Management Information System
Assignment #2
Topic: Role of Artificial Intelligence in E-Commerce
Submitted to: Dr. Khalid
Submitted by: Tooba Khalil
MBA-P Batch-14
Roll no. 19014032-001
Artificial intelligence has the powerful ability to acquire and analyze large volumes of data and provide
decisions for action. E-commerce is now adopting this technology to identify patterns based on
browsing, purchase history, credit checks, account information etc. This data collected then form the
basis of creating customized recommendations for each customer. Google and Microsoft are already
investing into new AI initiatives. Many e-commerce businesses have started implementing different
forms of AI to better understand their customers, and provide an enhanced customer experience. This
paper highlights the role of artificial intelligence in e-commerce and its application in different areas of
e-commerce.
INTRODUCTION
Artificial intelligence is the engineering and science of making intelligent machines and intelligent
computer programs. Artificial intelligence is different from psychology because it emphasis on
computation and is different from computer science because of its emphasis on perception, reasoning
and action. Artificial Intelligence is to develop intelligence in the machines or software and provide
them the ability to think as humans. John McCarthy is known as the father of Artificial Intelligence.
The eCommerce industry is on its way to grossing $700 billion by the year 2022. The use of
artificial intelligence or machine learning in eCommerce is paving the way to the online portals that
are easy to use, safe, and profitable.
AI is one of the most talked topics in this digital world. AI offers the industry with smart and innovative
business solutions. It adds a plethora of valuable elements and features to the e-commerce platforms.
Now, brand performance and user experience are balancing as artificial intelligence or machine learning
technology is changing the tedious working pattern. Manufacturers, retailers and digital startups are
setting a new example in this industry.
Due to continuous competition for clients, brands are enabling artificial intelligence in their enterprise.
AI is one of the fastest successions of technological breakthroughs owing to various smart solutions that
are transforming the e-commerce industry. The advancement of new technologies has completely
changed the present scenario of the eCommerce industry.
Artificial intelligence has 2 types:
1. Weak AI.
2. Strong AI.
1. Weak Artificial intelligence:
In weak artificial intelligence, machines behave like an intelligent human. Machines with weak artificial
intelligence have all abilities like thinking, moving, talking but are programmed to do so. In the chess
game, the machine has the ability to play but it does not possess any thinking ability like humans. The
machine is programmed to play chess and make smart moves to compete with other players.
2. Strong Artificial intelligence:
In strong AI, machines actual ability is like humans. It is based on the concept that machines can be
programmed like the human mind. They can think, make decisions, and have perceptions and beliefs.
E.g. the artificial intellectual supercomputer “WATSON‟ invented by IBM. Strong AI does not
currently exist. It is estimated by some experts that it may be developed by 2030 or 2045.
Role of artificial intelligence in eCommerce industry:
1. Search has become more customers centric within online stores
It has been seen that due to lack of customer-centric search results in eCommerce websites, a lot of users
actually drop off. By making use of the AI tools and machine learning, search results can be
significantly improved. Moreover, AI aided search results are also gaining prominence, that is luring
businesses to provide a customer-centric experience. In this case, videos and images, such as logo, style
and product are tagged, organised to provide visually relevant search for customers.
Pinterest has utilized the image recognition software for the chrome extension. In this process,
customers are able to search for images across the web as per the choice of the product.
2. Customer experience has got more personalized
In case of a personalized customer experience, Artificial Intelligence can be used in eCommerce portals
for personalized experiences. This is possible by making an analysis of comprehensive data and
accordingly, products are recommended.
As per the study conducted by Boston Consulting Group (BCG), retailers who provide personalized
experiences have experienced around 6-10% increase in sales, which is two or three faster compared to
other retailers.
3. Much better sales processes
In the previous era, sales depended heavily on yellow pages and such conventional means to attract
customer attention. However, sales processes have moved on a lot from those days and now retailers
make use of different kind of digital platforms. Sales teams nowadays use AI integrated CRM systems
that cater to customer tastes and preferences. Moreover, AI can answer customer queries, solve
problems and even identify new sales opportunities.
Getty Images has effectively made use of integrated AI tools in order to identify data to get an idea of
which businesses use images from the competition. Accordingly, the sales team of Getty Images lures
more target audiences and woos new businesses.
4. Targeting potential customers
A huge customer base has its advantages as well as challenges. Due to the numbers, it gets a bit difficult
for sales and marketing teams to track prospective leads.
According to a study done by Conversica, around two-thirds of companies do not follow up on inbound
sales leads. To resolve this issue, more and more eCommerce companies are taking help of AI in order
to track consumer behaviour by observing their in-store behavior (using facial recognition software) and
online customers through different offers.
5. Better and efficient logistics
Making use of Artificial Intelligence in logistics also ensures a seamless and efficient delivery process.
Nowadays, warehousing uses automation to a great extent and machine learning algorithms are used for
automated warehousing operations. Most of the eCommerce giants, such as Amazon, Alibaba, eBay, and
others are making use of AI to a great extent in the form of machine learning and robotics. It is expected
that the speed and efficiency will be improved to a great extent and it will also cut costs to a great extent.
If AI is used across different areas of eCommerce, such as warehousing and delivery, customer service
and other internal operations, eCommerce will be boosted to a huge extent.
6. Advance Visual Search Engine:
In recent months, Artificial intelligence introduced a visual search engine in the eCommerce
industry. This is one of the most exciting trends that help the user find what they actually want
with just a few clicks.
Hence, we can say that AI enables the visual search. With a simple click, the user can get
appropriate and desired results. An image can be helpful to find a better size, color, and quality
to identify product brands and names on search engines. Depending on the image, the user can
achieve the desired result.
7. Cyber-security
AI is not ready to replace traditional solutions of cyber security but has a helping hand in the
lending. The threat to e-commerce platforms and customer data is always a great problem. By
incorporating AI and deep learning concepts into security solutions, platforms can save data from
cybercriminals.
Deep Learning and AI enable cyber traffic solutions to "outliers" in network traffic, which can
easily predict intrusion in an attempt.
8. Intelligent Data Management
AI-based data management doesn’t need to organize raw data before using it. In fact, things
work better when it does not. By using data lakes, artificial intelligence can leave e-commerce
platform data in the unstructured and raw until it is processed.
But data has to be structured to be used efficiently, right? Not with artificial intelligence. By
placing product descriptions, images, and customer data in raw form, artificial intelligence does
not need to sort through data structures while using data for different web applications.
Conclusion
Today, the eCommerce industry is in full swing in satisfying its customers in every single aspect
right from understanding their requirements, predicting their shopping interests, recommending
the products that best fit their interest to offer round the clock customer support. With artificial
intelligence, the eCommerce industry has quickly changed the way people sell shop and browse
things on the internet.
The above blog has represented the rise of AI in the eCommerce industry and if you are feeling
far from reality than it is worthwhile to partner with Web Development Company that enables
you to improve your AI tools to match the market demands.
