Artificial Intelligence (AI) is at the forefront of digital transformation in the retail industry. With the ecommerce AI market expected to reach $45.72 billion by 2032 and 84% of ecommerce businesses prioritising AI, its influence is undeniable. AI is revolutionising how brands connect with their audiences by providing deeper insights into consumer behaviour and preferences, and those who fail to adapt risk losing their competitive edge.
With AI, brands can precisely tailor their ecommerce strategies, enhance the customer experience and improve operational efficiency to drive overall profitability. As AI continues to advance, it sets new standards for retail businesses and is essential for growth and innovation within the increasingly crowded online retail space.
From analysing live customer behaviour and optimising back-end processes to creating lifestyle imagery sure to appeal to target audiences, here are some of the key ways ecommerce brands are harnessing AI to boost their business strategies.
Creating personalised shopping experiences
Personalisation is becoming a standard expectation for shoppers, and brands have seen their revenue increase by 40% as a result of this tactic. Advanced AI algorithms can enhance the shopping journey by leveraging vast amounts of customer data to predict preferences based on browsing history and past purchases.
Amazon, for example, uses generative AI to deliver highly personalised product recommendations and descriptions on a customer’s homepage and throughout their shopping journey. Instead of generic product recommendations such as “More like this”, generative AI enables Amazon to offer specific, personalised recommendations like “Gift boxes in time for Mother’s Day” based on a customer’s shopping activity. This improves the shopping experience by exposing customers to products that best match their interests, allowing for more targeted marketing strategies that can encourage purchases and brand loyalty.
‘Digital shelf’ optimisation
Digital shelf is the term for the product listings that appear when shoppers search for a particular keyword on online marketplaces such as Amazon. As hundreds or even thousands of keywords and keyword phrases are relevant to every single product on a marketplace platform, there are countless possibilities for each digital shelf. Winning organically on an increasing number of respective keywords and keyword phrases is essential for long term, profitable growth on marketplaces.
By using AI-powered algorithms and extensive data sources, brands can identify and monitor their rankings on these digital shelves and see how they compare to their competitors and understand why they are converting. These insights can be used to create a data-driven strategy that adjusts to live keyword trends, showing brands where they should focus their energy to ensure their products always remain visible to relevant buyers. This can lead to higher True Return on Advertising Spend (ROAS) and drive new sales which can boost overall revenue growth.
Enhancing brand storytelling
AI can also strengthen ecommerce tactics by enhancing brand storytelling and optimising content strategies. AI has the power to analyse audience demographics, creating imagery and product descriptions that will have the maximum impact amongst their general customers. AI algorithms can also be used to continuously evaluate content and its performance to adapt accordingly. For example, AI can decipher the most effective image archetypes – from lifestyle images to action shots – and develop content strategies with these images at the forefront.
This approach delivers test results cost efficiently and ensures that content is aligned with audiences’ preferences, driving conversions as a result. Harnessing AI-powered insights ensures listings are compelling so brands can maintain a competitive edge within a crowded market. Automating and optimising content on product listings will also allow teams to focus on more strategic, human-led tasks, such as refining and elevating broader brand messaging and strategy.
Optimising inventory and supply chain management
One final way AI can optimise the entire customer experience is by streamlining the distribution journey. Retailers can use AI to develop a comprehensive and data-driven replenishment strategy that takes buyer habits, seasonality and price elasticities into account so they can prepare for surges in demand.
Leveraging AI in inventory management and the supply chain means that businesses have the necessary information to adjust stock levels accurately in response to demand forecasting. By combining historical data with machine learning technology to understand what consumers are likely to purchase and when, retailers can maintain optimal stock levels and be well-prepared for inflated buying periods. A well-managed supply chain underpins seamless customer experiences by ensuring product availability, which builds brand reputation and trust.
The future of retail with AI
AI is revolutionising the ecommerce space, offering brands unprecedented opportunities to innovate and thrive. From optimising a brand’s ‘digital shelf’ and personalising shopping experiences to enhancing brand storytelling and fine-tuning inventory management, AI empowers brands to adapt to rapidly changing consumer expectations.
As AI technology continues to evolve, embracing these advancements is essential for brands to stand out, drive growth and encourage customer loyalty. By strategically integrating AI into operations, brands can achieve significant cost and time savings through increased operational efficiency, laying the groundwork for sustainable long-term success.
