The idea of artificial intelligence, or AI, has become nearly inescapable these days. People from all walks of life and industries are wondering how AI will change the jobs they do and the tools they use. When it comes to AI in eCommerce, there are many possibilities for business owners to explore.
But what do those possibilities really look like? Here are 5 predictions of how AI could benefit eCommerce in 2024.
Prediction 1: Inventory Management Gets Smarter
The eCommerce market is now generating trillions of dollars in revenue around the globe, making it a lucrative space for companies of all kinds. Whether selling software, downloads, or physical products, running a successful eCommerce company can be lucrative.
For companies selling physical goods, success can depend on the quality of the operation’s inventory management system. Inventory management is all about storing products, knowing how much of each item is in stock, keeping it in good condition, and efficiently processing orders and restocking returns. AI is offering tools to do that.
AI and Inventory Optimization
The first area AI can help with is optimizing your inventory management. By using AI algorithms to interpret large and complex data sets, businesses can free up staff that would have had to analyze that data otherwise. As AI expands in 2024, these algorithms will be able to generate inventory and forecasts more quickly and with more accuracy, allowing companies to give their staff members other important work to focus on.
This predictive power could make managing stock levels more efficient by anticipating future sale patterns and helping leaders find the right stock balance. If product stock levels aren’t optimized, eCommerce operations run the risk of missing out on revenue because they don’t have in-demand products stocked, or wasting money on stock that isn’t moving. AI navigates this delicate dance, ensuring that businesses have what they need, and more importantly, what customers want.
Restocking can also be automated by using AI in eCommerce. AI could be used to reorder the correct amount of a product based on sales trends when stock levels hit a certain threshold, allowing online stores to seamlessly serve customers.
Looking ahead, the role of AI in inventory management is expected to grow and cover more aspects of the process. Machine learning is getting more advanced, so expect more accurate inventory forecasting predictions. There will also be more integrated tools, such as the Internet of Things (IoT) technologies being used to give real-time feedback on what inventory is moving and what isn’t, with insights about why.
Prediction 2: Customer Data Transforms
Customer data has become one of the most important assets in every company’s plans, but leaders have to be able to make the most of it. This data can tell decision-makers what the audience likes and doesn’t like, how people are likely to behave, and which investments are going to make the most impact on the company. AI in eCommerce is getting smarter and offering new ways for businesses to leverage their customer data into profitable plans.
AI in Data Analysis
Analyzing customer data to create smarter business plans and strategies is a critical part of ensuring growth in the future, and artificial intelligence is offering ways to make all the number-crunching much easier and more accurate. Machine learning takes the lead here, with algorithms doing the hard work of sifting through mountains of data and generating insights and conclusions. Companies can turn those conclusions into targeted marketing strategies and predictions for customer behavior.
For example, an AI-powered data analytics tool may allow businesses to offer individualized recommendations and promotions that are created from a customer’s previous shopping history, preferences, and behaviors. These reports can be informed by customer purchases, social media interactions, and demographic data, using all of these touchpoints in a way that would take a lot of time and work for a human. This not only enhances the customer experience but also increases the likelihood of sales and profits.
Predicting customer behavior is another benefit of AI in eCommerce that businesses can take advantage of. In the coming year, it will be easier to understand how different customer segments interact with the online storefront and anticipate the needs of those customers. There will be better opportunities to streamline the shopping process and improve the customer experience, based on data from those customers about what works for them and what doesn’t.
Privacy and Ethics
As people spend more of their time online and do more of their business and shopping on the internet, there is a growing concern about privacy. Consumers want to make sure unneeded data isn’t being collected about them, and that the data that is collected is used for the right purposes and doesn’t fall into the wrong hands.
AI systems that delve deep into mining data from customer interactions must have safeguards in place. Artificial intelligence programs are being built with more transparency to allow people to understand when customer data is being collected and where it’s going. Data collection and usage also need to comply with safety laws, which can vary by country and even by state.
Ethical use of customer data is crucial. When using AI-driven personalizations for customer interactions, businesses will need to make sure not to cross the line and make customers feel spied on. By prioritizing privacy and respect for customers, AI can help businesses without harming consumers.
Looking ahead to the 2024 eCommerce landscape, expect to get more precise insights from customer data generated by AI in eCommerce. Algorithms that are faster, more accurate, and can handle more data will offer new perspectives on marketing to target audiences and follow the trends in the market. Predictive analytics will become more refined, enabling businesses to anticipate shifts and customer needs with greater accuracy.
Prediction 3: Interactive Customer Service
Modern consumers have more choices than ever, so every aspect of an interaction with a business matters when it comes to building loyalty and repeat business. Customer service is a big part of this, especially for eCommerce companies that don’t have a physical presence. Online stores and Software-as-a-Service businesses need top-notch support for customers since there is less access to face-to-face support.
AI-Powered Chatbots
Many eCommerce companies already use chatbots, those little applications that can respond to customer questions on websites. Chatbots have grown from simple programs that give pre-determined answers to AI-powered tools that can create smart solutions for customers. These chatbots offer big advantages for companies, including the presence of 24/7 customer service without having to staff a full team at all hours of the day. Customers get what they want when they want it, enhancing their view of the business.
Chatbots can be equipped to handle a wide variety of questions, from queries about tracking orders to answering product-related questions. With this form of AI in eCommerce, there is a lot of growth and evolution expected as more chatbots can learn from interactions and tailor their answers to each customer’s purchase history and site interactions.
Voice Assistance and AI
Mobile phones and voice assistants are now making the most of AI-powered voice commands, and eCommerce companies should do the same. Voice assistants that use AI can offer a hands-free shopping experience, offering a better experience for customers who prefer not to navigate through websites or apps. Consumers can simply speak to the voice assistant to search for products, check the status of their orders, or even place orders directly.
This technology has made eCommerce more accessible, especially for individuals with disabilities or those who are not as tech-savvy. Because voice assistance enhances the accessibility of online shopping, a broader range of consumers can enjoy the convenience of online shopping, expanding each company’s potential customer base.
Impact on Customer Satisfaction
By shortening the amount of time and effort customers have to expend to get support from an eCommerce company, customers will hopefully leave each interaction more satisfied and more likely to continue doing business with that company. Leveraging the accuracy and improved response time that AI can bring to customer service allows an online retailer to streamline their operation and reputation.
AI tools can also pull data from customer service interactions, allowing leaders to improve features that may be causing problems. For instance, if the AI chatbots report that multiple people are having an issue with the same software, the development team can be alerted that an update or bug fix may be needed, giving all of your customers a better experience.
This efficiency and reliability in customer service fosters a sense of trust and loyalty among customers, as they feel valued. The personalized touch that AI adds to customer interactions enhances the customer experience, making shopping more enjoyable and convenient.
Challenges and Future Outlook
AI chatbots in 2024 will need to be improved to meet new challenges. Again, privacy is a concern for the general public when it comes to any AI tool. Customers worry about whether their answers will be recorded, whether the chatbot or others can see words being typed before they are sent and what data is recorded. Many customers prefer to talk to a person, rather than a chatbot with language that imitates humans.
To meet these challenges, developers, and businesses will need to offer more transparency and options to customers. Consumers should be made aware of whether they are talking to an AI-powered chatbot or a real person, and be given an option to change to the solution they are comfortable with. Companies also need to consider if some customer service issues should automatically be sent to a human representative, such as ones that deal with sensitive customer information.
Prediction 4: Insightful Product Development
Businesses in every industry are always looking for smart ways to expand and invest so they can make the most of their resources. Product development is a big part of this since a company that can tap into a growing product market has a chance to create new opportunities for revenue and increase its market share. AI in eCommerce has several different tools that development and research teams can use to make better decisions.
Consumer-Driven AI Insights
Years ago, commerce companies came up with surveys and focus groups to try to understand what consumers wanted. Sometimes these groups or survey participants were made up of a company’s customers and other times the participants were from a target audience the company wanted to capture. In both cases, the sample sizes were relatively small compared to the entire potential consumer base, and the data was anecdotal.
With new tools for AI in eCommerce, businesses get more accurate and in-depth analysis of customer data to inform product development. AI is a great tool for processing vast amounts of data. This means it takes less time to compare responses and actions from a variety of platforms and synthesize them into a narrative that tells leaders which trends are worth investing in.
One idea is to have AI algorithms analyze social media trends to identify the colors, styles, and features that are gaining popularity among a certain target audience. AI can also process customer reviews to pinpoint common issues or needed improvements in existing products. With a data-driven approach, businesses ensure that new products or upgrades align with customer expectations and market trends, increasing the likelihood of converting people into customers and boosting sales.
Personalization and Customization
Another opportunity for product development teams using AI is the chance to personalize products for customers who share their data. Companies can use AI to create personalized shopping experiences, where product recommendations are tailored to individual consumer preferences and even the products Beyond recommendations, AI is also enabling the customization of products themselves.
By using a customer’s past behavior, AI in eCommerce can suggest relevant product changes and upgrades for each customer, potentially increasing the number of sales and the amount spent per transaction.
Looking to the future, using AI in product development is set to become even more common and sophisticated. Expect to see AI systems that not only analyze current trends but can also predict future trends with high accuracy, both for the market as a whole and each customer segment.
Prediction 5: Real-Time Financial Forecasting
Every business has a bottom line which means leaders have to stay aware of forces that can impact revenue and costs. Financial forecasting can be time-consuming, but it is important for the success of an eCommerce company. By using AI tools, faster and better insights can be used to stay ahead of the market.
AI in Financial Analysis
One of the best things about artificial intelligence is its ability to go through a large amount of data and identify patterns in a short amount of time. In the world of financial forecasting, this means businesses don’t have to limit themselves to certain data sets because of a lack of resources. Maybe a company only analyzed local markets because they had to limit how much data they looked at. AI overcomes that limit. AI also works more quickly, so the analysis can happen nearly in real time.
One of AI’s key strengths is its ability to predict market trends with accuracy and nuance. By analyzing patterns in consumer behavior and factoring in economic indicators and global events, AI algorithms can forecast sales volumes, revenue trends, and market changes before they become a problem or a missed opportunity for a business. Companies can adjust marketing, pricing strategies, inventory plans, and more based on these advanced forecasts.
AI also can simulate unique business scenarios based on existing data, allowing leaders to test strategies and make useful decisions based on predicted outcomes. Expect more companies to embrace these kinds of models as AI use grows in 2024.
Risk Management
Risk management is another area where AI in eCommerce is helpful. AI can detect risks from different sources, such as events that will disrupt supply chains and increase costs, shifts in consumer preferences, and other forms of market volatility. Those insights allow companies to know if they need to shift focus, say from a product that may see a supply issue soon to one that will have lower production costs.
AI in financial forecasting will depend on accurate data for the machine learning algorithms to analyze. In 2024, more institutions will be putting out more data than ever, so it will be critical to make sure any AI models businesses use are well-trained to identify relevant data that is complete and unbiased.
Continuous advancements in AI for financial forecasting are expected as more businesses start to look to this tool for an advantage. Other technologies such as blockchain are offering more data, and AI developers are working to make use of this field. It is also expected that AI will get better at handling complicated data sets and analyzing non-linear data to create more dynamic business plans. Combined, these tools will make teams more informed and better equipped to position their companies in the right place in the market.
Ongoing Challenges in AI and eCommerce Integration
AI in eCommerce is full of opportunities, but there are also concerns and challenges that businesses need to keep in mind. Like any evolving technology, there will be unexpected obstacles and it may take a bit of trial and error to get the right strategy for each business.
Here are some things to keep in mind as leaders explore implementing AI for eCommerce in 2024:
- Privacy Protections: As mentioned, the increased use of artificial intelligence creates new questions surrounding privacy, both for customer data and business data. Every company that begins to integrate AI should take the time to evaluate privacy policies and procedures. If a business uses a third-party AI solution, this should include getting a clear understanding of how that outside business stores, protects, and uses data.
- Return on Investment: New tools and programs can offer a lot of benefits, but businesses don’t have unlimited resources to keep buying programs and software. Leaders should ask themselves which aspects of their operation can benefit the most from AI in eCommerce, and if the predicted return is worth the upfront cost. This decision could become easier as AI becomes more common and prices drop.
- Human Oversight: Artificial intelligence can do a lot, but it is still a tool that needs to be used under the supervision of humans. Companies may be able to shift staff away from certain jobs such as online customer support, but there should be a plan to have at least a few human team members analyzing the outputs from AI tools.
With a bit of planning, business owners can come up with plans to add AI tools to their list of resources without wasting money or causing additional problems. Thoughtfulness will be key to a successful AI eCommerce strategy.
Embrace AI in eCommerce in 2024
The growth of AI means there are new ways for businesses to connect with customers and support them as they interact with the company. In the eCommerce world, this can mean better business decisions thanks to improved inventory management and market forecasting, as well as better support for customers. The opportunities are expansive and can align with business goals in the ever-changing eCommerce world.
