E-commerce trends
5 Ways Generative AI Is Impacting E-commerce in 2024
Gautier Tubert (Dialog)
August 9, 2024
In 2024, AI is transforming e-commerce, with over 52% of shoppers considering AI tools for their clothing purchases.
Generative AI is revolutionising the industry by improving customer service, increasing conversion rates, and boosting average order value (AOV).
By 2023, AI technologies are expected to boost business productivity by up to 40% and drive profit gains of 38% by 2035.
Once limited to giants like Amazon, AI tools are now accessible to all businesses thanks to models like OpenAI’s ChatGPT and Gemini.
AI makes it possible to automate once difficult tasks, such as providing 24/7 customer support in multiple languages and offering personalised shopping experiences.
Let's explore five key ways generative AI is changing e-commerce, providing new opportunities for automation and personalisation.
This article was brought up to you by Gautier Tubert, Growth and Marketing Manager at Dialog. Dialog is an AI assistant designed to replicate a store salesperson on your site. It guides customers, answers their questions, and recommends products, thereby increasing conversion rates.
1. Transforming customer service: Faster query resolution
When using generative AI like ChatGPT, the first use case that comes to mind in e-commerce is replacing customer support.
AI can answer frequent questions and solve problems quickly, being available 24/7 and in almost all languages.
Most customer support conversations involve logistical questions with known answers:
- Where is my package (WISMO)?
- How do I make a return?
- How can I exchange my product?
Implementing AI for these tasks is significantly more cost-effective compared to employing dedicated staff to address user questions.
Chatbots can decrease customer service expenses by up to 30% by managing up to 80% of routine inquiries efficiently.
Additionally, AI-powered customer support can be integrated across multiple channels including email, chat, social media, and phone.
This ensures that customers receive consistent and efficient support no matter which platform they use to reach out.
By integrating an AI assistant, companies can reduce costs and provide fast and efficient customer service, thereby improving the overall customer experience.
2. Increasing conversion rates: From static navigation to dynamic interaction
Previously, a website resembled an Excel sheet where one navigated from category to category.
Thanks to AI, the experience becomes much more natural. AI can replicate the best conversion tool in physical stores: the salesperson.
This can be achieved through tools that already exist, such as analysing customers' browsing and purchase history.
Now, AI also allows for direct questioning, identifying needs and preferences to offer relevant product suggestions.
It helps improve conversion rates by providing real-time assistance and personalised recommendations.
According to McKinsey, companies investing in AI see a 3 to 15% increase in revenue and a 10 to 20% improvement in sales ROI.
2.1 Example: Product recommendation quiz
Currently, these are quizzes with decision trees created by humans using tools like Typeform.
Despite the amount of work put in by the teams, they don't take all parameters into account, are the same for every customer, and need to be adapted for each new product.
Now, thanks to AI, we can provide truly personalised diagnostics.
The AI asks tailored questions based on previous responses and adapts to each new product, considering every detail.
Whether it's determining the size you need or selecting the right anti-ageing serum, generative AI can effectively guide customers.
You can also create faster thanks to AI with custom questions generated by AI.
3. Enhancing personalisation: Increase in customer loyalty
According to a study, 66% of consumers say they are willing to abandon a brand if their shopping experience is not personalised.
Before AI, brands were already dynamically changing their pages based on the customer, but they were limited by possibilities.
Today, thanks to AI's flexibility, we can go even further.
AI can map out detailed customer journeys, identifying key touchpoints and potential pain points.
The result is a highly personalised shopping experience that meets each customer's specific needs, ensuring customers have a smooth and satisfying journey from discovery to purchase.
For instance, we see AI trained to enable users to negotiate their price directly on the product page, making the experience both fun and interactive.
This kind of initiative reduces friction in the shopping process and significantly increases conversion rates.
Moreover, it creates loyal customers who return because their experience is 100% tailored to their needs.
AI can also help craft highly targeted marketing campaigns by analysing customer data and predicting preferences.
This can include personalised email marketing, dynamic website content, and targeted social media ads that resonate better, leading to higher engagement and conversion rates.
3.1 Kana Lifestyle
Kana Lifestyle, a Canadian brand specialising in cast iron cookware, has integrated an AI-powered Dialog box on its product pages.
This feature allows users to ask questions not only about the products but also about the recipes that can be made with them.
Thanks to this tool, they create a bridge between their highly visited blog and their product pages, offering a richer and more cohesive user experience.
Result:
- People who interacted with Dialog had a conversion rate 8 times higher (9.45% vs. 1.17%).
- The add-to-cart rate is 20% compared to 4% for those who did not interact with Dialog.
4. Cross-selling and upselling: Boosting Average Order Value (AOV)
According to The Online Retailer, 35% of Amazon's revenue comes from cross-selling and upselling.
Research by Amazon also indicates that implementing them in an online store can increase revenue by 10%.
Previously, the best solutions involved offering similar or complementary products at checkout.
The AI now opens up a world of possibilities, for example:
- Dynamic bundles: After a conversation, the AI can create a completely new bundle that doesn't exist in the CMS. It can also apply a discount to increase the AOV and meet the user's specific needs.
- Upselling or cross-selling complex products: The AI can help the user understand the added value of a higher-end range by answering their questions.
- Alternatives when out of stock: The AI can redirect the customer to similar products to avoid losing a sale, which is a nightmare for e-commerce merchants.
5. Collecting data for re-engagement: The best help in a post-cookie world
With the disappearance of data due to GDPR, the end of third-party cookies, and iOS 14 restrictions, AI's ability to collect and analyse customer data to fuel re-engagement strategies becomes crucial.
The advantage of AI is that it can categorise even imperfect data.
For example, a chatbot can collect responses directly provided by the user, categorise them, and thus create a goldmine of first-party data (0-party data) reusable for re-engagement.
Importantly, these interactions with AI include GDPR consent, ensuring that the data collected is compliant and usable.
By analysing conversations, AI can deduce purchase intentions and learn from user behaviours.
We can even imagine that re-engagement emails could be 100% different from one person to another in the future.
This allows for precise and effective re-engagement strategies. Klaviyo has launched an AI feature that, while far from this projection, shows that we are heading in this direction.
In its tool, AI now allows for segment creation, form optimisation, and predictive insights.
When we know that repeat customers generate 300% more revenue than new buyers, using AI for re-engagement represents a major opportunity for e-commerce companies.
5.1 Example: Cosmetic Brand Launching a New Product
One of Dialog's clients had a unique use case: they wanted to determine the perfect shade for their next cosmetic product before launching it.
Their advanced AI system is specifically designed to facilitate this process.
By engaging in detailed conversations with customers, the AI gathers valuable insights into their preferences and trends.
Additionally, it assists in predicting the stock levels required for future products, ensuring that the client can meet demand efficiently and accurately.
This approach not only enhances the decision-making process but also helps in launching successful and well-received cosmetic products.
Generative AI is revolutionising e-commerce in remarkable ways.
From enhancing customer service and increasing conversion rates to personalising the shopping experience and collecting data for re-engagement, its benefits are clear.
One of the standout features is its ability to boost average order value through effective cross-selling and upselling.
As AI models rapidly evolve, the future of the e-commerce sector looks increasingly promising.
Each new advancement unlocks greater possibilities, enabling companies to stay competitive and meet the rising expectations of consumers.
The potential of generative AI is immense, and those who harness it now will position themselves as leaders in the future e-commerce landscape.
.webp)
