E-Commerce Trend #1 – Artificial Intelligence: Expert interview on the topic
It’s no secret that customer buying behaviour has changed dramatically in recent years. As technology advances and customer demands change, e-commerce businesses must adapt and innovate to remain successful.
Our blog series on e-commerce trends takes a closer look at the 2023 trends and topics to know through interviews with in-house experts. Michael Kollegger, PhD, Senior Data Scientist at Emakina CEE, answers our questions about the role of artificial intelligence in e-commerce.
What are the benefits of AI in e-commerce?
Michael Kollegger: E-commerce has become an integral part of our lives and has the potential to become even more powerful with the help of artificial intelligence (AI).
Businesses are striving to make customer experiences more efficient, personalised and cost-effective.
AI technology is being used to automate everyday tasks, provide personalised product recommendations andeven detect fraud. AI can help companies maximise their ROI, improve customer satisfaction and reduce costs.
How can you use AI in e-commerce?
MK: One of the key benefits of using AI in e-commerce is the ability to automate everyday tasks. AI-powered chatbots and virtual assistants can help businesses save time and money by automating customer service requests and order processing. AI can also be used to automate product recommendations and help customers find the right product for their needs. AI-powered algorithms can analyse customer data and create personalised product recommendations based on the customer’s previous purchases and browsing behaviour. This can help businesses increase sales and increase customer retention.
Personalisation is at the core of using AI in e-commerce content marketing. Based on specific data collected from each online user, AI and machine learning gain important user insights from customer data. Armed with these insights, businesses can offer customers individual product and service recommendations, which in turn can lead to higher sales. AI can also be used to detect fraud and other dangerous activities. By analysing customer data, AI algorithms can detect suspicious activity and alert organisations to potential security risks. This can help protect businesses from financial loss due to fraud and other harmful activities.
Furthermore, AI can help to automate customer service. AI chatbots can provide customers with quick and accurate answers to their questions. This increases customer satisfaction and reduces customer service costs. AI can also be used to automate tasks like order processing, payment processing, and parts of shipping. The result: reduced operating costs and increased efficiency. Finally, AI is also used in pricing. AI algorithms can analyse customer data to dynamically determine the optimal price for products and services. Depending on many individual factors such as user behaviour, time and stock, the best possible price is automatically displayed. The clear benefit: increased profits.
How do customers benefit from AI during the buying journey?
MK: AI has become a powerful tool for e-commerce businesses. As we have seen, AI can be used to improve customer experience, increase sales and reduce costs. Customers benefit from an improved customer experience: searching for products delivers better results and purchasing processes are faster. AI can also help identify and recommend similar products that a customer has already viewed or purchased. Nobody wants to see an inappropriate product recommendation, but a good suggestion often leads to a purchase.
In addition, the customer experience in customer service is improving. Automatic answers from chatbots can directly provide the information they are looking for. Customers are satisfied without having to open a time-consuming service ticket and wait for employees.
What are some of the solutions required to use AI in e-commerce?
MK: There are no ‘out of the box’ solutions for AI. It makes more sense to find specific solutions for defined problems. AI is based on analysing data patterns. Before a company decides to use AI, it must ask itself whether it even has the data it needs to use AI. Is the data ready (existing, correct, clean, meaningful) to be used for analytics, AI and data science?
Businesses should also ensure they have the right—and sufficient— resources to maintain and manage their AI solutions. AI solutions need regular maintenance and updates to remain effective. Businesses should also ensure they have the right people in place to manage and oversee AI solutions. This includes data scientists, software engineers, and other IT professionals.
What are some of the pitfalls of using AI in e-commerce?
When looking to integrate AI in e-commerce, one of the common mistakes is failing to properly define the problem statement. Without a clear understanding of the problem, it’s difficult to develop the right algorithms and data sets to create an effective AI solution. In addition, companies should be aware of the possible bias (distortions) in AI algorithms.
This can be caused by wrong data sets, wrong assumptions or wrong algorithms. Businesses should always test their AI algorithms for bias and accuracy before deployment.
Do you have any questions on this topic or would you like to contact us? Then we look forward to your message.