Shifting Your eCommerce into High Gear with AI

June 25, 2020 Michael Wu

By now, we’ve all experienced the chaos created by COVID-19. It has disrupted nearly every business around the globe and put our economy into an induced coma. Despite the havoc, however, this pandemic has also created an opportunity for leaders to change how their businesses compete in the market. Over the past few months, approximately 3 billion people around the world are under lockdown. So the best way to engage with the rest of the physical world is via digital means. Hence, digital media consumption increases, and e-commerce sales soar.

Although digital transformation has long been an effort undertaken by many global enterprises, the current pandemic has greatly accelerated these digital initiatives. The sudden surge of interest in digital will most definitely increase the efficiency of these businesses. But since everyone is doing this, it also makes it harder to differentiate your e-commerce in this increasingly crowded digital market. So the question is not about if, or when, or even how to go digital, rather it’s about how to be outstanding and differentiated in this vast digital economy. And the secret sauce is none other than artificial intelligence (AI).

AI Categories That Are Crucial to eCommerce Success

So how can the use of artificial intelligence for business help differentiate your e-commerce? Despite there are thousands of applications of AI, a majority of them can be classified into 4 areas that are of paramount importance today. Some of them are more developed in e-commerce, while others have yet to realize their full potential. But they are all crucial to the success of your e-commerce in the post pandemic world.

Four classes of AI that Turbo Charge Your e-Commerce

1. Internet AI: ensuring your eCommerce is relevant to your users

The first category is called Internet AI, because the data used to train this type of AI have traditionally been derived from user behaviors on the internet. This category is also known as Personalization AI, because their primary use case supports recommender systems and personalization engines. Internet AI is already widely used in eCommerce to provide a personalized recommendation of products and services. This category is well understood and includes popular recommender systems from online platforms like Amazon, Spotify, or Netflix.

Because eCommerce lacks the person-to-person interaction, personalization will be crucial to provide users with relevance and individualized context to improve the user experience. This is crucial during the pandemic, when shoppers who wouldn’t have shopped online are adopting eCommerce as a last resort. Remember, it’s not about being online or offline, everyone is going online, even your competitors next door. Once online, you customers won’t just see you and your next door competitors, they will see hundreds and thousands more.

2. Perceptual AI: creating a more dynamic and engaging user experience

The second category is called perceptual AI. The dominant use case of this class of AI is human-computer interaction. Virtual assistants (e.g. Cortana, Google Assistant, Siri, etc.) and chatbots are some of the most common examples of this class of artificial intelligence today. Because these tools often require machines to mimic the higher cognitive function of humans (e.g. voice recognition, speech understanding, etc.), this category is also known as cognitive AI.

The proliferation of conversational agents made perceptual AI extremely popular in eCommerce. Since most eCommerce sites are relatively static and lack the engagement of physical shopping experiences, perceptual AI can make your eCommerce shopping experience much more interactive and engaging. As a result, many websites (eCommerce or not) are implementing chatbots to help visitors navigate more efficiently and guide them to the information they are looking for. Perceptual AI can also be coupled with internet AI to recommend products via conversational agents. Like internet AI, engaging and guided user experiment through perceptual AI is more important than ever due to the influx of new users who might not be familiar with your eCommerce.

3. Business AI: ensuring your eCommerce delivers business results

The third category is called Business AI because it’s typically used by business users instead of end consumers. Consequently, consumers are usually unfamiliar with this class of AI. Business AI is also very diverse because there are so many different domains in which they operate. Despite the diversity, the main use case of this class of AI in business is to automate decision-making within a company. Therefore, this class is also known as decision AI and PROS is an example of this type of AI. For your eCommerce, these decisions may be: “How do we set the price for a certain product? How long do we run a particular promotion? How much discount do we offer to your most loyal customers?”

Although every important business decision should be supported by some data, most business operations are far from this ideal. Where data-driven decisions are feasible, business AI solutions will access all the relevant corporate data, perform the necessary analyses, and produce an optimal decision with the option to automate its subsequent actions. This automation can improve productivity, reduce costs, and free up time for teams to focus on value-added tasks such as customer relations or handling monitoring complex situations. Moreover, by optimizing the decision outcome and standardizing the decision processes, business AI can help you deliver business results more consistently. Using business AI will be critical to your eCommerce success now, because the pandemic has significantly disrupted the demand and diminished margin in many industries.

4. AI Autonomous: delivering the “last mile” of your eCommerce

The last category is called autonomous AI because this is the kind of AI that powers the self-driving car and other autonomous systems (e.g. robotics and autonomous drones, IoT, etc.). Although autonomous AI is mainly used to drive autonomous vehicles today, it offers a huge opportunity for the eCommerce industry. Today, consumers can explore, research, configure, and purchase products or services online, but not all of them are downloadable with a click of a mouse. Many products and services still need to be delivered or performed in person by humans. This is known as the “last mile” delivery problem. Autonomous AI can bridge the gap between the physical world and your eCommerce in the digital world.

If you live in the San Francisco Bay Area, you can already see autonomous AI helping eCommerce automate this “last mile” delivery of physical goods. Food and package delivery robots (e.g. Starship, Kiwibot, etc.) are appearing on select campuses and cities. JD.com, one of China's leading eCommerce, is experimenting with drone delivery in remote areas. Since robots can be sterilized easily and made contagion free, these contactless delivery mechanisms will be in great demand in a more hygiene-conscious post-pandemic world.

Being Outstanding in eCommerce through AI

So how can your eCommerce stand out from the crowd? Let’s see what we can learn from the leader in eCommerce. Amazon is leveraging all 4 categories of AI effectively to maintain its leadership position and is perhaps one of the best examples of how innovative companies use artificial intelligence in business. It has developed applications in each of the 4 classes of AI and adapted to Amazon’s need.

Amazon is one of the early pioneers of internet AI. It has developed the famous recommender system: “Customers who have bought this item also bought.” Amazon also uses perceptual AI in its speakers and mobile app with Alexa. Besides, the eCommerce giant is constantly adjusting prices to match the dynamic market demand with its own dynamic pricing algorithm, a form of business AI. Finally, the company also uses autonomous AI to power the robots in its warehouses to transport products to the right place at the right time to be inventoried, processed, packaged, labeled, and finally shipped. Amazon is also experimenting with drone delivery powered by autonomous AI.

So how are you going to use AI to stand out virtually in the digital world of eCommerce?

Adopting AI Will Make Your Business More Resilient Than Ever

The pandemic will forever change our world. The digital trend is now an inevitable future, and this future is coming fast. For business, this means shifting to eCommerce and digital transformation, and this is a lot more than just digitizing your product catalog and putting them online. Since eCommerce is on 24/7 and borderless, once you are online, you’ll be competing with every online business for your customers’ limited attention. The competition will be more fierce, so we must learn from the best to stand out from the crowd. And the best eCommerce platforms now are using all 4 classes of AI to help them stay at the top. It’s foreseeable that these AI applications will become an integral part of every eCommerce in the near future, at least the successful ones. So don’t get left behind!

If we were to look back at the year of 2020 from the future, what will we say about it? Most will probably say that it’s a year of the pandemic, it’s a year where racial injustice is brought under the spotlight, and it’s a year of tremendous business and economic disruption. These are certainly true, but perhaps we could also look at 2020 as a year of great opportunities for dramatic change. Although changes are uncomfortable, but the current pandemic is leaving us with no choice but to go online. Adopting AI in your eCommerce will not only help you differentiate, but it will also make your business more robust and resilient than ever coming out of the pandemic.

Ready to take the next step in strengthening your eCommerce? Read more about the benefits of AI for business and how these benefits can improve the customer experience.

About the Author

Michael Wu

Dr. Michael Wu is one of the world’s premier authorities on artificial intelligence (AI), machine learning (ML), data science, and behavioral economics. He’s the Chief AI Strategist at PROS (NYSE: PRO), an AI-powered SaaS provider that helps companies monetize more efficiently in the digital economy. He’s been appointed as a Senior Research Fellow at the Ecole des Ponts Business School for his work in Data Science.

Prior to PROS, Michael was the Chief Scientist at Lithium for a decade, where he focuses on developing predictive and prescriptive algorithms to extract insights from social media big data. His research spans many areas, including customer experience, CRM, online influence, gamification, digital transformation, AI, etc. His R&D won him the recognition as an Influential Leader by CRM Magazine along with Mark Zuckerberg, Marc Benioff and other industry giants.

Michael has served as a DOE fellow at the Los Alamos National Lab conducting research in face recognition and was awarded 4 years of full fellowship under the Computational Science Graduate Fellowship. Prior to industry, Michael received his triple major undergraduate degree in Applied Math, Physics, and Molecular & Cell Biology; and his Ph.D. from UC Berkeley’s Biophysics program, where he uses machine learning to model visual processing within the human brain. Michael believes in knowledge dissemination, and speaks internationally at universities, conferences, and enterprises. His insights have inspired many global enterprises and are made accessible through “The Science of Social,” and “The Science of Social 2”—two easy-reading e-books.

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