Still figuring out what product you should list next on your e-commerce marketplace to maximize profit? Looking to optimize your product mix? Or perhaps you are hoping to drive more conversions by nailing the ad copy on your next campaign? The 2010s are calling: they want their problems back.
In the era of artificial intelligence, these are not concerns that you need to work through manually. You simply need to ask the right questions and be assured that you will get the right answer for your business from an intelligent machine. In a previous post, we delved into the use cases of AI in e-commerce. In this one, we investigate the direct business impact of the expanding use of AI and machine learning (ML) for e-commerce brands.
E-Commerce and AI: A Business Bonanza
The introduction of AI tools in e-commerce is not only revolutionizing user experience but also transforming the economic health of businesses.
Increased Ad Effectiveness: Engaging with consumers through one-on-one discussions and customized messaging is the gold standard for businesses and helps them stand out from the competition. Advancements in AI and ML have simplified deep personalization approaches. They can help pinpoint exactly what your consumers want and convey the most effective message by analyzing large volumes of data gathered from purchase histories and other customer interactions.
Better Customer Retention: Sending out customized marketing and advertising messages to customers can boost retention. According to McKinsey, omnichannel personalization techniques have the potential to increase revenue and customer retention by 10-15%. “A critical element of personalization is building better data and insights on customers, an asset that also generates additional value across the value chain. … Our research suggests the ROI for personalization will quickly outpace that of traditional mass marketing.”
Minimal Need for Human Intervention: AI can significantly support a company’s endeavors to automate redundant processes, which is vital for operating an online store. For instance, it can eliminate the need for human involvement in processes such as product suggestions, loyalty discounts, and basic customer support. This not only ensures prompt, round-the-clock customer service but also cuts down on costs.
Enhanced Sales Process: By gathering information about consumers, automating follow-up questions concerning abandoned carts, and more, AI can assist a business in establishing a more efficient sales process. When customers interact with chatbots for simple and straightforward inquiries, it can move them further along the sales funnel, much faster.
Supply Chain Optimization: AI-enabled supply chain automation can aid e-commerce platforms in managing their costs more effectively and running a more efficient and profitable operation. This could include powering business decisions related to vendors, delivery schedules, and market needs.
Model shopping cart with multiple credit cards in it, placed on a laptop. Image by Freepik
From Competitive Edge to Critical Necessity
AI is helping businesses unlock the true potential of e-commerce. Increased optimization across the value chain, hyper-targeted ads with a high ROI, and better customer loyalty are a few of the more significant benefits that have a direct positive impact on a company’s revenue and profitability.
Moreover, the insights and learnings from AI usage in e-commerce marketplaces can point to actionable strategies even for traditional businesses. In 2023 and beyond, the adoption of such technologies will continue to become more vital — no longer an extra tool but an integral component.
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Written By: Nimesh Bansal
