Practical Ecommerce

10 Ways That Artificial Intelligence Helps Merchants

The term “artificial intelligence” refers to software that learns from experience. It mimics the human mind in that it changes responses based on data. Self-driving cars and voice-enabled devices rely on artificial intelligence.

Retail businesses can also benefit. In this post, I’ll list 10 use cases of how artificial intelligence helps merchants.

10 Benefits of Artificial Intelligence

Customer service is critical for most retailers. Artificial intelligence can streamline and improve customer service. A.I. parses through messages and customer information to provide personalized responses. It is also used for questions that are repeatedly asked, to reduce human involvement. This leads to better service while lowering costs.

Product recommendations are more effective with A.I. For example, chatbots can interactively suggest products to shoppers based on their preferences and intended use. This process has delivered strong results for 1-800-Flowers.com and North Face, the retailer of outdoor goods. It’s a vast improvement over guided selling. A.I. is more personalized and can change responses on the fly as it learns more. Thus it leads to improved sales.

This application from ModiFace can show different hair colors digitally.

An application from ModiFace can show different hair colors digitally.

I addressed human-free retail in an earlier post. It uses A.I. to analyze real-time video data to understand shopper behavior, including which products are added to a customer’s shopping basket.

Retailers have used personalized marketing for years. With A.I., personalized marketing decisions can be made on the fly. The message or the promotion can change based on the real-time and historical information associated with each consumer.

Fraud is a huge challenge for online merchants. A.I. reduces fraud by applying real-time, continuous learning and intelligently flagging transactions that appear suspicious. I addressed A.I.-based fraud detection last year, in “Intelligent Ways to Manage Fraud.”

Using A.I., product search can become smarter as it can understand human speech. For example, a shopper could speak “I want to buy a gift for my niece. She is four, loves dinosaurs, and pink is her favorite color.” A.I. search tools can utilize natural language processing to understand the shopper and show the products that match her request.

A.I. can streamline shipping, by finding the best routes, estimating arrival times, and even experimenting with human-free ports to load and unload containers. A.I.-powered self-driving vehicles will likely improve the delivery process even more.

Product classification is a laborious process. A.I. simplifies it by analyzing all product information and standardizing it into a common format. This helps with searching, product comparisons, and even with product feeds to third parties. A.I. can review product images and identify features, how they are used, and which products are similar.

A.I. can automate the pricing of products. Historically, merchants set prices by researching the market, estimating what shoppers would pay, evaluating competitors, and so on. A.I. optimizes all of this. It can collect comprehensive data and provide the pricing. The merchant saves time and increases profit.

Inventory management benefits from A.I. For example, robots can count items in a warehouse and A.I. can then make decisions such as reordering or liquidating. This speeds up the inventory management process and also frees up employee time.

Gagan Mehra

Gagan Mehra

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  1. Ernesto March 22, 2018 Reply

    Hi Gagan,

    This is great insight. Could you please recommend or mention some vendors that offer these services for e-commerce retailers?

    Thanks!