Role of AI in revolutionizing e-commerce

Role of AI in revolutionizing e-commerce

The one thing every business has in commonno matter how big, how well known, or how new is the need for customers. Customers are the backbone of any business. Customer experience is the new marketing battlefront that helps gain the trust and loyalty of each customer. 

Moreover, businesses are adopting new ways of communication to engage their customers. AI is the most popular technique nowadays that contributes to more accurate data and help find the right customer. By 2025, AI revenue may exceed $36.8 billion, says the research report by Tractica.  

e-Commerce Industry

The global e-commerce market is expected to rise at a compounded annual growth rate (CAGR) of 14.7% from 2020 to 2027 

The technological awareness among customers due to internet penetration, smartphone availability and development in 4G/5G technologies has enabled e-commerce market to be more accessible and structured. The growing use of social networks further aggravates the demand for online purchasing of various products and services. Increasing digital dependency and convenience on online platforms has evolved amid a busy lifestyle and an overabundance of options available to shop with home comfort. 

Well-established businesses and large enterprises are more inclined towards online business due to its low marketing and infrastructure costs. Nowadays, abundant marketing options are available due to social media’s popularity, which helps drive the e-commerce market towards growth trajectories. For example, e-commerce giant Amazon’s marketing strategy includes Associate programs, social and online advertising, sponsored search, television advertising, and other initiatives to get more products in front of customers. 

Considering the recent COVID-19 pandemic, e-commerce companies experienced a steep demand for essential goods like groceries, medicines, personal care, and bathroom essentials. However, this on-going severity has forced governments around the world to enact some restrictions, thereby disrupting the supply chain and negatively affecting sales. 

Role of AI in e-Commerce

AI in e-commerce is revolutionizing the mobile app world and the whole business structure. AI has helped improve customer experience and develop brand awareness. It is helping startups, manufacturers, and retailers to set a new example in the industry.
Businesses are dynamically transforming and inventing new modes of communication to attract their customers. Sending personalized replies to customer inquiries, reminding them about products in wish lists, and giving customized alerts on shopping deals are just a few ways that businesses are using AI to improve the customer experience. 

AI applications in e-Commerce

Let’s check out some of the real-world applications of AI in e-commerce industry that helps in transforming businesses:

Virtual Assistants and chatbots

Virtual assistants

Many e-commerce retailers are becoming sophisticated by their AI capabilities to capture attention and enhance customer experience using digital chatbots and virtual assistants. The e-commerce world is a confluence of vocal, visual, written, and predictive capabilities where customer needs are evolving rapidly, and retailers strive to meet them. 

Virtual assistants use a machine’s ability to interpret speech and text inputs from users. These have been integrated by various retail giants and are becoming commonplace with examples like Siri, Alexa, and Cortana. From playing songs to booking your dinner table online, virtual assistants impact customer experience by offering more convenience while allow retailers to take advantage of its integration.

On the other hand, a chatbot is a specially developed computer program that simulates a conversation with online users. Chatbots provide fast customer support with accurate answers than other options like calls, emails, and contact forms. 

Smart product recommendations

Product recommendations on phone

AI helps provide product recommendations through pop-up messages, social media ads, texts, and emails to buyers based on their previous purchases, recent searches, and buying behavior. Using big data, AI helps in personalized product recommendations for online buyers boost conversion rate by 915% and average order value by 3%. 

 For example, Amazon uses past purchase data of customers to recommend new products, while Amazon Prime Video suggests new movies and videos based on previous search history. 

Product recommendations using AI in e-commerce provides multiple benefits, including: 

  • Increased number of returning customers 
  • A personalized shopping experience for online customers 
  • Customer retention and increased sales 
  • Run a personalized business email campaign 

e-Commerce Personalization using AI

AI for personalization

Personalization is the core of any e-commerce marketing campaign that uses AI and ML to derive useful user insights from the generated customer data. AI-based personalization uses a multi-channel approach where AI engines like Boomtrain analyze customer data from multiple customer touchpoints like websites, mobile apps, and email campaigns to see how they perform online interactions.  

Customer Data Platform (CDP) helps provide a persistent, unified customer profile by combining and harmonizing data from multiple sources and making this data available to other tools and systems. An effective CDP can drive increased revenues by enabling targeted, personalized content and offers to the customers.   

Sales forecasting

advanced analytics

Traditional forecasting methods use historical data to predict future sales, but sales are easily affected by changes in trends, price change, promotional activities, and many other factors. AI makes use of neural networks that potentially remove the need for manual feature engineering, making forecasting more accurate and less time-consuming. 

The algorithms constantly crunch data, forecast market trends, and respond to it in real-time. Using AI, all the data from operations, competition, and the market can be consolidated and analyzed. 


Identify fake reviews

Customer reviews

According to Dimension Research’s recent study, 90% of respondents who recalled reading online reviews claimed that positive online reviews influenced buying decisions. Moreover, 86% of respondents said that negative online reviews influence purchase decisions.
Many e-commerce retailers emphasize adding verified and helpful reviews to fight against astroturfing using AI technologies. The AI-powered system ensures that the prominence and weight of verified customer purchase reviews are visible to others. AI helps analyze several review characteristics such as ratings to detect fake reviews as they are very critical and help build customer trust. 

Inventory Management

inventory management

AI-enabled inventory management helps maintain stocks based on data related to projected or anticipated changes in product demands and sales trends over previous years. 

Apart from this, AI enables warehouse management that uses automated robots that store or retrieves stocks 247 and dispatch items followed by online orders. 



Artificial Intelligence has been playing a leading role in driving digital solutions and enhancing customer experiences. Although the term artificial may sound dehumanized or negative, AI has helped transform the retail industry 

AI in e-Commerce enables retailers to analyze millions of interactions every day and provide customized product recommendations to a single customer. Businesses can also leverage AI to improve sales forecasting to engage with the right prospect with the right content at the right time. Managing inventory and a smooth supply chain has improved the process of order execution due to AI implementation in e-commerce. 

AI is evolving day by day. In 2020, we saw retail and e-commerce rapidly transform to incorporate AI for optimization and personalization to adapt to new shopping behaviors and restrictions in the COVID-19 pandemic. As AI continues to improve the customer experience, we can expect to see other significant advancements across shopping experiences such as augmented reality, autonomous deliveries, and much more in the next few years. 

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This blog was originally published 1/12/2021 and has since been updated.