3 AI eCommerce Trends To Watch out For
Artificial intelligence has introduced a seismic shift to the eCommerce sector. It’s projected to boost eCommerce sales by 59% and the global AI-powered eCommerce solutions market will reach $16.8 billion in 2030. In addition to this AI will handle 80% of all customer interactions.
What’s more, AI can increase eCommerce profitability by almost 60% in 2035, according to a recent report. This underscores the need for store owners to adopt AI to stay abreast of the competition.
But what are the driving forces behind these remarkable figures, and why should you, as a store owner, be concerned about integrating AI into your business strategy?
In this article, we will explore the latest trends in AI within the eCommerce sector, providing real-world examples of eCommerce brands that have harnessed the power of AI to drive positive outcomes
1. AI-driven Personalization is Becoming the Norm
AI is becoming the go-to solution for personalization in e-commerce, with 92% of businesses already leveraging it to enhance customer experiences. This shift is driven by the significant advantages AI offers over traditional methods.
Traditionally, personalization in e-commerce has been about segmenting customers into different groups and customizing product suggestions and communications for each segment.
This approach, while seemingly personalized, is fundamentally rule-based and doesn’t account for the individual behaviors and evolving preferences of consumers. As a result, it often leads to a one-size-fits-all shopping experience.
AI, on the other hand, works by continuously analyzing a wide range of behaviors in real-time, not just purchases.
It adapts to subtle changes in browsing patterns, search queries, interaction with marketing emails, and more, offering a level of responsiveness and personalization that static segmentation cannot.
Furthermore, AI can also predict future customer behaviors and preferences, often before the customer explicitly expresses them through a purchase or other direct action. This means businesses can offer personalized product recommendations.
Take the case of Norrona, a leading brand in outdoor clothing. It transitioned to an AI-driven recommendation engine from a manual system to help customers discover new products.
Initially, a manager would manually select and add complementary products for each new item on the website. This process was time-consuming and based on the assumption that complementary products (like trousers for a jacket) would be the best strategy for helping customers navigate their collections.
However, this method lacked the ability to dynamically adapt to individual customer preferences and behaviors.
But when Norrona switched to an AI-based system that recommended products based on customers’ past behavior, they saw a 50% improvement in conversion rate.
It also helped the brand visualize customer preferences and understand their shopping habits better, which ultimately led to an improvement in conversions.
2. Generative AI is Transforming Content Creation
AI is proving to be a game-changer for personalized content delivery during peak shopping seasons. Its ability to automate tasks, analyze data, and generate engaging content is helping brands connect with customers on a deeper level, while simultaneously improving efficiency.
The demand for top-notch visuals and content is consistently high. But it reaches its peak during shopping seasons like Cyber Monday as both content and visuals play an important role in engaging customers and reducing product returns.
However, creating content on a large scale is resource intensive and time consuming.
But AI models can analyze vast amounts of customer data (purchases, reviews, browsing behavior) in real-time to uncover hidden patterns and insights. This data fuels the personalization and optimization of content at scale.
Furthermore, these models can also continuously learn and evolve based on the data they’re fed. This means they can quickly adapt to changing trends, seasonality, and customer preferences, and constantly hone their content creation abilities.
Babylist, an online baby registry, tested out AI’s content creation abilities through their email marketing campaigns. They targeted two of their newsletter audiences: pregnant individuals and parents.
10% of each group (approximately 59,000 pregnant recipients and 222,000 parent recipients) received two versions of the same email campaign, with one email crafted by a human Babylist editor and the other generated by ChatGPT.
Both emails addressed the then-recent bankruptcy of buybuy BABY, a popular retailer for baby-related goods. However, the subject lines differed.
ChatGPT’s subject line resonated slightly better with the parent audience, achieving a 0.37% higher open rate than the human-written subject line. But for the pregnant group, the editor’s email won with a 2.9% higher open rate.
In addition to creating high-quality visuals and marketing content, AI models are also being used to generate product descriptions.
Marketplace giant eBay has developed a “Magic listing tool” powered by OpenAI’s ChatGPT. This tool is designed to generate product descriptions based on the information provided by sellers regarding a product’s category, condition, color, brand, and other relevant details.
Roughly 30% of sellers shown the generative AI tool use it, and out of those, 95% accept at least part of the description, said Xiaodi Zhang, vice president of seller experience at eBay.
These instances underscore the potential of AI to augment human creativity and
simplify the content creation process.
3. Conversational Commerce is Improving Customer Service
AI-powered chatbots are not just automating processes; they’re poised to become intelligent companions, guiding customers towards their next purchase, anticipating their needs, and responding to queries almost instantly to reduce wait times and improve overall customer experience.
During peak seasons or with high customer volume, human agents can become overwhelmed, leading to extended wait times and frustrated customers. This damages brand reputation and causes a loss in sales.
They also often spend a significant amount of time handling routine inquiries like product information, order tracking, and basic troubleshooting. This repetitive workload reduces their capacity for more complex customer interactions and personalized service.
Traditional chatbots alleviate some of these problems and can handle basic customer inquiries. However, they can’t tailor responses to individual customer needs and preferences as they lack understanding and context. This leads to generic unhelpful answers and often requires human intervention.
AI-based chatbots, on the other hand, understand natural language and customer intent, and offer context-aware and personalized responses.
They also continuously learn and improve based on interactions to provide increasingly accurate and relevant assistance.
Newegg, a global e-commerce leader for technology products, has launched the PC Builder ChatGPT plugin, to simplify computer shopping. Users can communicate their requirements, such as “I want to build a VR-ready computer under $2,000, and the AI technology selects and assembles PC components that meet these criteria.
If users don’t have access to ChatGPT Plus, they can still access the PC Builder on Newegg.com or the Newegg app, which is also powered by ChatGPT. Once the user inputs their requirements, the AI selects and assembles PC components that meet these criteria.
After the AI assembles the components, users can find their PC Builder list on Newegg.com for further customization and checkout. This seamless integration ensures a smooth transition from the AI recommendation to the actual purchase.
It has also resulted in lesser queries to human agents from customers and also improved their overall customer satisfaction and loyalty.
How AI will continue to shape eCommerce
As AI continues to evolve, it’s clear that personalization will become the standard in eCommerce, shaping every aspect of the customer journey.
This trend is evident in the growing use of AI for conversational commerce, content creation and personalized product recommendations.
What’s more, the AI influence extends beyond content creation and product discovery. It’s also influencing customer retention.
This is where Raleon comes in. Our loyalty co-pilot exemplifies the move towards more personalized loyalty strategies and offers tailored campaigns that align with individual customer preferences, enhancing engagement and retention.
To learn more on how Raleon puts loyalty on autopilot and improves customer retention, schedule a demo.