Updated on January 21, 2025

Illustration with the Kommunicate logo, a person surrounded by icons representing data and growth, and the text "How to Use AI in Online Shopping".

It would be an understatement to say that the e-commerce sector is booming. With more than 27 million e-commerce businesses (and counting) worldwide, it is safe to say that the e-commerce landscape is not only thriving but expanding rapidly. It also means it is becoming increasingly challenging for e-commerce businesses to cut through the noise and stand out.

While global giants including Amazon, Alibaba, Etsy, etc., will likely remain the trailblazers of the e-commerce world in the upcoming years, micro and mid-size online shopping businesses need to break free from traditional operational models to acquire, engage, and retain customers. The answer? Artificial intelligence (AI)

With nearly 60% of retail businesses likely to invest in AI infrastructure, the technology has emerged as a viable alternative for e-commerce businesses to deliver hyper-personalized experiences. By leveraging an eCommerce chatbot guide, businesses can effectively integrate AI-driven chatbots to enhance customer interaction and support

But, do businesses understand how they can harness the power of artificial intelligence (AI) to provide enhanced online shopping experiences?

This blog shares precious insights about how online shopping businesses can leverage AI to ensure their customers keep coming back for more. 

What are the Biggest Opportunities to Use AI in Online Shopping?

Before we explore the impact of AI on online shopping, it is worth noting that most applications are directed toward providing seamless and frictionless customer experiences. 

While over 85% of e-commerce brands think they offer personalized experiences, merely 60% of customers agree. 

Illustration showing how AI enhances different stages of the customer journey, including product discovery, image-based search, dynamic pricing, customer support, and social proof marketing.
Openings for AI in Online Shopping

Here’s how AI can help to bridge this gap. 

AI-driven Product Discovery

On average, customers spend around 45 seconds while browsing an e-commerce store. Wouldn’t you want them to find what they are looking for in that time frame? Customers will no longer spend minutes searching for products they are looking for, so why waste their time with distracting and unwanted clutter?

It is very important to remember that product search is a purposeful and focused activity. In this case, customers know what they are looking for. However, product discovery happens when customers discover new products by chance. 

Tailored Product Discovery with NLP

AI is transforming product search and discovery catering to unique customer queries and requirements. Natural Language Processing (NLP), the cornerstone of AI, allows online shopping platforms to evaluate and read the nuances of search queries. NLP empowers AI algorithms to determine the sentiment, intent, and context of search queries to deliver context-driven results. E-commerce stores can utilize NLP to provide accurate and targeted search results and more importantly provide a seamless shopping experience. 

AI strategies for marketing automation also revolve around recommending products despite users making spelling errors, and adding missing words and synonyms while searching for products. 

Pinterest was the first social media platform to use Image Recognition; an AI technology that relies on algorithms to segment people, places, text, objects, and videos. The tech allows users to click photos or upload images to find a specific product or similar alternatives.

Several studies show that images and other forms of visuals have a profound impact on their purchasing decisions. The Image Recognition market is set to revolutionize how customers search for products. 

Dynamic Pricing

Notice how airline fares keep changing and keep moving up every time you start a new session? This is nothing but the magic of dynamic pricing. Here, AI models, developed to follow the if-then pricing rules continuously reprice products depending on different factors including page visits, return visits, competitor analysis, sales velocity, etc. 

The idea here is to help e-commerce businesses adjust prices in real time based on consumer behavior and demand to maximize profits without compromising the buying experience. 

Social Proof Marketing

Here’s something every online shopping business owner must know. A Nielsen study finds that more than 90% of people trust a suggestion from someone they know and 70% rely on customer reviews to buy something.

Social reviews offer a perfect blend of both worlds; the human element and AI’s analytical ability. Social proofs are not generic reviews, but a mix of detailed insights into how to use the product and shared personal experiences. 

E-commerce business owners can depend on AI to track the most popular or spoken-about products in real time and use it in conjunction with social reviews to drive conversions and build trust. 

Tailored Customer Support with AI

There is a high chance you are texting an AI assistant or a chatbot while interacting with customer support. Some reports have found that online businesses can save up to 30% of costs by switching to automated customer service and deploying AI-powered chatbots.

While customers may require human interaction at some point of customer support, generative voice AI tools integrated with your call center software can do an excellent job of addressing generic to complex customer queries including the status of orders, resolving issues with the order, etc. Apart from the monetary benefits, chatbots and AI assistants unlock doors to 24/7 customer support, which was a distant dream even 15 years ago. 

On average, customers spend around 1 minute 38 seconds while interacting with chatbots. As a business owner, your goal should be to minimize that window and resolve customer queries as early as possible. 

Use Kommunicate’s generative AI chabots to provide seamless customer service and resolve queries in seconds. Deliver contextual responses aligned with your brand’s tone by leveraging content from your support documents including spreadsheets, PDFs, etc. Define your chatbot’s personality to generate human-like responses. You can also set up multi-lingual chatbots and virtual assistants to cater to a diverse audience across different markets. 

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How to Win Customers with AI-powered Personalized Marketing?

It is worth repeating; personalization at every step of a customer’s journey is very important to stand out and win customers in the e-commerce world. The pandemic has played its part in transforming non-tech savvy customers into tech geeks who are ready to go to the depths of the internet to find the best deals, products, and tailored experiences. 

Infographic highlighting AI-powered personalized marketing strategies, including tailored deals, abandoned cart messages, and personalized emails to engage customers effectively.
Win Customers with AI-powered Personalized Marketing

Tailored Deals, Discounts, and Offers

One interesting way to win customers is by resorting to personalized e-commerce promotion strategies across different marketing channels like text, WhatsApp, and social media.

Leverage AI to amplify short-term sales, attract new customers with irresistible deals, retain existing customers with periodic loyalty-based deals and discounts, and much more. An Accenture study states that around 91% of customers prefer shopping with e-commerce brands that display relevant deals and discounts. 

AI also clears the path for intent-based promotion, allowing you to tailor offers according to every customer based on their interaction, engagement patterns, and how frequently they interact with your business. 

AI also makes it improve the production of your marketing assets at minimal cost. For instance, you could leverage AI to add subtitles to your marketing videos in several languages with just a few clicks – instantly expanding your target market to multiple geographies. 

Abandoned Cart Recovery 

The average cart abandonment rate for e-commerce stores is around 70%. Despite proactive communication via pop-ups, push notifications, and email, e-commerce brands haven’t succeeded in influencing their customers to overturn their decisions. While engagement rates of cart abandonment emails are 2-5%, only 10-15% of customers interact with exit-intent pop-ups.  

You can deploy an AI-powered e-commerce chatbots to answer customer queries including shipping details, return policies, and payment options, and lay the foundations of a smooth checkout process. Additionally, you can also automate cart abandonment emails by offering targeted limited-time deals and discounts to create a sense of urgency and encourage them to complete the purchase. 

Use AI to highlight the benefits of completing the purchase and incentivize their purchase with tailored deals, loyalty points, etc. 

How to Overcome Logistical and Operational Hurdles with AI?

One of the most critical facets of any online shopping business is inventory and logistics management. Traditionally, online retailers primarily relied on historical data and guesswork to figure out stock management, demand forecasting, and overcoming logistical challenges. 

The benefits of AI in order fulfillment and demand forecasting are immense, and the best part is that we are still in the nascent phase. 

Order Processing and Shipping

AI tools are capable of transforming the entire order-processing framework right from receiving orders, verifying them, and managing inventory. These tools are also equipped to detect errors across orders, particularly when the order includes an unusual combination of items, doubtful addresses, and dodgy customer details. 

Many e-commerce businesses are also deploying AI to find the best logistics partners, and transport routes, and manage transportation across the distribution channels to minimize costs and boost efficiency. The goal here is to minimize transportation costs and reduce delays. 

Route Optimization

Route optimization refers to the process of determining the best possible and most efficient route to fulfill orders from an e-commerce warehouse by taking into account factors including traffic conditions, weather, distance, and delivery schedules. AI empowers online businesses to minimize delivery costs by navigating toll routes and managing fuel costs. 

Demand Forecasting

Demand forecasting paves the way for informed decision-making and sets new standards for predicting customer behaviors and requirements. AI tools go beyond internal data to track trends on social media and competitor movements to determine buying and demand patterns that humans can easily turn a blind eye to. E-commerce stores can respond to dynamic market conditions to forecast future demand and create a strategy around it to improve market responsiveness. 

Wrapping It Up

From product discovery, and customer support to order fulfillment and logistics, AI-powered customer service are transforming every facet of an online shopping business to help brands deliver personalized experiences. Additionally, same-day delivery, 24-hour shipping, and free shipping have transitioned from “good-to-have” to “must-have” features for all e-commerce businesses in the post-pandemic era. 

While the focus remains on delivering frictionless and pleasant online shopping experiences, businesses should not neglect their internal processes. Thanks to AI, businesses can save costs, streamline operations, and improve their bottom line; all while delivering flawless customer experiences.

Transform your e-commerce with generative AI chatbots by Kommunicate. Hurry, your competitors are racing ahead!

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