How Conversational AI is Revolutionizing Ecommerce

The Ecommerce sector is not oblivious to the power of Artificial Intelligence. This is one of the first sectors to have successfully implemented AI technology and boosted the bottom line.

In this guide, we will look at how conversational AI is transforming the Ecommerce sector, one sale at a time. But first, let’s understand what AI in e-commerce means.

What is AI in Ecommerce?

AI in Ecommerce refers to integrating Artificial Intelligence technologies to enhance online shopping for customers. It uses emerging technologies such as machine learning algorithms, natural language processing, and predictive analytics to personalize the shopping experience while optimizing operations.

What are the Benefits of AI in Ecommerce?

Personalized, Prompt, and Real-time Service

AI in Ecommerce allows businesses to offer personalized, immediate, and responsive customer service. As per McKinsey, consumers expect personalized experiences and offers as table stakes. However, most retailers fall short of these expectations today.

This is where AI can step in and:

• provide relevant offers and recommendations
• analyze customer data to understand preferences, purchase history, and browsing behavior
• enable businesses to personalize marketing messages and leverage real-time support via AI chatbots

Improved Brand Affinity

Salesforce predicts that for 80% of customers, experiences provided by a brand are as important as its products and services. AI-powered systems can enable ecommerce storefronts to:

• • drive hyper-targeted marketing campaigns
  • customized promotions and deals based on customer history and create a sense of relevance as well as connection with customers

As a result, customers develop stronger brand affinity, leading to repeat purchases and advocacy.

Reduced Cart Abandonment Rates

Cart abandonment is a significant challenge for ecommerce businesses with the average cart abandonment rate hovering around 69.99%.

To lower and identify potential reasons for cart abandonment, businesses are leveraging AI-powered chatbots to intervene during the checkout process. This simple strategy can not only address customer concerns but provide additional information and incentives to complete the purchase.

Before we jump into how brands are capitalizing AI in Ecommerce, it is worth knowing that the Ecommerce AI market will hit USD 45.74 billion by 2032. Needless to say, AI will play an increasingly instrumental in making customers happy and brands profitable.

Application of AI in Ecommerce: 7 Actionable Strategies

Wondering about what’s the role of AI in ecommerce? Consider the following seven useful strategies:

1. Enjoy an Enhanced Search Experience: Put Customers First

Amazon implements a customer-centric search experience by utilizing AI algorithms to:

• Understand user intent
• Offer advanced filtering options
• Provide relevant product suggestions

To capitalize on the power of AI-driven search, ensure your ecommerce platform has robust search capabilities. You must also optimize the product tags and descriptions to continuously improve search relevance based on user behavior.

Another great example of a brand using customer-centric search is Etsy. This online marketplace allows customers to filter and sort results based on various criteria (think: price, location, and customer ratings).

This makes the shopping experience friction-free and fun!

2. Engage in Precision Personalized Retargeting: Bring Back Potential Customers

Adore Me, an online lingerie retailer, ran targeted Instagram and Facebook video ads that opened into a full-screen Instant Experience.

The creative focused on personalizing the buying experience with a box of curated products for different segments of users. The video ad also featured a call-to-action button that linked it to a landing page on the brand’s website.

This ad campaign resulted in a 25% increase in opt-ins to the brand’s subscription plan in comparison to its business-as-usual video ads.

To retarget effectively:

• Track customer behavior using cookies or pixels
• Segment your audience based on their interests and actions
• Create personalized ad campaigns to bring back potential customers

3. Add a ‘Personal Touch’ with Chatbots: Drive Human-like Assistance Anytime, Anywhere

The North Face, an online retailer, uses AI-powered chatbots to provide personalized beauty recommendations, answer customer questions, and assist with product selection.

To provide a personal touch with chatbots:

• Design chatbot interactions to be conversational
• Employ natural language processing (NLP) to understand customer queries
• Integrate chatbots with customer data to offer tailored recommendations and support

Notice how the brand has prepopulated the common Frequently Asked Questions to speed up the query resolution process.

You won’t need to burden your customer support team to answer these kinds of routine, basic questions; the chatbot can take care of it for you.

4. Empower Store Workers with AI: Equip the Frontlines for Success

Walmart, a multinational retailer, equips its in-store associates with a voice assistant, Ask Sam.

This tool enables workers to:

• Locate items
• Access store maps
• Look up prices and view sales information
• Check messages

All the in-store associates need to do is verbally ask questions like:

• “What aisle is hand soap located in?”
• “Who is in the apparel department today?”
• “What’s my schedule for tomorrow?”

And more.

5. Shop with Your Voice: Walmart’s Virtual Personal Shoppers

Walmart leverages voice shopping to help customers reorder items using the Walmart Voice Order feature. All customers need to do is pair their Walmart accounts to their smart speakers and mobile devices.

Here’s how this system works:

Let’s assume you say: “Hey Google, add wholewheat bread and a dozen eggs to my cart.” Walmart’s AI system will use:

• Natural language processing (NLP) to understand the request
• Product name entity recognition technology to identify the right products
• Previous buying history to learn more about the customer’s brand preferences

That’s not all. Walmart also uses a Text to Shop feature to empower customers to:

• Add or remove items from the cart
• Search for items
• Reorder their favorite products
• Schedule a pickup or delivery when they’re ready to check out

All this is made possible with simple text.

6. Take Control on Social Platforms: Social Media Chatbots

E-commerce brands are also leveraging conversational AI on social media platforms to engage with customers, answer queries, and drive sales.

For example, Sephora has integrated two chatbots with Facebook Messenger to provide real-time support, showcase products, and facilitate purchases.

With the Sephora Reservation Assistant, customers can make an appointment to reserve a makeover at Sephora stores. This bot has seen an 11% higher conversion rate as opposed to other channels for booking appointments.

The second bot Sephora Virtual Artist is essentially a shade-matching bot. Using this chatbot, customers can scan an image/face of a celebrity for instance, and see all the matching lipsticks in one go.

Sephora also has a bot called Kik that offers makeup tips, how-to videos, and reviews to customers. Plus, the bot has been trained to ask relevant questions to gather information and make personalized suggestions (such as makeup brand preferences). Once the bot has all the information collected, it redirects the user to the brand’s website or Sephora app for purchase.

7. Use Order Assistance and Tracking: Dominos Has a First-Mover’s Advantage with Conversational AI Technology

Conversational AI can assist customers in tracking their orders, providing real-time updates, and handling any issues that may arise during the shipping process.

One brand that took to conversational AI before it became the phenomenon that it is today is Domino’s Pizza. The brand employs a chatbot that interacts with customers, allows them to place orders, and keeps them informed about the status of their delivery.

Customers do not need to leave the Facebook Messenger, they can place the order from within the app. That’s not all.

Domino’s Pizza integrated its ordering system with Amazon’s Alexa voice assistant. Here’s how this works: Customers with Alexa-enabled devices can use voice commands to order pizzas from Domino’s.

By enabling the Domino’s Pizza skill on Alexa, customers can place their orders, customize their pizzas, and track the delivery status using their voices.

This seamless integration allows customers to simply say commands like: “Alexa, ask Domino’s to order a large pepperoni pizza” or “Alexa, ask Domino’s where my pizza is” to interact with the Domino’s Pizza skill and get the information they need.

This integration provides a convenient and hands-free way for customers to order food and track their delivery using voice commands.

AI in Ecommerce: Trends to Look Out For

Trend #1: Hyper-Personalization

Benefit: Enhanced customer satisfaction and increased conversion rates through personalized experiences.

Useful for: E-commerce brands looking to deliver tailored shopping experiences.

Actionable tips:

• Collect and analyze customer data: E-commerce brands need to gather customer-centric data such as the customer’s behavior, preferences, purchase history, and so on. This can be done by implementing robust analytics tools into the existing workflow to gain insights and identify patterns.
• Implement recommendation engines: Leverage AI-powered recommendation engines to provide personalized product suggestions based on customer data such as Amazon does. You can also leverage this technology to cross-sell and upsell.
• Dynamic website personalization: Utilize AI algorithms to dynamically customize website content (think: product recommendations, messaging, offers, etc.) based on individual customer preferences and browsing behavior. The more you are able to tailor the shopping experience in real-time, the better your chances of higher engagement and conversions.

Trend #2: Visual Search and Augmented Reality (AR)

Benefit: Enhanced product discovery, improved customer engagement, and informed purchasing decisions.

Useful for: E-commerce brands selling visually-oriented products like fashion, home decor, and furniture.

Actionable tips:

• Enable visual search functionality: Implement AI-powered visual search capabilities that allow customers to search for products using images. For instance, Pinterest uses the visual search function as shown below.

This technology essentially integrates computer vision algorithms to accurately analyze images and provide relevant search results within seconds.

• Offer AR try-on experiences: Want customers to virtually try on products or visualize how they would look in their environment? Invest in AR technology and create 3D models of products to provide immersive experiences to your loyal customers as Nike does with its virtual view app.

This intuitive technology allows shoppers to preview clothing on 3D holograms of models in WebAR as customers browse through the Finish Line website.

Trend #3: Chatbots and Virtual Assistants

Benefit: Improved customer support, personalized recommendations, and streamlined interactions.

Useful for: E-commerce brands seeking to provide 24/7 customer assistance and enhance engagement.

Actionable tips:

• Deploy AI-powered chatbots: Integrate chatbots on your website or messaging platforms to handle customer inquiries, provide product recommendations, and assist with order tracking. Make sure to train the chatbot with relevant FAQs and continuously improve its responses through machine learning.
• Personalize interactions: Implement AI algorithms to analyze customer data and deliver personalized responses and recommendations through chatbots. As a thumb rule, leverage natural language processing to understand customer intents accurately and provide tailored assistance.
• Seamless handoff to human agents: Enable smooth transitions from chatbots to human support agents when more complex issues arise. To make this possible, develop processes and workflows to ensure a seamless handoff so that the customers are not left scrambling for help.

Trend #4: Fraud Detection and Security

Benefit: Minimized fraud risks, enhanced transaction security, and increased trust.

Useful for: E-commerce brands looking to protect their businesses and customers from fraudulent activities.

Actionable tips:

• Implement AI-based fraud detection systems: Integrate machine learning algorithms that can analyze transaction data, user behavior, and historical patterns to identify fraudulent activities. Also, continuously update and refine the algorithms to stay ahead of emerging fraud techniques.
• Real-time monitoring and alerts: Set up real-time monitoring systems that can detect suspicious activities and trigger alerts. Implement automated systems that can take immediate action, such as blocking transactions or contacting customers for verification.
• Invest in secure payment gateways: Partner with trusted payment gateways that have robust security measures in place. Plus, collaborate with payment providers that leverage AI to detect and prevent fraudulent transactions, adding an extra layer of security.

The Future of AI in Ecommerce

Conversational AI is acting as an enabler for customers who want a more proactive and personalized shopping experience. On the business side, AI in Ecommerce has the power to benefit the entire Ecommerce ecosystem, from the customers and employees to the storefront owners and marketplace sellers.

However, embracing technology for the sake of it will not give you the benefits outlined in this blog. You’ll first need to understand which tasks, activities, and end goals need that AI boosts within your organization and then scout for prospective tools to give your business an edge.