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Explore & Thrive with AI AI IMPACT: Ecommerce Industry

How will Ecommerce be affected by AI?

Ecommerce is a $6.3 Trillion, Tech-heavy, Early-adopter industry.

How would it adapt to the age of AI-powered business?

Ecommerce's entire business model is to automate customer checkouts for scalability.

Humans have literally no 'physical' touchpoint in the core process!

Ecommerce is one industry going to be very significantly impacted by AI. This is because most of the business processes in the industry are already digitized, and the industry is dominated by tech-heavy entrepreneurial games desperately looking for a way to get ahead of the competition.

There is lots of superficial information out there in the market on how to implement AI in Ecommerce, but we will be providing some actionable information. So we'll begin with an understanding of where we are, how we reached there, before we are able to go and see where we are headed.

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Ecommerce: Leader of bringing Automation in Retail

Of all the ways products move in an economy, it looks like this: factories produce the goods, wholesalers buy from them, small retailers buy from the wholesalers, and consumers buy from the retail. Now why this is structured like this is a because of a lot of different complications and different competencies required at each layer of the business, but atleast at the retail level, people visit stores to "access" products "near them" and at "good enough" prices, and the price is a really BIG factor.

All these factors combined over time, led to the emergence of the self-service model: just visit the shelf, pick it up, bring it to the counter, pay at the counter, and its yours!

By the time 1990s rolled around, we had a new communication technology called a Website. And there, websites started emulating this same self-service model for their business.

The value addition was very clear - anyone anywhere could visit a website 24x7. This thing was so powerful, businesses started automating everything they could - they automated the shelf, the payments, the support, the integrations. Everything they could, they tried to automate, and they did.

Limitations of Automation

But there were some limitations as well. One of the biggest problems was that businesses couldn't really communicate the shopping VISIT experience, the look and feel of the items. See in traditional retail, shopping meant a family activity, but now it meant a few clicks without any eye-catching displays!

The other big change was the personal connection. Even in supermarkets there were salesmen to guide you through difficult decisions. Shopping used to be a discussion - the salesmen were trained in guiding you through your objections, and there was an element of silent validation in the purchase process, which was all lost when shopping became an online way to just add to your cart and checkout.

Ultimately the art of the sale was lost, only because it could not be automated over a website.

Ecommerce changed the power dynamic

But Ecommerce changed the power dynamic at every level of the industry - manufacturing became easier due to the ability to reach consumers directly and to do just-in-time models.

For consumers, things became much more convenient as the value proposition changed from the ability to get things to "convenience"

But things changed a LOT for retail - with major disruption. Earlier excelling in retail meant focusing on supply chain managament, or store layouting. But now factors became digital - how to lay out a website and the ability to do online advertising.

Changes since 1990s

Even till 2020, nothing had changed much since the 1990s. The idea of what we're trying to do in our website: provide convenience by reducing friction everywhere: seamless one-page checkouts, easy search.

Even the latest innovation in the industry: Q-commerce is all about adding convenience: better and faster. But the basic business model is exactly the same.

How you can adapt to AI

Now with the understanding of this background, let us talk about what AI will end up doing to the industry.

The #1 information I have for you is to prepare for more competition. If you thought competition now is intense, you'd be amazed. Today anybody can create a online shop by filling a few forms at Shopify, but within 3 years from now, you'd be able to spin up a proper online shop with just one verbal command to the right AI business bot. And it will also generate product descriptions, pictures, do SEO etc. So the competition is going to become tense, especially for digital goods. So you need a REAL advantage to be able to compete.

Second, and most important insight from this, is that access and convenience are now a given, so the customers will be even more spoilt for choice. In this environment, only those who truly excel at making the customer happy will win. Now AI can do that, but you'd need LOADS of data about every customer to empower your AI to win over the competition.

How can AI gamify Ecommerce

Lets quickly look at all the available options with us to make customers happier. There are traditional factors like price, range and quality, and there are digital factors like digital marketing and digital influence, but then we also come towards the experience-level factors like the look and feel of the items and visit, and the purchase experience.

And what factors are these? Lets take a look: This is an online flower shop - we can choose a product and checkout. Now imagine the same flower shop, but we were welcomed with a smile.

So we're trying to emulate a personal shopping experience and what we're seeing here are 2 things - The first is about AR/VR / the visuals which will definitely become better in the future, but it is a longer-term game. But what we're tying to highlight is that the most impactful change over the next 3-7 years will be the personal connection - which AI can completely change.

The personal connection - to make someone "feel" - it can be manipulated into the art of the sale. A salesman guides consumers to overcome their objections and provides a high-touch personalized experience of the brand. And when you put this in the hands of AI, you get a really powerful business device.

Now you can scalably do a lot of things you couldn't do with a website. What we couldn't do with the traditional websites was to personalize the entire shopping experience every time for every customer and learn from it and build upon the learnings. But AI can, and we have a lot of wiggle room to learn and experiment - you know why? Because a salesman has a lot of tricks up his sleeve! A lot of it is visible, a lot of it is invisible as well.

What do we need to implement? All we need to do is to train our AI to learn from every customer interaction and to treat it like a learning opportunity! Slowly, by controlling every pixel and learning from the reactions to it, AI starts to treat it like a REAL-TIME video game, and we know how good AI is at video games, right?

By treating a sale as a score in a real-time game, the task of the AI Salesman is to MAKE CONSUMERS BUY WHAT benefits IT MOST!, not necessarily what the customer wanted. But the art is to make the customer feel satisfied at the same time! This is so powerful - it is the gamification of the entire ecommerce Business Model. That is what AI can do to ecommerce!

So what changes can we see going forward?

Now how will this happen, what are the changes we can expect going forward?

Change #1: Websites will become AI-driven.

Users won't need to click here and there anymore, they can just say what they want and it'll be served to them. Don't believe me? Here's a demo for you:

This is a website for a financial company which gives out loans. Its a complete website which would have a business bot or assistant here, which is like what we have in a LIVE CHAT. Though the difference beween what this is, and usually a live chat is, is that this is an intelligent business bot, which can control the website - you can speak with it, and you can type here as well.

Change #2: Everything will be tracked

Ok, the next thing that will happen is that every interaction will become a learning opportunity for the AI, and will need to be tracked. No more third party analytics tools! Every interaction will be stored and learned from.

Change #3: Personalized Addiction coming up!

The third thing is that a lot of the tricks AI chances upon will be things we know are habit-forming. If you thought things are addictive today, wait till AI starts to seduce you with personalized offers based on your habits and your past purchases.

So we're heading towards a new era, one where business bots don't optimize for friction, they optimize for customer lifetime value. Customers will be made to feel like kings and queens, and will be seduced to buy again and again and again by AI.


Frequently Asked Questions about AI in Ecommerce

What are the challenges of implementing AI in ecommerce?

The biggest challenge is the lack of data and discontinuity of technology from current HTML (like custom PHP sites) / third-party based (like Shopify) / CMS (like Woocommerce plugin for Wordpress) to the new AI-based paradigm, where the focus is on personalizing everything for the customer. AI needs data to learn from, and the more data you have, the better it can learn. But the problem is that most businesses don't have enough data to train their AI.
How does AI benefit the ecommerce industry?

AI is going to be a complete game changer for Ecommerce, since it will gamify the process of "making a sale". AI will learn from, and treat every customer interaction as a way to make a score - regardless of whether it is opening an email, scrolling through a page, or clicking through a product. AI can, in other words, weaponize Ecommerce.
What are the different types of AI used in ecommerce?

There are 2 types of AI used in ecommerce: to generate personalized pages for every customer, and the second generates personalized communication - email, sms, whatsapp - for every customer.
How is AI different from traditional ecommerce practices?

Traditional ecommerce practices are focused on reducing friction in the purchase process, but AI is focused on exceptional customer service - to make them feel like they are being served by a personal assistant (like in a shop).
How can AI personalize the shopping experience for ecommerce customers?

AI can personalize the shopping experience for ecommerce customers by learning from every interaction and then using that to generate personalized pages and communication for every customer in order to optimize customer satisfaction and Lifetime Value both.
How are AI-powered product recommendations generated?

Pre-2023, Amazon-type product recommendations were created via a correlation of products bought together, and correlation across time (For example, if somebody buys a product for pregnant mothers today, it is highly probable that they will buy baby nappies in the future). But post 2023, product recommendations are generated to optimize customer satisfaction and LTV, so they use customer's past purchases, their browsing history, their search history, and their interactions with the ecommerce business.
What are the benefits of using AI for product recommendations?

Do you want to be treated special? Like a king? Would you like it if the ecommerce website shows a detailed understanding of your needs, and shows you products accordingly? Would you like to be told that since you are a special customer, you are being given 25% of this latest product? This showcases the benefits of using AI for product recommendations.
How can AI be used to personalize ecommerce product search results?

Would you like to be shown the latest red scarf to go along with the red dress you bought last time, when you are searching for just "scarfs" on an ecommerce site? This is what AI can do in ecommerce search results - it can turbo-boost discoverability of relevant products
What tools are available to implement AI-powered product recommendations?

There are a lot of third-party tools available to implement AI-powered product recommendations, but the best one is the one which hoards your data from third parties, and is able to learn from every data point, and then use that to generate personalized pages and communication for every customer in order to optimize customer satisfaction and Lifetime Value both. In other words, the best tool for AI implementation is an Ecommerce BizBot, which controls every aspect of your business - your data, your website, sales and customer service.
How can I measure the effectiveness of my AI-powered recommendations?

The effectiveness of AI-powered recommendations can be measured by the increase in customer satisfaction and LTV, and subsequent decrease in customer churn.
How can AI be used to personalize ecommerce pricing and promotions?

An intelligent segmentation of customers, based on price insensitivity and "mouldability" of their decisions based on the AI gamification of the purchase process (influence-ability), can be used to personalize pricing and promotions, which can be used to optimize profitability.
What are the challenges of using AI for ecommerce search and navigation?

Currently speed of calculations and little availability of data are both limiting factors for complete AI implementation in ecommerce search and navigation. We at BizBot can get you started in the right direction to overcome this problem.
How can chatbots be used to improve customer service in ecommerce?

Currently AI Chatbots are used to improve customer service in ecommerce by providing 24x7 support over a fixed set of queries (programmed bots). But in the future, AI Chatbots will be used to as a customer concierge on every ecommerce site, offering personal support, communication and offers to every customer.
How to successfully implement an AI bot in customer service for ecommerce?

The best way to implement AI bots in customer service for ecommerce is to use a BizBot, which controls every aspect of your business - your data, your website, sales and customer service. Contact us at BizBot to learn how to can get you started in the right direction.
How can AI be used to adjust prices dynamically in ecommerce?

AI can be used to adjust prices dynamically in ecommerce by learning from every customer interaction and then using that to generate personalized pages and communication for every customer in order to optimize customer satisfaction and Lifetime Value both.
What are the benefits of using an AI Bot in ecommerce?

An Ecommerce BizBot, unlike a traditional chatbot which just provides 24x7 support on programmed topics, is your online business assistant - it becomes the core piece of software that runs your business - ranging from client communication, dynamic pricing and customer service. The benefits of using a BizBot in ecommerce is that we can turn customer purchasing and satisfaction into a game, and optimize for both, which in business terms means supercharging your profits.
What are the future trends for AI in ecommerce?

It is clear that AI BizBots will be used in ecommerce to supercharge profits - by optimizing customer satisfaction and LTV both, by focusing on providing exceptional customer service, and not just removing checkout friction - which has been the focus of the technology for the past many decades. AI will control every aspect of the business, then learn from every customer interaction to generate personalized pricing, products and communication for every customer in order to optimize customer satisfaction and Lifetime Value both.
How much does it cost to implement AI in ecommerce?

The cost of implementing AI in ecommerce depends on the size of the business, and the amount of data available to train the AI. By 2027, there will be open-source free BizBots which can spin an ecommerce site on just a command, but meanwhile we at BizBot can get you started in the right direction to implement AI in your ecommerce business.

For a quote, contact us.
What are the best resources for learning more about AI in ecommerce?

The best resource for learning more about AI in Ecommerce is to follow the "Explore and Thrive with AI" blog at BizBot, which contains lots of original and strategic information about helping entrepreneurs with their AI strategy.
What are the best AI tools and platforms for ecommerce?

With the advent of AI, where you can generate any tool at a command, it is not advisable to look at 3rd parties for AI tools and platforms. The best AI tool and platform for ecommerce is a free and open source Ecommerce AI BizBot, which controls every aspect of your business - your data, your website, sales and customer service. Contact us at BizBot to learn how to can get you started in the right direction.

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