ECommerce is any commercial outfit that is selling their products or services online using a web portal and app. Some of these ECommerce companies could be product companies, while others are simply an aggregator platform. Irrespective of the business model, what is common among all ECommerce companies is that they all are generating a lot of data and serving millions of customers. Highly successful and heavily funded ECommerce companies are continuously investing in innovating their business models using artificial intelligence and machine learning. In the realm of the knowledge economy, no one can be left behind for the lack of their understanding of the subject such as AI or machine learning. So this article cuts the crap out of AI buzz and gets down to a few points that will help ECommerce companies to build their case around artificial intelligence solutions.
What is Artificial Intelligence for ECommerce?
A software application's ability to use data to recommend business decisions and choices in the most crucial business scenarios that drive the growth is artificial intelligence for ECommerce. In the absence of artificial intelligence, the ECommerce businesses make these business decisions and choices using their implicit knowledge or gut feel.
Some of the most crucial ECommerce business scenarios include pricing discounts to be given away, the order in which the products should be displayed, which users to engage further and so on.
Why is Artificial Intelligence relevant to ECommerce today?
There are two ways to look at this question. A natural need to use AI arises in an ECommerce company due to the growing number of its product lineup, buyers, buying scenarios. With the increase in the volume of every moving aspect of the business, the key people can't practically make all the crucial decisions and choices effectively. Therefore they need a machine or a software program to learn how they make these decisions and choices to improve profitability. Another way to look at the rising need for AI in ECommerce is because of the increased competitiveness in ECommerce. Today an average online customer has many choices. To do more business, ECommerce companies need to learn a lot more about users' behavior and habits so that they can make the right offer at the right time. Making use of AI is equally essential for the new entrant ECommerce companies.
Use Cases of AI in ECommerce
When we speak about the use cases, 2 kinds of scenarios are essential to consider:
- Use cases that are a pain point for the ECommerce business (i.e., either they are losing money or not making money) in the absence of a solution
- Use cases that open up new opportunities to do business (i.e., new revenue channels) with the help of a solution
Here are some of the use cases of type 1 above that matter the most to an upcoming, growing ECommerce company:
- Reducing cart drop-off or cart abandonment
- Engaging customers who buy once but never return back
- A lot of traffic but dismal conversion rate, changing this pattern
Can artificial intelligence solution handle these? The answer is yes, however the AI solution and its implementation changes as per specific scenario. Most ongoing pain points in ECommerce are a result of poor to no customer engagement. Customer engagement requires a contextualized understanding of customer behavior. To learn the context, you can use AI. AI helps understand all the customer interactions and also to recommend your next engagement option.
Here is a list of use cases that machine learning and artificial intelligence can bring an incremental revenue for ECommerce companies:
- Product recommendation: Product recommendations are shown so that the ECommerce marketers fetch an additional purchase from the buyer. Most ECommerce portals provide a view of products that might interest the visitor. This list of products should be personalized as per visitor behavior. Most ECommerce companies have fixed product recommendations, and it is decided based on their gut feel. AI solutions can help ECommerce marketers to come up with a precise set of recommended products - This helps them increase their chances of getting incremental business per checkout.
- Customer Churn: ECommerce companies seldom know which customers are likely to buy more next month or week. They are at best hoping to see the customer back to the portal. To run a predictable business model, you could use AI solutions to help you understand the customers who will return to buy more and those who won't. Predictable customer behavior helps plan a precise engagement journey for each kind of customer.
- Demand Forecasting: For the product based ECommerce companies, this is an important indicator. Whether you are showing a stocked out item to customers repeatedly or highly stocked item on discount without many buyers, you have a demand forecasting problem. Artificial intelligence can use many signals from your past purchase data, seasonality data, and so on to forecast demand and sales.
So far artificial intelligence might sound like the holy grail of ECommerce. However, the real differentiator is your domain knowledge and the data. To begin your journey of AI, you don't have to be an expert in data science. Thanks to the artificial intelligence that can learn itself. Now, you have tools that can help you redeem the value of your data in terms of incremental business. Using Datoin AI platform ECommerce companies can have all the benefits of using artificial intelligence without going through the pains of managing another technology team.