Artificial Intelligence in Ecommerce

What makes AI, AI? Isn’t ecommerce just commerce? How (and why) do the two fit together? Why is it important to support this connection?

AI in Basic Terms

What mainly separates artificial intelligence from, say, traditional intelligence is the presence of a computer or modeled system rather than a living, sentient being.

This computer can complete tasks on par with or beyond those typically reserved for humans, such as processing visual, auditory, and written information, all within the context of current and historical data.

Ecommerce in Basic Terms

Ecommerce, or electronic commerce, is any transaction that occurs on a network-connected entity. In other words, it’s any transaction that occurs online.

In our digital world, ecommerce happens on the digital shelf, which makes just about every commerce interaction an ecommerce transaction.

How AI and Ecommerce Work Together

With so many connected devices and computers, this further increases the odds that AI has played a role in each ecommerce transaction. This makes the two terms even more inextricably linked.

Properly enabling — or directly employing AI tools for ecommerce at your organization — plays a huge role in how quickly and effectively your products get to market and how consumers interact with them along their buying journey.

Work With AI for Ecommerce and Digital Shelf Success

An increasing number of buying journeys occur partly or entirely on the digital shelf. Buying journeys continue to involve more digital touch points, allowing more brands more ways to connect with more consumers.

More touch points, more products, and more consumers can lead to increasingly competitive, complicated paths to purchase. But AI can help your target customers cut through the noise for an experience that feels more personal (and keeps them coming back).

But how did AI come to fuel these personalized experiences that consumers crave?

AI’s history originates in academic settings and research labs, dating back to the 1950s and ‘60s. Several decades passed before AI was applied in business settings.

The Early Days of AI in Ecommerce

The boom of the internet in the 1990s and 2000s — and, particularly, the rise of the ecommerce giant Amazon — fueled the integration of AI into ecommerce with its knack for offering personalized recommendations.

How AI in Ecommerce Picked Up Speed

In the 2010s, AI started “learning” more rapidly, gaining the ability to recognize and analyze patterns and written or verbal information, then curating appropriate responses. Businesses began further adopting AI for customer service and inventory management.

AI in Ecommerce Now

Well into the 2020s, the usage of AI, particularly generative AI (GenAI) in ecommerce, continues to grow. An IBM study estimates that 35% of businesses use AI — and even more (44%) are working to embed it into their applications and processes.

To better understand AI in ecommerce — and the associated components and technology — here are some related terms to know.

There’s a lot of information about AI to absorb. Whether you (knowingly) use it every day in your work (or, during scroll breaks on your small screen), it can be hard to wrap your head around everything that AI can offer.

Here are the pros and cons of artificial intelligence in ecommerce at a glance.

Pros of AI in Ecommerce

In large and small organizations, some of the pros of AI in ecommerce are:

• Consistent, accurate data through well-defined rules and parameters;
• Operational efficiency through the automation of repeatable tasks; 
• Higher brand engagement and recognition through search engine optimization (SEO);
• Greater security for organizations and consumers;
• Intelligent inventory management and order processing;
• Cost and time savings, plus increased speed to market; 
• A deeper understanding of your customer base; and
• Higher, more predictable conversion rates and demand. 

Cons of AI in Ecommerce

In large and small organizations, some of the cons of AI in ecommerce are:

• Limited, robotic-sounding product and brand content;
• Inaccuracies from generative AI content left unchecked by a human editor;
• Security risks from a lack of employee training;
• Consumer (or employee) hesitancy to interact with artificially intelligent systems; and
• The fast pace of AI technology’s growth and change.

Even for late or hesitant adopters, ecommerce professionals and digital marketers alike probably interact with AI far more than they realize. The same goes for consumers.

Popular AI Examples

Each of these examples of AI’s abilities, for both information and product data, is likely activated at least once in the course of your day, if not hundreds of times per hour as either a professional or a consumer:

• AI overviews from popular search engines or visual and voice searches;
• Content and product recommendations; and
• Spell-checking, grammar and tone suggestions, predictive text, and auto-translation.

These examples of virtual assistance are (typically) natively embedded in products and services you’re already using, likely via Apple’s Siri, Google’s Assistant, Amazon’s Alexa, or Meta. You generally don’t have to go out of your way to use these tools.

Other powerful AI tools for marketing and ecommerce professionals go beyond just ChatGPT and can be used at all stages of the sales cycle — starting with ideation and content creation through churn prevention. For example, Midjourney can generate imagery and Google Analytics 4 can help measure content performance. 

More AI Examples

More examples of AI available for businesses to leverage are expanded on in this section, including:

• Generative and creative AI;
• Virtual reality (VR) and augmented reality (AR) for futuristic selling; 
• AI for personalization and channel segmentation;
• AI for customer service; 
• AI inventory and order management; and
• AI for demand forecasting and dynamic pricing.

Generative and Creative AI, VR, and AR

If humans created AI, how can AI create better than humans can? (It can’t.) A great way to think of using AI is for repurposing existing content. In a pinch, for cost-savings or otherwise, AI can create content and images for you — it just can’t replace your entire product catalog.

Artificial Intelligence: Generative vs. Creative AI Uses

Video Source: Salsify

What humans can’t do, however, is directly visualize versions of products to scale. VR and AR will become increasingly valuable in selling items like furniture, clothing, and even makeup. 

Image Source: L’Oréal Paris

In this virtual-try-on example, beauty brand L’Oréal Paris offers an “accurate and inclusive skin tool” with tips and step-by-step instructions to ensure all shoppers find their perfect look — bridging the gap between digital and physical shopping experiences.

AI for Personalization

If AI makes it easier for companies to bring their products in front of consumers, won’t that just increase the number of options? Won’t shopping just get increasingly difficult? Enter personalized recommendations — the cure for any potential decision fatigue.

According to McKinsey & Company, nearly three-quarters (71%) of consumers expect companies to offer personalization, and if they do, 78% are more likely to recommend them to family and friends — word-of-mouth being arguably the most powerful review network.

AI for Customer Service and Experience

On the topic of personalization and the customer experience, another top example of AI is ecommerce chatbots. They can enhance the customer experience (in most cases) by capturing contact information, fielding simpler queries, and starting support tickets. 

Image Source: Spanx

For shapewear and apparel brand Spanx, a virtual styling assistant greets shoppers and determines what they want to chat about before passing them along to a live agent.

And, as noted by SmallBizGenius, chatbot usage is popular among smaller businesses — and can reduce operational costs by up to 30%. AI workflows can also trigger contact nurturing or alert you to security threats.

AI for Inventory and Order Management

Another necessity for scaling and keeping your customers happy? Actually keeping your products in stock. And, beyond that, ensuring they reach customers quickly and efficiently — AI might even be able to reduce returns. AI can make your inventory management and order processing efforts more intelligent thanks to pattern recognition between your data and the market at large. 

Image Source: Columbia

Sporting goods brand Columbia offers a great example of order management and customer care post-delivery through their warranty claim page — featuring an option to easily submit a claim or use a chatbot, even offering support for Spanish speakers. 

AI for Demand Forecasting and Dynamic Pricing

Pattern recognition also lends itself to sales and demand forecasting as well as dynamic pricing abilities, so your organization can focus on improving your product and experience — not worrying about how much you’re going to sell or who’s going to buy what. And, not to mention, consumers will appreciate price reduction opportunities. You’ll appreciate offering informed discounts.

The uses and applications of AI for ecommerce businesses — including brands, retailers, and distributors — are only growing. Every organization operates differently and can find different value as they integrate AI into their workflow.

Will AI Steal Your Job? (Hint: The Answer Is No)

Thinking of AI as a scary, all-powerful, job-stealing entity is a bit of a misnomer. In actuality, it’s changing the nature of work for ecommerce and marketing professionals, serving as an additional tool in your toolbox.

A (human) creative department and a dedicated legal team are still invaluable, as is thought leadership from stakeholders — that will never change. Instead, AI enables greater efficiency and can allot more time for the tasks these teams actually enjoy. That’s a win for everyone.

Ecommerce AI and Ideation: Your Competitive Advantage

AI is particularly useful in the ideation phase. Thinking of AI as a “thought partner” instead of something that can do all the work for you can help provide an alternate perspective and spur inspiration — especially if your colleagues are unavailable for a rap session.

AI won’t have all the answers, but it can speed up the rate at which you digest new concepts that you can then put into your own words. It’s even possible to humanize your brand messaging with AI tools. AI can provide you with outlines or baseline content that you can then inject more flavor and personality into.

Artificial Intelligence: A Thought Partner

Video Source: Salsify

Ecommerce AI and Iteration: Becoming a Content Powerhouse

Another way that implementing AI can turn your organization into a bunch of speed demons? The rate at which the right GenAI tools can speed product content creation across your entire product catalog. It can get your products to market better, faster, and stronger — that is, more suited for each audience and channel.

AI can help determine the best channel and customer segmentation and serve up seemingly one-of-a-kind experiences for consumers, no matter which platform or retailer they’re shopping from. After all, 76% of consumers become frustrated if companies don’t deliver personalized experiences, per McKinsey & Company.

GenAI is even reshaping the future of product development thanks to its growing ability to predict the wants and needs of consumers based on feedback and suggest products that aren’t even on the market yet.

Ecommerce AI and Optimization: Successful Scaling

If more of your content — not just your superstar products — is constantly optimized, these efforts won’t go unnoticed. AI can easily improve your search rank and help your organization differentiate in the most crowded marketplaces to stand out among consumers.

Imagine meeting complex, ever-changing retailer requirements automatically. AI can do that. And, with your time savings, you can easily justify expanding your retail network and channels.

Artificial Intelligence: Successful Differentiation

Video Source: Salsify

More than half of consumers (52%) are interested in AI that assists them through “a product, website, or feature experience,” according to a report by SurveyMonkey.

However, trust in AI is higher among younger generation groups, and perhaps it’s because younger generations understand it better, according to Salsify’s “2024 Consumer Research” report.

Hesitancy or not, AI tools for ecommerce can support consumers in the discovery, consideration, and buying stages of the buyer’s journey.

AI in the Discovery Phase

How can AI support a consumer in the discovery phase of the buying journey? According to SurveyMonkey’s report, “42% of customers appreciate AI-driven product recommendations.” 

For example, a consumer may type “men’s rain jackets” into their preferred search engine or retailer search bar. If the consumer were to just go with this query, which isn’t highly specific, there would be a daunting number of results.

Before submitting their query, the search engine will likely suggest several more, increasingly specific queries (either based on past searches from that same consumer or others), such as “men’s rain jackets waterproof with hood,” “Patagonia men’s rain jackets for sale,” and “Patagonia men’s rain jackets for sale used.”

The query gets more specific based on the data mining ability of AI and related tools — that is, using past query data to notice and even predict patterns. Perhaps this user has searched for Patagonia products before or frequents resale or secondhand marketplaces. 

AI in the Consideration Phase

How can AI support a consumer in the consideration phase of the buying journey? According to Salsify’s research, AI tools have started to spur a small number of sales, with 9% of shoppers recently buying a product after using a virtual try-on tool and 8% of shoppers buying a product after using a virtual tool to preview placement.

For example, Wayfair’s Room Planner tool can help shoppers better visualize their space (true to size) and dream up new decor prior to purchase — from platform beds to pothos planters. 

Image Source: Wayfair

Similar AR tools are available from Target, The Home Depot, and Amazon. Providing comprehensive specs to these retailers or enabling AR will allow your products to show up in more customers’ homes (literally).

AI in the Decision Phase

How can AI support a consumer in the decision phase of the buying journey? As discussed, personalization and product recommendations can go a long way for consumers who feel they have too many options.

For example, a shopper with neck pain (heaven forbid) might be at their wit’s end with their current pillow. But maybe they don’t know what to look for in a pillow for side sleepers with neck pain — especially since every option can be labeled “the best,” without much to back it up.

Tech-savvy shoppers could research their options via ChatGPT, which will not only recommend popular brands for side sleepers with neck pain, but will also provide them with specifications to consider, like firmness and material.

Less tech-savvy shoppers would benefit from product recommendations and ads to help them find the pillow of their dreams.

And if, from a lack of sleep, either shopper adds a few pillows to various carts but then doesn’t complete their purchase, AI-powered abandoned cart reminders (such as those from Alexa) can alert them to complete their purchase or if one drops in price.

Even if their purchase doesn’t work out, “59% of customers would use AI to return a purchase,” per SurveyMonkey.

Innovation doesn’t happen in a vacuum — and AI cannot drive innovation on its own. Humans are a crucial part of the equation, and the next big season of innovation at your brand is likely just a few clicks away.

An Ecommerce AI Strategy = A Winning Ecommerce Strategy

Ecommerce experts Rob Gonzalez, CMO and co-founder of Salsify, and Steve Engelbrecht, CEO of Sitation, share at length how an ecommerce AI strategy is synonymous with a winning ecommerce strategy — especially for organizations who want to dominate the digital shelf.

Tips for Using AI To Build a Winning Ecommerce Strategy

Here are some tips for employing AI at your organization:

• AI fixes data problems, not hard problems: Use AI for well-defined processes, scale up, and repeat in other cases — this gives your teams more time for critical thinking.
• AI can help you get more personal: AI’s talents include analysis and prediction — it can easily clue you in on what recommendations to send consumers and drive upsell.
• AI helps with regulatory compliance: Some regulatory agencies and retailers change their requirements hundreds of times per year — to avoid penalties and keep up, use AI.
• AI can help cut costs: Implementing AI workflows with human checks or AI-on-AI checks can speed time to market and boost efficiency.

AI: Productive Play

Bigger career or organizational challenges likely can’t be solved without creativity. And fruitful creativity requires freedom to daydream, experiment, and play. This begs one final question, can AI be fun?

Artificial Intelligence: Can It Be Fun?

Video Source: Salsify

The more you play around with AI, the more you’ll learn — after all, play is how humans learn, according to Gonzalez. And, the more you play, the more your intuition will take hold, kickstarting inspiration and catalyzing growth.

Better employment of AI at your organization can also come from a better understanding of how to speak AI’s language and how much legwork it can do for you.

For example, by plugging in the following prompt to ChatGPT, you can identify your unique selling propositions (USPs) when compared to competitors: 

Identify the unique selling propositions of [BRAND NAME] compared to the following competitors: [COMPETITOR NAMES].

Once these selling points are identified, you can refresh your brand’s messaging or strategy accordingly.

You can even take it a step further and request AI to update your product or brand content by infusing these USPs. A step further still? Conduct regular keyword research with AI to ensure you always rank near the top of the search. 

Your organization is welcome to (try to) ignore AI. But, as you’ve likely learned from this post: No risk, no reward. And, also, it’s more likely than not that your organization is directly employing or interacting with AI in some capacity. Getting more familiar with the risks of AI can help you get more comfortable choosing the right tools and practices for your organization. 

Top Risks of Using Artificial Intelligence in Ecommerce

Here are some risks of artificial intelligence in ecommerce to consider:

• Data errors or misuse: Arguably the biggest risk to your organization’s image? Leveraging bad data or mishandling data. (However, this is possible with or without AI.)
• Poor AI practices: Not conducting training, human checks, or carefully selecting the right AI tools for your organization can be costly.
• Avoiding AI and automation: While there are risks with any fast-paced, iterative technology such as AI, it’s a risk in itself to forego the advancements that AI can bring to your organization.

Limitations of Artificial Intelligence in Ecommerce

Here are some limitations of artificial intelligence in ecommerce to consider:

• AI can get things wrong: AI is very far from being all-knowing, all-seeing, and always right — human judgment and checks can go a long way.
• Consumers may prefer a human touch: The embrace of AI by consumers will likely never reach 100%, and, in some countries, customers far prefer chatting with live agents.
• AI is still evolving: Though developers aim to improve AI tools, very few solutions are foolproof, and it’ll likely take your organization time to figure each one out.

Artificiality isn’t free of consequences. So often, people (and the organizations made up of who else, other than people) are applauded for acts of authenticity, honesty, and transparency. Likewise, organizations that exhibit strong values such as these attract not only employees, but customers.

When it comes to the growth of AI and your business, it’s no longer a matter of if you choose to infuse it into your practices, but how. Internally, if not also externally, aligning your business’s ecommerce AI strategy and ethics policy will help ensure you reap the benefits of this technology and mitigate risks.

Here are some questions to facilitate discussion and alignment of your stakeholders and employees. Businesses of any size or industry can benefit from having these conversations. 

10 Questions To Help Develop a Strategy for Your Organization’s AI Ethics

1. What are our goals for integrating AI and/or solutions that use AI into our tech stack?
2. What questions do we have regarding AI for our solution providers?
3. Which department(s) will be using AI tools?
4. How often will we update or train our employees on AI usage?
5. How does our business use and define original content and data?
6. How does our organization store, collect, and use data?
7. Which department(s) will check the data AI has interacted with?
8. Are there content or data sets that we will bar from AI involvement?
9. What specific AI risks might our organization face?
10. Will we publicize our AI usage guidelines to the public?

The future of artificial intelligence in ecommerce is synonymous with automation. Though no one can predict the full extent (or evolution) of AI’s involvement in buying and selling goods on the digital shelf, it’s safe to say it’ll expand.

From automating (or creating) custom orders for repeat customers or developing new product iterations based on feedback, to intelligently recommending sustainable materials swaps and predicting demand, the possibilities are endless.

For brands, retailers, and distributors that don’t want to fall behind the times of necessary digital transformation, what is the vehicle through which automation moves? A powerful product experience management (PXM) platform.

Although, you won’t find full, reliable automation capabilities that help you keep up with the demands of the digital shelf in just any product experience management solution — you need a next-generation PXM solution.

A next-gen PXM solution enables all your products across all your channels to meet ever-changing requirements and be backed by intelligent optimization to drive further visibility and sales, so your enterprise can enter its next stage of growth.

And, as consumers (and society at large) continue to favor personalization, the right PXM solution also uses AI to automate the optimization process, for as much of the work as possible, as the combination of channels, products, and change rapidly increases in complexity.

Though the list of applications of artificial intelligence in ecommerce grows every day, the value of ecommerce AI tools is lost without leaning in and giving that keyboard a workout. So much of AI’s value is tied to productivity, and much of any professional’s worth is also tied to output (sometimes in excess).

AI, when used properly, can help extensively.

However, AI’s ability to support your business processes and boost your efficiency is only as effective as your trust and knowledge of these tools. Understanding how to securely leverage AI capabilities and enact the right human checks and balances can be overwhelming.

Finding the right AI-powered solution partner can help you navigate the intricacies of AI and cultivate a strategy of testing and learning for digital shelf success.