AI is acting as a superpower of e-commerce businesses, here's how: Experts

While the digitisation of e-commerce began with online marketplaces, artificial intelligence (AI) is poised to take things several steps further, creating a more personalised, frictionless, and intelligent shopping experience for consumers globally.

Meanwhile, global retail e-commerce sales touched $6.5 trillion in 2023, accounting for 22.9 per cent of total retail sales, according to eMarketer. In India alone, IBEF says, the e-commerce market is expected to reach $350 billion by 2030, fueled by a growing internet user base and increasing smartphone penetration.

This exponential growth signifies a massive consumer shift towards online shopping.

However, with competition fierce, businesses are constantly seeking ways to differentiate themselves and enhance customer satisfaction. Here's where AI steps in.

AI - Superpower of e-commerce businesses

AI's influence on e-commerce is broad, affecting many areas of the online purchasing experience. 

Let's take a look at what Somdutta Singh, founder, and CEO Assiduus Global Inc and LP angel investor views on a few major areas where AI is making waves:

Personalised Recommendations: Imagine a virtual assistant recommending products based on browsing history, prior purchases, and demographic information. AI-powered recommendation systems, driven by massive datasets, can predict client demands with incredible precision. This personalisation benefits both businesses and customers by increasing sales and providing a more relevant purchasing experience.

Chatbots: Frustrated by awkward search bars that produce irrelevant results? AI-powered search algorithms can interpret natural language searches and recommend highly relevant products. Furthermore, AI-powered chatbots can answer client inquiries 24 hours a day, seven days a week, making the purchasing process more accessible and efficient.

Pricing and promotions: AI can analyse market trends, competitor pricing, and customer behavior to suggest optimal pricing strategies. Fraud Detection and Risk Management:  E-commerce fraud is a major concern, but AI can help mitigate risks.

Here’s what experts say

Milan Sharma, founder and MD, 35North Ventures: 
Artificial Intelligence acts as a transformative force in digitisation of the entire e-commerce sector by bringing significant enhancements across the sector, which allow brands to create a highly personalized shopping experience, increasing the likelihood of customer engagement. Apart from customer experience, AI will allow brands to optimize and build a robust supply chain with greater accuracy, reduced costs, and improved efficiency. 

The e-commerce market has always been driven by personalized customer interaction, and AI will help brands optimise and enhance the overall customer experience and maintain strong security by leveraging AI.

Yasin Hamidani, Director, Media Care Brand Solutions:
AI is poised to revolutionize India's e-commerce sector, enhancing personalization, efficiency, and customer experience. Through AI-powered algorithms, platforms can analyze vast datasets to offer tailored product recommendations, streamline supply chain management, and optimize pricing strategies. Chatbots equipped with natural language processing capabilities provide instant customer support, improving satisfaction and retention. Additionally, AI-driven analytics enable retailers to forecast demand accurately, minimize inventory costs, and identify market trends swiftly. As AI technologies continue to advance, e-commerce players in India are leveraging these innovations to stay competitive, driving growth and shaping the future of online shopping in the country.

Ambika Sharma, Founder and MD, Pulp Strategy:
AI is revolutionising the e-commerce sector by advancing the digitization process through the introduction of AI-driven personalized stylists and shopping assistants. These humanoid AIs, similar to shopping with a friend, use generative AI to analyze consumer preferences, past shopping behavior, and current trends to offer tailored fashion advice and product recommendations. This not only enhances the shopping experience but also increases efficiency and customer satisfaction by making it more interactive and personalized. Such AI assistants can also integrate seamlessly into various platforms, providing a consistent and helpful presence that guides users through their online shopping journey, much like a knowledgeable friend would. AI is also used to show and tell in real environments to ensure improved decision-making and potentially lower returns or cancellations.

What lies ahead

While AI offers immense potential, there are challenges to consider. Data security, algorithmic bias, and the ethical implications of AI-driven automation are crucial aspects that need to be addressed.

However, the future of e-commerce undoubtedly lies in harnessing the power of AI. As technology continues to evolve and AI becomes more sophisticated, we can expect even more transformative experiences for online shoppers around the world.