The future of e-commerce with new age AI tools
E-commerce has been steadily growing in popularity over the past decade, with more and more people opting for the convenience of online shopping. The market is expected to grow steadily and reach $6.4 Trillion by the end of 2024. One technology that is set to play a major role in achieving that goal and in the future of e-commerce is artificial intelligence (AI).
Below is the region-wise size of ecommerce market as of 2021:
- Asia-Pacific – $2.7 trillion USD
- North America – $861 billion USD
- Europe – $489 billion USD
- Latin America – $107 billion USD
- Middle East and Africa – $83 billion USD
AI has already had a significant impact on the way we shop online, with many retailers using chatbots to improve customer service and recommendation engines to suggest products based on customers’ browsing and purchasing history. However, this is just the tip of the iceberg when it comes to the potential of AI in e-commerce.
One of the ways in which AI is expected to transform online retail is through personalized shopping experiences. By analyzing vast amounts of data, AI systems can establish customer profile, patterns and preferences, and use this information to make personalized recommendations, promotions and even entire shopping experiences tailored to an individual customer.
The biggest problems customer face in online shopping is to find the right product that they want. Traditional search engines are often not well-suited to the nuances of e-commerce, with customers often struggling to find the exact products they are looking for. However, AI-powered search engines can take into account a wider range of factors, such as customer preferences, browsing history, and even image recognition, to deliver more accurate and relevant search results.
A significate contribution of AI for online retailers will be to create and optimize pricing strategies in real-time. By analyzing sales data and customer behavior, AI systems can adjust prices dynamically to reflect changes in demand and supply, as well as to optimize profitability.
One of the most exciting applications of AI in e-commerce is the use of virtual assistants and chatbots. These AI-powered tools can help customers with everything from product recommendations to tracking their orders, and can even provide personalized styling advice.
With all the upside that AI brings to online retail, there is going to be some downside as well. If algorithms are not designed and trained properly, they may end up perpetuating or even amplifying existing biases in society. For example, an AI system that is trained on historical sales data may end up recommending products only to a certain demographic, perpetuating existing inequalities in the market.
For an effective AI system, it is required to collect and churn a vast amount of data; data which will be sensitive and private as well. It is very important for ecommerce platform providers to account for those security issues while building the modern-age intelligent online stores. Retailers will need to ensure that they have robust data protection policies in place, and that their AI systems are designed to protect customer privacy.
Despite these challenges, the future of e-commerce looks set to be heavily influenced by AI. As AI systems become more sophisticated and widely adopted, we can expect to see a transformation in the way we shop online, with personalized experiences, intelligent search engines, and virtual assistants becoming the norm. e-commerce retailers that are able to harness the power of AI will be well-placed to succeed in the coming years, while those that fail to keep up with these changes may struggle to stay competitive in an increasingly crowded market.
(The author is Mr. Alok Kumar, CEO, eqomOS, and the views expressed in this article are his own)