Artificial intelligence (AI) is creating new opportunities for the retail industry. It is making retail more human and improving various processes for customers and businesses on a global scale. Through the use of AI, retailers can improve their operations, enhance customer experience, and increase revenue. In this article, we present the most relevant e-tailing trends and provide real-world AI use cases that will enable retailers to understand how to leverage AI in their business.
Incorporating AI Strategy in Retail
For retailers, the AI strategy should start within. One can begin with a few internal use cases, say improving the workflow for employees in a particular department or boosting the efficiency of a specific operation. The right AI partner is also important. A retailer can go to Google or Microsoft to pick up the best model, or it can use an open-source one.
Start small and then ramp up as employees and other key stakeholders familiarize themselves with the technology. This will ensure that the organization’s employees and board are ready to embrace AI, as they have already seen its benefits via an internal use case.
AI Personal Assistants in Retail
AI personal assistants made interactive shopping possible. Once consumers started using AI tools like ChatGPT for day-to-day tasks, such as meal planning, retailers quickly followed suit with the same tools for their own websites.
A good example of how these technologies are applied is Walmart’s implementation of semantic search, where you can type in what you want to buy in ordinary language (say, “I need a good battery-powered lawnmower”). The AI system can interpret this request and recommend products from the store’s stock that suit customer needs. And just like that, Walmart improved user interaction and streamlined customer journey. So, in the coming years, we might find that the process of shopping online is completely different because of what AI will be able to do.
Leveraging AI to Analyze Customer Behavior and Generate Personalized Offers
Retailers can improve personalization by using point-of-sale data combined with search data and social listening. Social listening is the analysis of what people say in conversations on social media, such as on Instagram and other similar places. If retailers use this information combined with sales data, they end up knowing more about their audience.
Demographics – such as which area of a city the customer lives in or what type of product category they are looking at – were the main tools that traditional personalization had to work with. But armed with AI, especially generative AI, retailers can go much deeper than that. AI allows businesses to discern which affinities might be associated with a particular customer segment. Combining information from social media use, for example, can help predict what a soccer mom might want to buy in a given season. The more detail the AI can provide about a customer, the more effective your personalization strategy will be.
Leveraging AI for Retail Success
Long before generative AI was the talk of the town, retailers developed data and AI platforms. These foundational machine-learning experiments shaped the way forward for AI. But the road to entry for generative AI is a lot easier: retailers can get started without investing in big platforms.
Using AI to Optimize Peak Shopping Seasons
In the run-up to huge shopping events such as Black Friday, retailers use AI months before the event to prepare. AI is used first to predict demand and then to develop replenishment strategies.
Personalization also plays a crucial role in how campaigns are shaped. Generative AI can further improve the understanding of customer behavior, allowing retailers to deliver personalized offers and recommendations to shoppers on an even deeper level. For instance, when shoppers are seeking gift ideas for their family members, AI-generated suggestions based on their needs and desires can make the process easier while also helping them plan their purchases and budgets better. Customers will benefit from this kind of personalized shopping experience – it helps to simplify and make it more intuitive.
AI for Summarizing User Reviews
Consumers routinely read reviews before buying something, but going through thousands of reviews can be time-consuming. Shoppers can now access highlights of user reviews generated by AI rather than reading through all of them. AI-written summaries of those reviews can point out the product's positives and negatives.
In addition, AI can be used to analyze the reviews en masse and help merchants understand if their marketing claims hold up. For instance, AI could tell you if your shampoo for blondes, marketed by you as such that removes yellow tones from the bleached hair, actually does what you claim it does.
In addition, AI helps brands uncover latent insights. For example, a product designed for the visually impaired (say, a shampoo bottle with a specially textured top) might also appeal to people who don’t want to open their eyes in the shower for fear of getting shampoo into them. With these insights, retailers can expand their target audience and refine their products.
Developing Semantic Search and Managing AI Hallucinations
Semantic search is one of the most promising AI use cases in e-commerce at the moment. However, for AI to work well at the semantic level, retailers must consider how semantic search can be integrated into their existing recommendation engines. They also have to be careful about generative AI's hallucinatory tendencies – cases where AI creates false data, which can confuse potential clients and, as such, tarnish the brand’s reputation.
Inventory handling is another issue that retailers should pay attention to. If an AI system recommends an out-of-stock item, customers will likely be annoyed. To eliminate such cases, inventory management has to be properly integrated with AI systems.
Supporting Retailers with AI Solutions
To compete in today’s retail environment, retailers must embrace the latest AI technologies and radically reimagine the shopping experience. To build a modern retail system, they must select an integrated solution provider from a growing field of companies that can guide retailers on their AI journey and help address their customers' changing needs. We can do that for you, meeting you at any point of your AI integration journey and helping you power your operations and processes with AI capabilities.
Harness The Power Of AI
AI is providing retailers with valuable tools to upgrade their relationships with their customers, enhance personalization, and gain purchasing intelligence. With the right approach, strategy, and solutions, retailers can fully leverage AI’s potential and embrace the e-commerce of the future.