How artificial intelligence is applicable in my eCommerce shop?

Hello, I'm Alexander Malyshev, Executive Officer at Steinbeis Consulting Center AI. I want to share the case study that we have learned working with several e-commerce shops.

Monitoring eCommerce trends since 2018, our team is facing similar requests from eCommerce platforms. However, I need to say that there are only two main types of e-commerce shops:

1) Conservative players: they probably have got good SEO ranking, but they avoid any enhancements. Progressively, they do not reinvest the profit into the business, and one day they understand that they have no idea why their profit has dropped.

2) Game-makers: they are okay with their website, but however they are reinvesting the money for the leadership. They know that one day if they do not have a new smart feature, Google drops them out of the search.

After COVID-19 crisis, e-commerce customers go more digital with up to 28.5% average growth by industry

Source: Common Thread Collective

That means the e-commerce market becomes more competitive, and conservative players begin to lose the race. In this article, I would share how to boost the website with AI.

Learn from market leaders

One of the fashion e-commerce leaders,, invest quite a lot of resources in algorithms: you may find great scientific results in machine learning concerning personalized recommendations, but you may also find their personalized feed enormously smart. Once you go to a feed, they show you more and more looks, creating an almost infinite feed of fashion clothes. Algorithms run everywhere: they collect information, what do you click, what is your shopping type and what could be a good recommendation for you to buy.

However, when geeks tell you stories about the future of AI, many e-commerce holders forget that the best up-selling technique in 2020 is still email-marketing. Email marketing is so strong that it gives up to 38x ROI: $1 invested in email marketing could be worth $38. That is because all of us faces problem to hold our customers and make them loyal. Emails are a great choice to reactivate customers and up-sell them more. Starting with that, let's see what possible bottlenecks for e-commerce businesses are?

ASOS is one of the leaders in e-commerce R&D

AI for e-commerce: bottlenecks & solutions

1) New customers

  • AI for Paid ads optimization

Paid ads could be optimized significantly: if you sell glasses, it is a great idea to get a Facebook audience where every user got glasses. In 2018 Ashmanov & Partners made a neural network to analyze social media and detect people who wear glasses. They have spent several days to train the model and parse the relevant audience groups. As a result, they have found a 250.000 target audience – this result can save x2-x3 money for your PPC-strategy

  • AI for A/B tests

A/B tests are frequently used in PPC-marketing. Each A/B test is quite expensive, and many companies use AI to predict the result of the A/B test using the historical data. It optimizes spent time for design, targeting, and saves from 5% to 25% of your PPC-budget.

  • AI as a content creator

Some companies begin to trick Google with AI-generated articles. Elon Musk's Open AI shows excellent results in text generation. AI-robots post content on your Instagram. Even TikTok can be in danger: there are excellent results in 3-D AI rendering: many creative videos could be replaced with artificial intelligence. However, in 2018 there was already boom with deep-fake algorithms. Steinbeis Consulting Center AI believes deep-learning algorithms are new content creators: they start with copy-paste, grow in the next few years, and begin replacing copyrighters, videomakers soon.

2) On-boarding

  • AI-based chatbots in web

AI-based chatbots can optimize customer service loading by 80-95%.

There are many ready-solutions: they help to answer questions about the product, delivery, FAQ, and they guide customers from the first website look to the first purchase.

  • AI-based chatbots in social-medias & messengers

Facebook, Whatsapp, Telegram, Viber chatbots are great for retention. Notably, it works excellent with GenZ: there is a trend they will more likely chat with a chatbot in Whatsapp instead of making a call or email.

  • AI for websites A/B testing

The first impression is everything. And what is also essential: different people want to see different content: overwise their first impression would be averaged, not maximized. Using some meta-data and targeting information AI can adapt the website to maximize the revenue stream.

3) Reactivation

  • AI in social commerce

Social commerce is a deep trend that will continue in 2021. In April 2020, TikTok has started testing a "shop now" button for influencers videos: high engagement together with call-to-action can do a significant market change. However, your Instagram likes & comments, and other customers' triggers require small but annoying actions – leave comments replies to your AI assistant and invest in analytics algorithms to predict customer satisfaction.

  • AI for personalized email marketing

Remember the example with emails and ASOS? However, they do over half of all revenue from segmented and targeted emails. A click on an item triggers AI, which predicts the chance you would buy the item. It maximizes revenue and customer satisfaction. Steinbeis Consulting Center AI has got its own algorithm Emmy Recommendations – it helps to increase open-rates from 3 to 12%, and it is a ready solution for any Shopify shop.

  • AI for shopper behavior analysis

Your customer's reactivation strategy should rely on the data, not feelings. AI-powered shopper behavior analysis is an excellent partner to make the right decision about promotions, email-campaign, or SMS-marketing.

Microsoft & Lenta has set up a challenge "Big Target Online" where they shared data-sets to predict the efficiency of SMS-marketing campaigns: the result has helped top-3 Russian retailer to save up to 40% of their costs of SMS-marketing.

  • AI-promotion

There are good ideas to use AI in sales-promotions: people are 40-70% more likely to do something with innovative machine learning algorithms: look at FaceApp, Gradient, or PicsArt success. However, it is easy to integrate such technology on your website or run a promo over a chatbot system in messengers.

4) AI for the shopping experience

  • AI as a maker for personalized feed

Amazon, Instagram, Tiktok – this is all about personalized content. And shopping content! But why is it essential? Well, 35% of Amazon sales go from personalized recommendations. The case is an example of why artificial intelligence is so important for e-commerce business. User behavior changes rapidly with Instagram, Youtube, Tiktok, or Facebook feed – your customers want to have personalized content, and they bring you more money if they have personalization.

  • AI for up-sale & cross-sale

Keep in mind that data is a source of customers' actions. It helps to make these actions happened. It can be additional items recommendations or similar items recommendation: in any case, machine learning algorithms are assistants to solve your business pain in e-commerce & retail.

  • AI for a new experience of shopping

Rakuten is a big e-commerce player in Japan. It is also called "the Amazon of Japan." Their research and development branch invests an incredible amount of resources in developing data science algorithms. For example, they have developed an app "Rakuten Fits Me," which uses AI to recommend the best possible fit based on customers' height, weight, age, bust, and body shape. That helps up to 86% of shoppers to avoid gamble while they are shopping the right sized clothing.

  • AI-based voice assistant

Launching an Alexa skill is currently the easiest (and best) way into the smart home assistant market. A headless digital platform will help you manage that new channel. Do not forget to optimize your website for voice searches – there is a potential of trillion-dollar e-commerce market-cap and a new digital revolution.

Over to you

What do you think is the best solution for your eCommerce business? Stay ready with Steinbeis Consulting Center AI and be in touch with AI trends and machine learning solutions

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