Online ISSN: 2455-0256 Print ISSN: 2394-9805
FUTURE OF ARTIFICIAL INTELLIGENCE IN E -
COMMERCE
Dr. Neetu Singh
Department of Commerce, Sunbeam College for Women
neetusinghvns@gmail.com
E-commerce is the activity of Purchasing or selling of products on online
services or over the Internet. There are three main types of e-
commerce: business-to-business (B2B), business-to-consumer (B2C), and
consumer-to-consumer (C2C). E-commerce has helped businesses (especially
small businesses) to be accessible to and establish a wider market presence by
providing cheaper and efficient distribution channels for their products or
services. Ecommerce which operates in different types of market segments and
can be conducted over smart devices. It is considered to be one of the
disruptive technology.E-commerce allows customers to choose a product
(most of the imaginable product and service including financial services) from
any supplier, anywhere in the world with much wider choices. Providing
goods and services isn't as easy as it may seem. It requires a lot of research
about the products and services you wish to sell,buy, about the market,
audience, competition, as well as expected business costs. This is where
artificial Intelligence comes in requirement and has made the things easy. AI
plays vast role in providing better customer experiences and innovative
solutions in the ECommerce industry. Product recommendations, personalized
shopping experiences, virtual assistants, chatbots, and voice search are some of
the most distinctive uses of AI in ECommerce. The role of AI in helping you
find your desired products is huge. AI help ECommerce store owners
understand their customer behaviour, Analysing purchasing habits, voice
search for products, enhancing payment options etc. and enhance the customer
experience in online stores. Apart from this the role of artificial intelligence and
machine learning technology in automating repetitive tasks is big. AI collects
data and predicts the possible outcomes in online businesses.The latest report
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by Mckinsey & Company conveyed how AI is bringing 20% extra revenue to
the ECommerce industry (https://www.ometrics.com/blog/growth-of-
artificial-intelligence-in-ECommerce) and boon for ECommerce industries.
Introduction
ECommerce is the process of buying and selling tangible products and services
online. E-commerce being described for the first time in the 1980s, e-commerce
has become a global growing trend and is now one of the most popular online
activities, it involves more than one partyrefers to companies and individuals
along with the exchange of data or currency to process a transaction. people
are now increasingly using e-commerce to make purchases electronic
commerce, or e-commerce for short, means commerce that takes place in the
online environment of the Internet, with the Internet being considered as a
single platform that connects the seller and the buyer,it is part of the greater
industry that is known as electronic business (e-business), which involves all of
the processes required to run a company online. 1
ECommerce has helped businesses (especially those with a narrow reach
like small businesses) gain access to and establish a wider market presence by
providing cheaper and more efficient distribution channels for their products
or services. The advantages of e-commerce for online retailers lie mainly in a
larger number of customers served, a larger number of orders and better
provision of information.The customer does not have to physically visit the
brick-and-mortar shop, which saves time. The consumer has the opportunity to
choose from a wide range e commerce or customers range of products and also
the possibility to compare products or prices. Providing goods and services
isn't as easy as it may seem. It requires a lot of research about the products and
services you wish to sell, the market, audience, competition, as well as
expected business costs.
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Types of Ecommerce
Depending on the goods, services, and organization of an ecommerce
company, the business can opt to operate several different ways. Here are
several of the popular business models.
Business to Consumer (B2C)
B2C ecommerce companies sell directly to the product end-user. Instead of
distributing goods to an intermediary, a B2C company performs transactions
with the consumer that will ultimately use the good. This type of business
model may be used to sell products (i.e. your local sporting goods store's
website) or services (i.e. a lawncare mobile app to reserve landscaping
services). This is the most common business model and is likely the concept
most people think about when they hear ecommerce.
Business to Business (B2C)
Similar to B2C, an ecommerce business can directly sell goods to a user.
However, instead of being a consumer, that user may be another company.
B2C transactions are often entail larger quantities, greater specifications, and
longer lead times. The company placing the order may also have a need to set
recurring goods if the purchase is for recurring manufacturing processes.
Business to Government (B2G)
Some entities specialize as government contractors providing goods or services
to agencies or administrations. Similar to a B2B relationship, the business
produces items of value and remits those items to an entity. B2G ecommerce
companies must often meet government requests for proposal requirements,
solicit bids for projects, and meet very specific product or service criteria. In
addition, there may be joint government endeavours to solicit a single contract
through a government-wide acquisition contract.
Consumer to Consumer (C2C)
Established companies are the only entities that can sell things. Ecommerce
platforms such as digital marketplaces connect consumers with other
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consumers who can list their own products and execute their own sales. These
C2C platforms may be auction-style listings (i.e. eBay auctions) or may warrant
further discussion regarding the item or service being provided (i.e. Craigslist
postings). Enabled by technology, C2C ecommerce platforms empower
consumers to both buy and sell without the need of companies.
Consumer to Business (C2B)
Modern platforms have allowed consumers to more easily engage with
companies and offer their services, especially related to short-term contracts,
gigs, or freelance opportunities. For example, consider listings on Upwork. A
consumer may solicit bids or interact with companies that need particular jobs
done. In this way, the ecommerce platform connects businesses
with freelancers to enable consumers greater power to achieve pricing,
scheduling, and employment demands.
Consumer to Government (C2G)
Less of a traditional ecommerce relationship, consumers can interact with
administrations, agencies, or governments through C2G partnerships. These
partnerships are often not in the exchange of service but rather the transaction
of obligation. For example, uploading your Federal tax return to the IRS digital
website is an ecommerce transaction regarding an exchange of information.
Alternatively, you may pay your tuition to your university online or
remit property tax assessments to your county assessor.
Example of Ecommerce
Amazon is a behemoth in the ecommerce space. In fact, it is the world's largest
online retailer and continues to grow. As such, it is a huge disrupter in the
retail industry, forcing some major retailers to rethink their strategies and shift
their focus.
The company launched its business with an ecommerce-based model of online
sales and product delivery. It was founded by Jeff Bezos in 1994 as an online
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bookstore but has since expanded to include everything from clothing to
housewares, power tools to food and drinks, and electronics.
Company sales increased by 38% in 2020 from the previous year, totalling
$386.1 billion compared to $280.5 billion in 2019. Amazon's operating
income also jumped to $22.9 billion for the 2020 fiscal year from $14.5 billion in
2019. Net income rose from $11.6 billion in 2019 to $21.3 billion by the end of
2020.
As the world adapted to the constraints of COVID-19, ecommerce capitalized
on the opportunity to further distance itself from in-store shopping. In 2021,
Amazon's net income rose to $33.4 billion, and it ended the year with over $42
billion of cash on hand.7 Amazon has stated as a result of the pandemic, the
company recognized three years' worth of forecasted growth in about 15
months.
AI is the latest buzz around industries. After powering Netflix
enter the eCommerce domain with global eCommerce sales expecting to
touch $4.88 trillion by 2021, it is clear to see that the sector is growing at a
decent pace. AI is creating strong relationships with customers.
Advantage for Retailers
lncreased
numberof
customers
lncreased lncreased
revenue numberof
orders
ADVANTAGES
FORRETAILERS
Better
Reducedcosts information
providing
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The advantages of e-commerce for online retailers lie mainly in a
a. Larger number of customers served,
b. A larger number of orders and
c. Better provision of information
d. Reduced Cost
e. Increased Revenue
Advantage for Customer
Savingtime
Availability Widerange
24/7 ofproducts
ADVANTAGES
FORCUSTOMERS
Discounts Price
comparison
Product
comparison
Online shopping offers several benefits to customers.
a. The customer does not have to physically visit the brick-and-mortar
shop,
b. The consumer has the opportunity to choose from a wide range of
products and also the possibility to compare products or prices.
c. Online stores also offer customers discounts that cannot be obtained in a
brick-and-mortar store.
d. The big advantage is 24/7 availability, so the online consumer can make
a purchase anytime and anywhere.
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e. Product Comparison Can also be Done
Role of Artificial Intelligence in E-commerce
Today, e-commerce is one of the industries that make the most of artificial
intelligence by building a huge customer base, trying to understand customer
needs, doing real-time research, coming up with ultimate solutions, and many
other activities
Top 5 ways Artificial intelligence can benefit your eCommerce business
1. Voice commerce and virtual assistants
eCommerce virtual assistants (VAs) are chatbots that use language processing
and machine learning technologies to understand customer queries and offer
businesses prioritize using virtu
scalability, too. Virtual assistants can perform several tasks ranging from
product research to listing to handling inventory. For customers, Virtual
assistants represent easy and quick access to information and assistance.
Voice technology is not new either. Businesses have been using it since the
technology that permits users to buy or do searches with their voices. Voice
commerce is preferred by many for its speed and convenience because users
2. Smart search
Many customers use the search box to find products on an eCommerce website.
It should go without saying that these customers are most likely to make a
actual desired item is the biggest problem here. For many, even after using
relevant keywords, they often
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Smart search is also referred to as
merchandising and search. It blends merchandising techniques with online
search practices. Searchandizing involves advanced elements, like, for instance,
faceted search, navigation, autocomplete, recommended product listings, recent
searches, and many other features that are merged with established search
techniques. eCommerce platforms use image annotation to offer personalized,
user-friendly and useful search experiences through behavioural data.
3. Personalization
Personalization in the eCommerce industry is remodelling artificial intelligence
the shopping experience according to an individual customer's pain points,
needs, preferences and tastes. For example, they can show recently viewed
products, run an automated personalized email campaign, or create a
personalized product list.
We can also translate it as the strategy of personalizing the online shopping
experience by dynamically or actively showing content, whether it be
campaigns, brands, or products, to customers. This depends on their click-
through, browsing behaviour, purchase history, etc.
Personalization was a part of the eCommerce industry before the
implementation of AI. However, now, computers can now crunch big bites of
data that enable optimization and real-time analytics. eCommerce stores have
hundreds of thousands of products and, correspondingly, many, many
customers regularly.
Software or an algorithm can quickly analyse the data on the spot and fetch
trends in customer behaviour. With personalized product recommendations,
eCommerce stores can benefit from customers' inclination to impulse buy. You
can also cross-sell or upsell products by recommending different products to
the customers at the checkout depending on their preferred brands and
categories.
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4. Automation
Online stores are now available on multiple channels with 24/7 availability.
This often requires some form of automation. By automating customer support,
merchants can save time, energy, and operating capital. AI can be of great help
when it comes to automation for eCommerce business owners.
With automation, an eCommerce business can manage and execute all
repetitive tasks and simplify the front and back-end workflow. With AI,
eCommerce businesses can automate everything from featuring new products
on multiple channels to synchronizing sales, identifying high-risk transactions,
offering discounts to loyal customers, etc. Additionally, shifting the burden of
answering routine queries to automated chatbots allows eCommerce business
owners to focus on more complicated requests.
5. Remarketing to potential prospects
Remarketing is more like a reminder of an eCommerce business brand and its
items to the target audience. A retargeting strategy aims to reach users who are
already your customers or those who have previously visited your website.
These customers might have already bought from you in the past or they might
have left their buying journey at some point before completing a purchase.
With the help of AI computer vision, an eCommerce business can identify the
behavioural pattern of every customer on the basis of sales generated and the
most viewed or purchased items. This data can be used later to attract them
back to your eCommerce website. Push notifications are the most powerful
retargeting strategy here. These notifications are brief and straightforward, so
there's little risk of customers getting annoyed. An eCommerce business can
also use personalized push notifications that provide one-on-one
communication.
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AI is constantly transforming the eCommerce industry. Today, it's impacting
how an eCommerce store features and sells products to its customers. By
offering a highly personalized shopping experience with the help of virtual
buying assistants, AI is improving the online shopping experience for both
customers and retailers.
The technology also offers advanced ways to identify customers' behaviour and
analyse big data to help eCommerce stores engage, segment, and retarget their
customers. Pulling off a highly personalized customer experience is key to the
prosperity of an online business. AI applications can identify and analyse
consumer data to forecast future purchasing patterns and make product
recommendations depending on the browsing patterns of the consumers.
According to a rough calculation, a report by "Business insider" stated that
nearly 85% of customer interactions would be managed without a human by
2020. With emails, phone calls, and chats being efficiently and quickly
responded to by automated systems, these stats appear to have been realistic.
By 2025, Tractica predicts that the profit generated from the direct and indirect
application of AI software will increase up to $59.8 billion.
However, there is still work to be done. According to some recent surveys, up
Clearly, there are still improvements to be made to AI algorithms, and this
number should go down as those improvements become a part of modern AI
solutions.
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Key takeaways
In coming future, machine learning and AI will transform the eCommerce
industry, but it's also affecting the present. AI plays vast role in adding better
customer experiences and innovative solutions in the eCommerce industry.
Recommending products, personalized shopping experiences, virtual
assistants, chatbots, and voice search are some of the most distinctive uses of AI
in eCommerce. The benefits don't end here. The advantages of gaining insights
from customer data collection and then breaking it down can be further
enhanced with AI to tailor online merchandising services to the interests and
tastes of every customer.
With the help of AI and data collected from customers and businesses, today's
eCommerce businesses make informed decisions by using that data more
efficiently to forecast future results and adjust their marketing campaigns
accordingly .well it can also be observed that global technological advancement
is the requirement of world, hence we have moved in the age of Technology
through this inventions which is also helpful for facing the competition of
market in all commercial aspect
References:
1. Ecommerce CEO. "What Is Ecommerce?"
2. United States Department of Commerce. "Quarterly Retail E-commerce
Sales."
3. Amazon. "Amazon.com Announces Financial Results and CEO
Transition."
4. Amazon. "2021 Annual Report."
5. Diaz C What is e-commerce? definition, differences with other terms and
first steps to follow if you want to launch your e-commerce,
https://www.doofinder.com/en/blog/whatise-commerce. Last
accessed 10 Jul 2021 11.
6. Ganapathi R (2015) A study on factors affecting online shopping
behavior of consumers in Chennai. J Manage Res Anal 2(2):123 126
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7. Menaka B, Seethal K (2018) Recent trends in E-commerce. Shanlax Int J
Commerce
8. Tan S (2013) Ecom hell: how to make money in ecommerce without
getting burned. Ecom Hell, San Francisco
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