How Artificial Intelligence Is Changing Diwali Shopping

by Richa Kapoor and Promita Majumdar    Oct 17, 2017

aishop

It’s that time of year again — when online retailers begin to plan for a tidal wave of festive shoppers. What will AI’s role be during this busiest of all seasons?

The festive season means many things to many people; to retailers and e-tailers, it means things are about to get busy. This is true no matter when the festive shopping season begins. In India, for example, it runs from mid-August to January; in the US, it traditionally stretches from Thanksgiving to just after the New Year.

Retailers of all sorts are already adapting their approach by timing sales and tying them into holidays or other festive events (e.g. Black Friday and Super Bowl sales in the US; Indian e-tailer ShopClues’ Maha Bharat Diwali Sale and Amazon’s The Great Indian Festival). But how are they using technology to support their sales efforts?

AI’s Current Role in the Festive Season Shopping

First, let’s consider what AI-embracing retailers like Amazon are already doing with this technology:

Recommendations—Recommendation engines are the poster child for commercial AI usage. And since we’re all familiar with how recommendations work, we won’t go into that now. But let’s think about how this can be improved. By looking at customers’ purchase histories, current activity (cart contents and page views), and other linked third-party data, e-tailers can tailor recommendations to quite an individual level, resulting in a customized online shopping experience.

Demand Forecasting—Knowing in advance how much of each product you can expect to sell is an essential part of peak season survival. Using AI to enhance demand predictions can help minimize overstock and out-of-stock situations.

Personalization—AI systems can delve deeply into customers’ data, finding trends and preferences that we human retailers may not know about. And it’s not just likes and dislikes; AI can weave in spending patterns, product recommendations, and other data sources to come up with a very detailed view. This not only provides the customer with a more satisfactory experience, it also helps retailers hit their sales targets.

Operations—We are already somewhat familiar with the activities of AI in this area. It’s already being used on a “small” scale (sending out confirmation emails) and a very large scale (managing warehouses and monitoring inventory levels). We can look at AI as one of the most impactful technologies of online shopping fulfillment.

Now let’s consider some AI applications that will be — as they say in the movies — coming to an online retailer near you:

Shopping Assistant— People like to shop with their friends, but online shopping is largely a solitary activity. However, an AI-powered shopping assistant could fill the gap. Think of this as a natural extension of the chatbot, with some visual processing added in. For example, suppose a customer wants to choose an outfit for a special occasion. The AI shopping assistant could learn their tastes and help them select some garments. It could then walk them through the process of virtually trying on an outfit. It could offer suggestions for complementary items or encourage them to buy the product, as a friend might.

Customer Service— Again, we’re looking at another level of chatbots here—ones that can learn from the interactions between customers and human reps. The bot can use the data it harvests to create a more personable and personalized interaction for its Watch this field closely; AI adopters like Flipkart, Google, and Amazon are already pursuing it.

Smarter Searches— Consumers have become used to voice-powered searches, so they’ll likely also enthusiastically embrace visual searches. For example, an AI-powered matching algorithm could “look” at a picture of a shopper’s favorite t-shirt (now due for replacing) and suggest similar products. We could see voice-powered searches entering the e-commerce arena as well. This information will also feed into the recommendation engine and the customer’s profile, creating a richer data source.

Our guess is that we won’t have to wait too long to see any of these AI applications become reality. As we stated, companies are either actively researching them, developing them, or implementing basic versions of the underlying technology.

As the 2017 shopping season approaches, it’s becoming increasingly clear that AI is changing e-commerce, making it a leaner and more effective proposition. Customers can expect to continue to see strides in personalization and recommendations. E-tailers can expect to see improvements to their order handling, customer service, and personalization efforts. These will pay dividends in the form of revenue enhancement, increased margins, and higher sales.

[Richa Kapoor is Manager at Absolutdata Analytics and Promita Majumdar is Marketing at Absolutdata Analytics]