and there’s often a tension playing out between brand and performance marketing. I would add that Meta seem to be slightly behind Google in Gen AI - we had to pull some ads with wholly inappropriate autogenerated background images - but they will no doubt catch up before long).
8. **Automation of Routine Tasks**: AI can automate various back-end tasks such as order processing, sorting reviews, and handling returns, allowing businesses to operate more efficiently and reduce operational costs. (Ah yes - the routine tasks which AI will take off our hands so we can all go to the beach. There may well be small improvements to be made, but humans will probably be picking, packing, sorting out returns and removing rude reviews from the website for years to come).
9. **Customer Insights and Analytics**: AI analyzes large datasets to provide actionable insights about customer behavior, preferences, and trends, helping businesses make data-driven decisions for product development and marketing strategies. (In addition to regular tools such as GA4, most personalised merchandising platforms produce a huge amount of data - see 1. above - and may be a better place to look for actionable insights. Equally the myriad of UX analytical tools - Hotjar, Smartlook, Crazy Egg and so on - are all great tools to use. Finding the time to make the most of them is usually the issue but always worth it. If you can afford it guided in-person UX sessions are also incredibly powerful).
10. **Visual Search and Augmented Reality**: AI enhances visual search capabilities and can be integrated into AR platforms, allowing customers to try products virtually, boosting customer confidence and reducing return rates. (AR is mostly in the “we shall see” bucket for me - but I do like some “see on me” and “see in your home” features but they seem to be slow to take off).
These AI-driven innovations help e-commerce platforms deliver better experiences, increase operational efficiency, and ultimately drive revenue growth. (It a good list and no doubt AI will continue to play a substantial part in the lives of eCommerce professionals and the experience of online shoppers. However, they do miss out one of the most important areas for AI in eCommerce: auto-translation into foreign languages. Things have improved so much over the last few years - Google Translate for example is now really good - and the latest generative AI platforms all offer translations which are good and getting better as nuances are learned. Great for website translations - Shopify do a pretty good job of this already - and potentially a very neat way of handling multi-national customer communications and service. Now all we need is for the UK to rejoin the European Union’s Single Market…).