The Impact of AI on Online Retailers
by Lauren Cassidy
February 12, 2020
At Kooomo, you’ll see that we’ve discussed AI as a digital trend for 2020 – and while it is a trend, it is by no means a fad. Brands that wait to implement it into their business will rapidly find themselves eclipsed by their forward-thinking competitors.
Live Chat Bots
The demands of online shoppers are constantly evolving, with 51 per cent of consumers saying a business needs to be available 24/7. It goes without saying that retailers have moved beyond the realms of 9-5. Therefore, it’s imperative that investments are made in AI in order to bridge any current gaps between themselves and on-demand consumers.
92% of customers feel satisfied when they use a live chat feature – a significant statistic that retailers who have yet to implement this feature should consider. If your competition has integrated live chatbots into their customer support, they’re already ahead. This is important to remember in terms of your online reputation – user generated content is another trend we have highlighted for the coming year. Positive experiences shared with others will be imperative for the success of online retailers, encouraging new custom and customer retention.
AI will also play a massive part in personalisation for online consumers as 59% of customers say that personalisation influences their shopping decisions. Demographic-based personalisation has been useful to date – but as consumers and technologies evolve retailers should take the next strides in getting to know their customers. This is where motivation based personalisation is set to take over.
Consumers now expect personalisation as standard. Take, for example, the recommendations Amazon and Netflix make based on the user’s prior interactions.
According to a McKinsey report, 35% of Amazon’s revenue is generated by its recommendation engine. Given Amazon's scale and position, it has already been able to develop learning algorithms from data signals like purchases, searches, and reviews. The data has created a feedback loop – Users contribute data, the product gets smarter, more people use the service and the process starts again. As an eCommerce giant, we can only expect that other retailers will aim to follow suit.
But it’s not just user experience that will encourage the uptake of AI among online retailers. It is also set to improve the way retailers manage their inventories and lead to better decision making. As mentioned, motivation-based personalisation will provide a better knowledge of a brands consumers and their behaviours. AI will allow for easier control of your supply chain – as a result, shrinkage is reduced, and so retailers will save time and cash.
Better Decision Making
From there, we can predict that AI will directly promote better decision making within the business itself. Take Carrefour, for example. The French multinational retailer is currently running an 18-month pilot, where AI-driven analytics will gather data related to its online orders, warehouses and stores.
This information will then be used to create customised algorithms that keep items stocked – but not to excess. This will lead to retailers being able to predict their stock levels more accurately and make smarter purchase orders.
Alexa! Hey Google! Hey Siri! – Whatever smart device you’ve chosen to integrate, soon it will be able to achieve much more than playing a Spotify playlist or controlling your home heating. Recent stats from Quoracreative indicate that this year, up to 50% of all searches across the internet will be voice-based.
AI systems will continue to be integrated into smartphones or smart speakers and be specifically designed to react to even more particular voice commands. Voice-based shopping is expected to jump to $40 billion in 2022. Therefore it may be in a retailer’s best interest to invest in these technologies now. Otherwise, they run the risk of missing out on a significant customer base.
Cyber SecurityAI is set to play a major role in improving cybersecurity as the capabilities of human-based monitoring cannot keep up with evolving consumers… and hackers. An ability to detect, identify and react to imminent cyber attacks immediately will be essential for maintaining secure transactions and a trustworthy brand.
According to Gartner, worldwide spending on cybersecurity is forecasted to reach £103 billion by 2022. We can expect major investment in AI to improve cybersecurity, as retailers hope to avoid incidents such as those suffered by Uber, Yahoo and Marriott-Starwood.
Artificial intelligence-led security solutions will be used to immediately detect unusual activity (using the knowledge gained from motivational based personalisation.) It will be able to collect and analyse comprehensive data to “connect the dots” and identify new impending threats. It is expected that it will even prevent possible exploitation of any flaws in the system.
Last year, the average time to identify a breach was 206 days. Using AI, security will now be monitored around the clock with an ability to respond in seconds – something that would have usually taken hours or even days for humans to identify.
Chat to us today about our services and future-proofing your business at www.kooomo.com.
Posted by: Lauren Cassidy