Artificial intelligence has changed the online shopping experience. As this technology advances, it shapes what customers expect from the e-commerce industry.
More Businesses Are Incorporating AI Into Online Shopping
Currently, Amazon struggles with a tremendous number of returns. Its customers often order one item in multiple sizes and return the rest because they know online sizing is inconsistent. The e-commerce giant developed a new AI model in late 2023 to reduce this practice.
Amazon is one of the latest businesses to find a novel use for AI in online shopping. It recently unveiled Fit Insights — its new large language model — to reduce returns. This algorithm sifts through reviews to match customer feedback to product page sizing charts. It aims to make the listed measurements more accurate.
The Fit Insights model is one of numerous developments in the e-commerce sector — many other ground-breaking algorithms exist. Since AI is becoming less of a trend and more of an expectation, similar innovations are becoming more common.
How Does AI Fit Into the Online Shopping Experience?
Small and medium-sized businesses (SMBs) are using AI to improve every aspect of the online shopping experience.
Many businesses use generative AI — an algorithm that can create images, audio or text — for their product pages. It can write descriptions and create pictures in any style imaginable. This tool benefits SMBs who want to make their listings more uniform.
Most SMBs waste time organizing, sorting and verifying purchases. For instance, grocery retailers spend as much as 16% of their fulfillment time manually filling online orders. Using algorithms, they can automate the administrative work. They can even let AI-powered robots do the tasks for them.
Since algorithms can constantly monitor orders, they can update inventory counts in real time. Additionally, they can provide customers with accurate shipping estimations using location, weather and transportation data.
One of AI’s best features is its ability to process massive amounts of information in seconds. SMBs can use it to extract the most common words or phrases in reviews, showcasing the highlights for potential customers.
AI can also eliminate fraud. It can track an account’s age, order numbers, average rating and review frequency to determine how likely it is to be fake. Small businesses benefit from this use case because a few bad reviews can easily dominate their product pages.
E-commerce retailers use AI primarily for customer service purposes. Chatbots are common because they work 24/7 and can hold multiple conversations simultaneously, meaning businesses no longer need a queue.
A frequently-asked-questions page is another common use for AI in e-commerce customer service. Machine learning models can constantly update, so the information on these web pages always reflects what people genuinely want to know.
Hyper-personalized recommendations are the future of online shopping since they benefit businesses as much as consumers. In fact, e-commerce retailers are 35% more likely to make a sale because of them. Since some AI constantly learn, they always offer relevant suggestions.
Virtual try-on is another type of personalization. Instead of looking at sizing charts and pictures of mannequins, customers can use AI to see exactly how an item would look on them. The same technology can work for pets or rooms.
Most people automatically go to the search bar when shopping online. AI can improve the typical auto-fill process by using consumers’ browsing history. Also, it can improve the filtering process by using their behavioral data to make the “most relevant” tag more accurate.
How Is AI Revolutionizing the Online Shopping Experience?
Even though online shopping has been possible for ages, customers report many of the same pain points. It lacks standardization and personalization — people’s most common complaints revolve around listing inconsistencies, impersonal interactions and irrelevant recommendations.
Finally, you can innovate with AI. For instance, algorithms can now show people exactly what they would look like in clothing without needing a fitting room or measuring tape. Many e-commerce retailers have developed similar novel solutions to common pain points.
Take Amazon’s solution to inconsistent sizing, for example. Its new Fit Insights algorithm is revolutionary because it ensures all clothing — no matter the brand or country of origin — has accurate measurements. This creation is a game-changer for people who shop online.
Another fascinating innovation revolves around automation. Traditionally, most SMBs have fulfilled orders, updated inventory and handled customer complaints manually. Now, AI can handle those processes for them, letting them prioritize more essential tasks.
When shopping online, people cannot walk through aisles. Since they often search intentionally instead of browsing casually, they do not make as many impulse or unplanned purchases. However, AI can now hyper-personalize their experience — data-driven recommendations make cross-selling and upselling more profitable than ever.
How SMBs Benefit from Using AI for Online Shopping
You can benefit in many ways from leveraging the latest AI-driven e-commerce innovations. They can boost sales, improve their reputations, increase customer satisfaction and save money just by incorporating an algorithm into their operations.
While many SMBs accept products back, they lose money as a result. In fact, returns accounted for $817 billion in losses in 2022, a $56 billion increase from 2021. Even if they do not issue refunds, they still have to pay for shipping and restocking — and customers are not willing to foot the bill.
Fortunately, AI can minimize return-related costs in numerous ways. For starters, it can detect and prevent fraudulent or abusive return attempts. Also, it can improve the ordering process to increase the chances customers will be pleased with the original product.
AI can even lower overhead costs. Although an algorithm costs money to train and run, it can do the job of multiple people during holidays and off-hours — and it does not need daily breaks or an annual salary. You can use it to achieve higher productivity while shrinking their labor costs.
Most importantly, AI dramatically improves the online shopping experience, improving customer satisfaction and reducing churn rates. It makes the process more convenient, personalized and faster — things customers have wanted for years.
Tips to Consider for SMBs Using AI for Online Shopping
Although using AI for online shopping can be beneficial, you must understand how to implement it. Properly training and deploying an algorithm is complex. Besides, a carefully thought-out plan has a much greater chance of long-term success.
Pain point and goal identification are the first things you should do before incorporating an algorithm into your e-commerce processes. Where do customers think you need to improve? What do you want to get out of AI? Carefully consider these questions before moving forward.
You should also strongly consider what kind of AI you need. Every type has unique strengths and weaknesses. For example, generative models are great for quickly producing content but get expensive if they are customer-facing because they are resource-intensive.
AI Is the Future of Online Shopping
As it stands, AI represents the future. It has revolutionized what customers feel online shopping should be — and it will never be the same. Algorithms will shape people’s expectations, permanently transforming e-commerce.