3 ways artificial intelligence is transforming e-commerce

In 2015, the Chinese e-commerce market generated an estimated $562 billion in sales, with shopping named as the fastest-growing online activity among Chinese consumers.

Though the rise of e-commerce is hardly a surprise at this point, the global reach and consistent growth in this sector make it one of the most significant global trends.

What makes this all the more notable is that the rapid transition from the brick-and-mortar shops of old is still heavily limited by technology – specifically, the limitations of online product searches, which, especially compared to a conversation with a real world sales associate, return far too many irrelevant and unspecific results to be of reliably convenient use.

Accordingly, what is left is a global phenomenon that has succeeded in profoundly disrupting the traditional shopping experience, but has yet to reach its full potential.

The bright side to this story is that the key to unlocking the next wave of e-commerce disruption has arrived, this time with the advent of artificial intelligence (AI).

>See also: How artificial intelligence is driving the next industrial revolution

Much has been said about the implications of AI, particularly for industries reliant upon manual labour, from car manufacturers to surgical clinics.

But consider the potential impact of such technology in the multi-trillion-dollar global e-commerce industry, one that has evolved into an integral feature of the average consumer lifestyle and a common medium across countless verticals.

The confluence of AI and e-commerce could not only transform the millions of online transactions that occur every day, but also in-store purchase behaviours, already influenced by digital interactions at a rate of 36 cents for every dollar spent in the retail store, or approximately $1.1 trillion total.

Where exactly will this impact be felt? Here are three key implementations of AI that will fundamentally change the face of e-commerce, bringing it many leaps closer to its optimal impact.

1. The search glitch

Arguably the biggest limitation in the e-commerce industry today is the burden placed on the consumer to choose and then fine-tune a keyword that accurately identifies or describes the product they want.

If they choose right, the respective search engine’s algorithms’ will fish out relevant results. If not, they will have to iterate with the keyword trial and error until they find what they are looking for. More often than not, this does not go as planned.

The scenario usually plays out something like this: a shopper inputs “smartphone android” into the search bar. While a human representative would either understand the meaning or probe for more details, the current digital results are far from promising (try it on some of your favorite e-commerce engines and see). The result is often pages upon pages of smartwatches, phones, cases and other android devices.

This is because current search engines typically work by retrieving results based on matching keywords in a search query to keywords in product titles and description, without factoring in the greater context. By design, search engine algorithms adhere to specificity, a characteristic typically absent in everyday vernacular.

So, why can humans understand what the person searching for the “smartphone with the best camera” hoped to find, but a powerfully programmed search engine database gets it wrong?

The answer is simple: the average search engine algorithms of today lack the ability to understand a given search query with the nuances of language, as a human would. They lack the contextual knowledge, the practical intelligence, and the ability to understand natural language expressions – abilities humans possess and often take for granted.

The key is to utilise the power of artificial intelligence combined with natural language processing capabilities (NLP), essentially putting the human element back into a digital experience.

By doing this, e-commerce platforms will be able to turn massive numbers of failed experiences into successful conversions. Natural language processing seeks to understand text as humans understand text. That means not merely computing words in a vacuum, but applying contextual understanding.

With natural language understanding supported by their e-commerce search engines, shoppers will be able to express their desire, needs, and associated requirements in greater detail and in intuitive everyday language.

2. Personal shopper to the everyday consumer

The future of search technology is smartly constructed so that brands can understand their customers’ wants and needs without deploying a physical salesperson to assist each and every individual, an obviously unfeasible task for the colossal e-commerce industry of today.

Rather, consumers will be able to enjoy their own personal virtual shopping assistant as AI undergoes an evolution and search technologies transition from being passive information retrievers to incorporating features of proactive personal assistance.

This very notion is what drove the creators of Siri to introduce what is now known as the Son of Siri.

Viv, developed by the creators of Siri, is the next-generation AI assistant equipped to seamlessly handle a number of complex requests, not just in terms of comprehension but by performing a multitude of services.

Expanding upon Siri’s NLP capabilities, Viv takes user requests one step further – for example, connecting with third-party merchants to purchase goods and book reservations as opposed to routinely shuffling queries off to a basic web search.

>See also: Artificial intelligence: advancements, abilities and limitations

3. All-seeing AI

In a sense, the goal of the Viv assistant and other such digital data concierges in general is to be omnipresent, to understand your preferences and history as you engage with it throughout your day, from your home to your workplace to your mobile device.

Using your accumulated input data coupled with knowledge that has been amassed and amalgamated from many sources, AI searches would then not only provide better and more informed responses, but also predict behaviors, preferences and future purchases – all of which unlocks the potential and facilitation of an immeasurable number of online transactions, adding to e-commerce’s 11% contribution of total retail sales anticipated in 2018.

Increased transactions, increased customer satisfaction, increased retention, increased conversion— these metrics are but the start of all that will be AI’s impact on e-commerce.

By providing e-commerce with improved understanding and a more human touch, the industry will be laid bare to unprecedented efficiency, automation and consumer knowledge.

The convergence of e-commerce and AI poises a multi-trillion-dollar industry on the precipice of a complete and utter transformation – one that will forever alter the way we buy and sell. In fact, it’s already begun.


Sourced from Amir Konigsberg, CEO, Twiggle

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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