With the E-commerce industry growing at an extraordinary rate globally, businesses are faced with the challenge of getting ahead of their competition and providing the best user experience possible in order to grow their business.

As numbers speak louder than words, the following statistics demonstrate the influence of AI on the E-commerce sphere: 

• A report by McKinsey & Co. shows that adopting AI can generate 20% extra revenue for your business
• Amazon’s AI-powered recommendation engine drives 35% of their annual sales
  

As NexGenAI Solutions phrased in a recent article:

“Harnessing the power of Artificial Intelligence (AI) is no longer a luxury – it’s an imperative”

Let’s go over a few of the hot topics in the field, and see how you can leverage these trends to your E-commerce business’s advantage. 

Emerging Trends for AI in E-commerce in 2024

1. Conversational Commerce

Conversational AI serves as the basis for chat commerce, as we discussed in a previous article.

Shortly put, conversational shopping aims to recreate the in-store experience online by enabling shoppers to chat with an AI powered shop assistant to get answers to any questions they have (about the store or products).

Conversational AI tools are capable of processing unstructured speech or text inputs and can further enhance their abilities through additional training and human feedback.

Using an AI-powered chatbot can reduce in-house costs, improve the user experience, and open a new online sales channel.

According to Markets&Markets’ recent study, the Conversational AI market is expected to increase from USD 10.7 billion in 2023 to USD 29.8 billion by 2028.

Read more at: 

• Conversational Commerce Use Cases
• Conversational Commerce Platforms

2. AI-Powered Customer Support

In addition to conversational commerce, Artificial Intelligence unlocks the door to seamless, lightning-fast customer support.

AI-powered chatbots are changing the rules of customer interactions by bringing efficiency and personalization to the forefront. They ensure 24/7 availability, break language barriers, reduce the need for human agents and enable higher degree of customer loyalty at the end.

3. Predictive Analytics

Predictive analytics algorithms are used to analyze various data derived from transactions and customer behavior.

Through the utilization of big data and statistical analysis, predictive analytics can assist in identifying customer needs, recognizing shopping patterns based on purchase history, and forecasting future customer behavior.

With the use of these analytics, you can efficiently generate personalized messages and offers, along with product recommendations that cater to the customer’s interests and preferences.

Providing suggestions tailored to the customer’s needs and preferences is one of the easiest ways to make them feel understood and valued. Customers are more likely to return to a store that prioritizes their satisfaction.

4. Personalized Recommendations

The concept of personalized product recommendations is not exactly new for E-commerce companies. Technological developments (including Artificial Intelligence) however, significantly contribute to making these recommendations more sophisticated and effective.

AI- and ML-based algorithms are the best choice when it comes to analyzing data related to customer interactions, as they can provide deeper insights into their purchasing patterns and behavior overall. Thanks to this, your recommendations can become even more personalized.

All in all, predictive analytics play an important role in customer satisfaction and retention as well.

5. Visual Search and Image Recognition

Computer vision, which is a subset of AI, gives machines the ability to “see” and interpret the world. It serves as a basis for visual search, where instead of a text-based query, the user searches with an image. 

How is it helpful in the E-commerce sphere?

The shopper can just take a photo of the product they’d like to buy, and upload it to the search engine, instead of writing lengthy queries, then browsing and filtering to find the best fit. 

Target and IKEA are great examples of visual search.

To easily get started, you can make use of ready-made visual search engines like Google Lens or Pinterest Lens. The other method of implementing this technology is to choose a site-search solution that supports visual search.

6. Vector Search

Vector search is the latest development in E-commerce search technology. It is based on a mathematical representation of language that transcends traditional search methods that rely on keywords alone. 

Vector Search dives deep into the very nature of products, understanding their features and nuances. This means more relevant search results, better product recommendations, and an altogether more satisfying shopping journey.

Thanks to Natural Language Processing, vector search enables shoppers to search more generally, while prioritizing relevancy, which means even if they cannot exactly explain what product they need, they can search for the concept and receive matching results

Vector search can be combined with traditional keyword search to improve search result relevancy leading to increased conversion rate and revenue.

Read more at:

• Vector Search – the Future of E-commerce
• Unveiling How Vector Search Works

7. Live Commerce

Live commerce (also known as Livestream shopping or live video shopping) is not yet a mainstream concept in the West.

However, recent studies show that in China, 77% of people have already purchased something via livestream shopping. It is an emerging trend in several Asian countries. 

Live commerce is when retailers sell products via videos broadcasted in real time. The main idea is that people can see the products from all angles and in the context before making a purchasing decision.

There are different ways to implement this new avenue of sales, but the two most common are omnichannel live streaming to promote and sell products, and live Q&A sessions to initiate conversation between the viewers and the representative(s) of a business. Either way, there is always a link or another action item in the videos that enables potential customers to reach the store in an instant. 

Social media is the most common platform for live video shopping, but some businesses like streaming on their websites as well.

8. Fraud Detection with AI

AI is emerging as a powerful asset in the fight against financial fraud as it can process huge amounts of data and recognize patterns in order to find anomalies and unusual activity.

ML- and AI-powered tools can uncover cases of fraudulent transactions involving several accounts, different locations, devices, and channels.

Natural Language Processing (NLP) plays a key role in AI fraud detection efficacy, by making sense of written communication, such as emails or text messages, related to a suspicious transaction.

This technology can be used for multiple other functions, including: identifying fraud both online and offline, filtering out fake reviews on websites, and blocking bot traffic.

9. Automated Content Generation

Using AI to generate content can save retail businesses a lot of time and effort.

It can be used to augment the product catalog by automatically generating high-quality product descriptions. It can help with automatic translation as well, to adapt content for different regions and languages, ensuring a consistent brand message and catering to a global audience. 1

Generative AI, like ChatGPT can also be a helping hand in creating content for bundle offers and cross-sell recommendations, directing customers to relevant items. 

Anticipating Future Developments in E-commerce AI: 2 predictions

+1 Augmented Reality / Virtual Reality

As customers look for more interactivity with a product before making a purchase, AR and Virtual Reality Shopping are most likely to emerge in the upcoming years. 

A VR/AR online shopping experience, for one, lets the customer take a thorough look at the product from all angles, even simulating the feeling of using the item (visual try-on). Journey, for example, a quite well-known shoe store in Northern America, allows their customers to try on most of their shoes virtually.

Foreseeably, this elevated level of convenience and comfort is on the list of future demands from shoppers. 

Some stores have created entire virtual stores that mimic their existing physical ones.

Ralph Lauren allows their customers to take a virtual look into their stores in several locations, while Charlotte Tilbury has an entire browsable virtual store. 

Virtual or Augmented Reality can help shoppers get educated about products, before making a purchase decision. 

+2 Innovative Omnichannel Payments

Merging all kinds of payment methods into one omnichannel strategy, and blurring the lines between them is another avenue of development in AI. In practice, this means that the customer can handle any transaction related to their shopping journey in whatever form they prefer (browse online, pay in-store with cash, get a coupon via email or text message, return an item through a pickup point, see their refund on their bank account the next day). 

Payment integrations like Amazon’s palm scanning, and biometric technology (payment by physical features, fingerprint), as well as social media payments, are examples of innovative ways to utilize AI in stores’ omnichannel payment strategy. As Michael Johnson, the CIO of SVP Worldwide phrased in his post,

“The Future of E-commerce is Here and It’s AI-powered“

Wrap Up

The latest developments in Artificial Intelligence can equip your business with the necessities to enhance the customer experience in your online store, helping to make you a leading retailer. 

To maximize the potential of AI, it’s crucial to have a solid understanding of the technology by staying informed to be up-to-date on the latest developments, then take the initiative and invest in AI tools to realize their benefits as soon as possible. 

Make sure your efforts align with your objectives and leverage Artificial Intelligence in the most fitting manner for your E-commerce business.