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AI Empowers E-commerce Players To Take Lead In ‘New Normal’
Recently, the pandemic-induced social distancing mandates have forced brick-and-mortar retailers to draw shutters until the situation eases.
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Recently, the pandemic-induced social distancing mandates have forced brick-and-mortar retailers to draw shutters until the situation eases. This development has driven hordes of shoppers to e-commerce platforms for their day-to-day needs. As a result, retailers, even the ones dealing in non-essential commodities, have also shifted to the online selling format.
The Indian e-commerce industry had been growing of late but the current circumstances have accelerated its adoption considerably. Today, both buyers and sellers are virtually dependent on this channel of commerce. Now, digital shopping has become an integral part of our new normal.
To put data into perspective, according to the Salesforce Global Shopping Index, between Q1 2019 and Q1 2020, retailers experienced a spike of 16% in digital traffic growth. Additionally, the average spending per visit grew by 4%. As per the report, the number of unique digital shoppers rose 40% year-over-year (YoY) compared to 12% in Q1 2019. This surge surpassed the pre-pandemic holiday shopping season of 2019, which apparently was hailed as a strong season.
E-Commerce: the future of the new normal
Online purchases have become the most obvious form of shopping since lockdown began. Demand related to sanitation, grocery, hygiene, and personal devices such as laptops, smartphones, and Wi-Fi routers experienced robust growth. In this challenging scenario, eCommerce is emerging as the much-needed saviour, thereby delivering choicest products at best prices safely at the doorstep of the customers.
Shelter-in-place is changing beliefs, values, norms, and behaviour of consumers and laying the foundation for the new normal. A new report by Capgemini Research Institute already supports this claim. It found that consumers' appetite for online shopping and convenience will only continue to grow once lockdowns are relaxed.
59% of consumers worldwide had high levels of interaction with physical stores before COVID-19, but now only 24% expect to return to that level;
In the next 6–9 months, the figure is projected to reach 39%, which is still 20% lower than the pre-COVID era;
Before the crisis, 30% of respondents said that they had high levels of interaction with online channels, but now 37% of them see themselves in that light.
Retailers must, therefore, invest in digital platforms as it offers an opportunity to deliver new value through cognitive experiences. Moreover, it is an opportunity to connect with the customer, in this time of crisis, via the digital channel to make them feel crucial beyond mere economic perspectives or a conversion percentage. This is where AI can personalize and humanize interactions.
The AI Road for E-commerce and Online Retail
At present, AI is helping retailers reimagine digital customer experiences. It is acquainting them with new efficiencies and effectiveness. For instance, AI-driven product recommendations are known to increase average order value (AOV) by up to 26%. And, this is merely one aspect of it.
So, here are a few ways in which Artificial Intelligence can help eCommerce players.
1. Visual Product Searches
Visual search technology as a feature has revolutionized the shopping experience. Pointing your smartphone's camera towards a product will get you all details about it. Some social media platforms also directly connect users to the item’s sales page on eCommerce platforms. Similarly, Image Recognition Software saves the shopper from surfing a dozen products listed on the websites.
Leveraging NLP, eCommerce companies narrow down, contextualize, and improve search results for an enhanced shopping experience, helping them easily purchase the product they were looking for.
2. Behaviour Prediction
Today, access to more and relevant data, neural networks, and processing power has enabled online shopping behemoths to incorporate their customers’ individual preferences at a massive scale. Their ability to foresee customer demand is the result of the predictive capabilities of AI. eCommerce companies can utilize humongous data sources like social media, sales, and market research to create deep psychographic profiles of known customers, identify upcoming trends, and predict unknown customer demographics.
3. Retargeting Inactive Customers
The best part is that AI not only focuses on active customers but also those who have dropped off at any stage of their purchase journey. It thus helps brands form retargeting strategies to catch the eye of such inactive consumers. If you happen to recall ‘Items are waiting in your cart’ message, then this was something initiated by AI. Further, Facial Recognition and the time spent looking for a particular commodity can be utilized to get insights into what a user wants. These insights are then stored to offer personalized suggestions during the next visit. With active developments occurring in a new-age tech environment, companies can expect to curate special offers on selected products based on a customer’s real-time browsing pattern.
4. Sales Forecasting
With innovations in AI, predictions on future demands become more accurate and the companies might never have to fidget about going understock or overstock. Having information on when the product will be sold will lend an idea on when to restock inventory. This would not only save retailers from spending scores on ill-timed marketing campaigns or excessive outlays while restocking but also help them operate efficiently with a leaner inventory.
5. Route and Delivery Optimization
AI can process huge amounts of geospatial data to better manage delivery routes and schedule delivery requests during such unprecedented times. Syncing shipment time with customer’s availability enhances the supply chain process and extends the feasibility of the business model in the new environment. Analytics and Artificial Intelligence can ameliorate resource allocation and shipping processes for any eCommerce or retail company.
6. Tailored offers for every ‘one’
Unique product recommendation is the biggest weapon of AI. The backend recommendation engine dives deep into the past user behavior information to learn various shopping patterns. After rummaging through the purchasing habits of the customers, along with their profiles, the system generated a new hyper-personalized suggestion for every buyer on the platform. A similar process is followed for new customer profiles to predict what they might be interested in. It also assesses their cart items and aligns it with what other people with similar profiles have done in the past. Based on the completion of the transaction, the system retains or improves its suggestions.
7. Flexible pricing to drive sales
Product prices may vary greatly based on multiple variables. A pricing engine can consider information on a shopper's profile, prevalent trends, competitor prices, product abandonment rates, etc. It helps in determining what percentage of discount must be offered on a specific product to drive sales without hampering a healthy profit margin on the item. AI and ML can be used by eCommerce platforms to optimize prices on product catalog and unleash massive competitive edge.
AI on the Horizon
The stringent social distancing mandates couldn't keep eCommerce platforms from thriving. The situation has only highlighted its importance in the retail ecosystem as a steady and rapidly emerging marketplace. Contactless payments and delivery models have further supported the online shopping landscape as more industry verticals rush to transition digitally.
In fast-developing nations such as India, a rapid surge due to higher internet penetration and improved data speeds will soon be witnessed. Online engagements with customers are also increasing as customers become more responsive to omnichannel marketing and promotional messages. The time is right for the eCommerce players to capitalize on the situation with AI in the backdrop - ultimately, embarking themselves on a new growth trajectory.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.