Evolution or Revolution: How Artificial Intelligence Has Transformed the E-commerce Industry

Artificial Intelligence (AI) is the driving force behind every e-business. By harnessing new technologies, companies can provide more efficient and personalized customer service. It is already predicted that businesses investing in AI and developing their employees' competencies will gain a competitive advantage in the future.

The Potential of AI in the E-commerce Industry Over the past few years, there has been a significant progress in automating sales and marketing processes using AI, machine learning, and natural language processing algorithms. As new technologies continue to develop, online stores gain more opportunities to leverage AI. How can AI support e-commerce?  

  • Natural Language Processing (NLP)

NLP is one of the elements of AI that deals with the analysis and interpretation of human language through the intelligent software. It can be widely used in e-commerce to facilitate interactions between customers and the shopping platform. E-commerce was one of the first sectors to implement NLP in practice, introducing chatbots and conversational interfaces to improve customer experiences. NLP is used, among other things, to better understand customer queries. NLP algorithms can analyze the semantics of queries, recognize synonyms, and suggest products that best match the customer's intent. This significantly enhances user interaction with the store, allowing customers to find their desired products faster.

  • Intelligent Product Search

Website search functionality is a critical factor in the customer's shopping journey. This applies to customers who know what they need and want to quickly find the products of their interest. More than 30% of users visiting e-commerce sites use the search option, which can generate 30% to 60% of total revenue (source). If a user doesn't find their desired product, they may look for it with a competitor that offers intelligent search capabilities. By using AI, the search engine can effectively predict customer needs even when they enter imprecise phrases. Algorithms suggest search results and show the most relevant products.

  • Product Recommendations

One of the most crucial applications of AI in e-commerce is personalized product recommendation systems. Major marketplaces like Allegro or Amazon have long been providing product suggestions to users based on their preferences. Smaller online stores can also utilize such solutions. Studies have shown that personalized product recommendations can increase conversion rates by up to 915% and account for 26% of total revenues (source).

  • Personalization of the Customer Journey

Personalization in an online store involves delivering experiences tailored to users' preferences and needs. This can be achieved through product recommendations, dynamically displayed content, and offers based on a customer's past behaviors related to purchase history or searched products. One of the ways to achieve effective personalization is through machine learning. AI algorithms analyze user behavior and display real-time special offers tailored to their needs. This can improve customer retention and increase sales for online stores.

  • Logistics and Inventory Management

Artificial intelligence also has many applications in e-commerce logistics. It can assist in inventory and warehouse management. AI algorithms analyze historical sales data, seasonal trends, and external factors to predict optimal inventory levels for individual products. This can help avoid stockouts and excessive inventory. By analyzing data on sales, market trends, and seasonality, e-commerce stores can forecast future product demand.

  • Dynamic Pricing of Products

AI can be used for dynamic product pricing, adjusting prices based on various factors such as market demands and seasonality. This means that product prices are not only dictated by inventory levels but also by product analysis and competitor insights. For example, an online store can raise prices if competitors have low inventory levels.

  • Visual Search

One of the hottest trends is visual search technology, allowing users to search for products based on screenshots or images. This can be achieved through Google Lens or Pinterest Visual Search. Users can point their phone camera at an object (e.g., shoes) to get information about it - where to buy it and its price. Visual search technology is particularly effective in the fashion and home interior industries. The most significant challenge for these systems is to ensure that AI algorithms accurately identify objects in images and redirect users to the appropriate product in the online store. Visual search is gaining momentum, and it is predicted to significantly increase e-commerce revenues.

  • Improving Customer Support

In the context of AI, automated customer support in online stores is worth mentioning. Traditional CRM systems struggle to handle large volumes of data. AI has far greater potential and capabilities for support operations. Currently, one of the most widely used technologies is chatbots, virtual assistants that can understand natural language and provide personalized real-time responses. They can assist in order tracking, handle returns and complaints, and provide general information about the store. Additionally, AI-powered marketing automation allows for audience segmentation, personalized content delivery, transactional emails, and automated email campaigns.

AI Transforms the Job Market

The implementation of AI technologies brings the greatest benefits when combined with employees' competencies. Companies are developing their employees' skills across various categories, from advanced analytics to creativity and communication. This is according to Microsoft's "AI & Skills" study conducted on approximately 12,000 employees in larger enterprises across 20 markets worldwide, including 611 Polish companies employing over 250 employees. Over 23% of them are using AI to an advanced extent, and about 80% of entrepreneurs see the value of AI for their business (source).

There is a growing interest in using AI in the processes. Currently, around 33% of surveyed companies admitted to being at the initial stage of AI development in their operations, while 44% are just discovering the possibilities of AI. One challenge, related to the innovation implementation, may be the deficit of competent specialists to handle advanced systems. However, more and more companies are investing in developing their employees' skills. In the long run, this will give them a significant competitive advantage. Undoubtedly, professions related to AI utilization will be the most sought after in the job market, including in the e-commerce sector. Candidates are already planning their careers in an even more digitized world.

For those interested in enhancing their competencies in using AI in e-commerce, we invite you to take advantage of our educational offer:

Postgraduate Studies in E-commerce are recommended for entrepreneurs looking to utilize the internet as a sales channel, marketing and sales specialists, and anyone looking to harness the potential of new technologies in e-commerce. The program aims to provide participants with comprehensive and practical know-how, especially in e-commerce models and strategies, business management, marketing support, including marketing automation and AI utilization.

Postgraduate Studies in Business.AI: Project Management of Artificial Intelligence is a unique program that provides participants with comprehensive knowledge about the possibilities of AI implementation in various industries, creating strategies, managing the process of AI technology implementation in a company, as well as ethical challenges and legal aspects related to AI development. Graduates will acquire practical knowledge and skills essential in modern e-business. The studies are recommended, especially for managers, specialists, and entrepreneurs responsible for implementing AI solutions in a company, as well as data analysts, IT specialists, consultants in new technologies, innovation, and business development.

Artificial Intelligence in Marketing Training aims to equip participants with the knowledge and skills needed to utilize AI to optimize marketing activities in a company. The program focuses on the key aspects related to the implementation and application of AI in modern business. Participants will learn how machine learning works, what NLP is, how to use AI algorithms in e-commerce, and how to increase the value of the shopping cart. The training also covers legal issues and the subject of cybersecurity in AI marketing. The studies are recommended, especially for senior management, marketers, analysts, strategists, and all specialists looking to expand their knowledge in machine learning and artificial intelligence and their utilization in the marketing field.


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