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Online Retail in the 'New Normal': How AI is changing the way we shop

In Consulting Services, Thought Leadership

The current state of the world is confusing; that is no secret. Most businesses are having to learn how to adapt to this 'new normal' in order to stay relevant and profitable. A particularly interesting sector to look at is the retail industry. As this Forbes article mentions, "even before the pandemic, the most profound behavioral change in commerce was the shift to digital shopping." Retailers were among the first group of industries that began to offer an online shopping experience to their customers. Thus it is interesting to note that the businesses who are having the most success during this global crisis are those who got a head start.

Nowadays it is strange when a brand does
not have an online presence or a website
where customers are able to shop from the
comfort of their homes. One of, if not THE,
most prominent players in the online
shopping game is Amazon.

Amazon has gotten everything figured out
from beginning to end of the customer
shopping experience. Everything you look at
from the moment you start to shop is taken into consideration by the built-in artificial intelligence (AI) and machine learning (ML) algorithms.  

While you continue to browse the massive catalog, a profile of who you are is being built on the backend. Your relative location, your interests, your needs, your past orders, etc. are all collected and interpreted in order to provide 'suggested' content, thus making your shopping experience a lot more personalized. And then when you finalize your order, you are given the means to stay informed on where your package is at all times and when it will be arriving.


Studies from Accenture show that personalized content does have an impact on the way customers shop. The study found that companies who know the customer's name, past orders, and interests are more likely to get the sale than those who do not. 

Image detailing statistics of consumers' desire for online retail personalization

These results make perfect sense. Who doesn't want to feel important and tailored to? The AI and ML algorithms are essentially the virtual version of sales associates at your favorite physical stores who ensure you have what you need and suggest other items you may like. Except there is one small difference: this virtual sales associate already knows what you like and can suggest items that are more likely to interest you. This does not mean that 'robots will take over our jobs', it just means that we will have extra tools to ensure the business is more profitable than ever.

Now for the hard truth, during a time of financial uncertainty, many people do not have the luxury to indulge in random spending. However, as Robert Lockyer puts it in this Business Leader article, "during this time, while most of us remain at home, there is still a desire to 'treat' ourselves." If this is the case, the scenario now becomes one where the customer is a lot more discriminatory with their money and wants to make sure they are spending it on the right items from the right company. Therefore the goal should now be to make yourself be the right company the customer is looking to buy from.



AI and ML have made the shopping experience so seamless that it feels like the e-store you are visiting was made just for you. This is how a company can differentiate itself from the others; when the customer doesn't even realize that their experience is different from the next person's. Think of Netflix for example, one person's homepage will most certainly be different than another's because of what content they have interacted with. It is important to note that when you are actively deciding to choose one thing, you are also actively deciding to not choose another. This will help filter out content that you are not interested in to not flood your feed with items you do not care about. That is what Netflix does, and that is the same logic that needs to be applied to online stores. If you are buying baby girl clothes, you should not be getting suggestions for male business suits.


Final Thoughts

Artificial intelligence and machine learning are creating a personalized shopping experience that allows customers to feel special and understood. An average human would not be able to remember thousands of visitors' shopping history and desires. As Jason Ferrell, Crayon AI Advisor, put it, "there is a tipping point in a well-designed AI solution where competing with it becomes an act of futility." The future is here, and those who do not get on board will be left behind. Once someone has had a taste of the "good life," there is not much desire to go back to the way things used to be. There is no doubt that everyday life will change, and e-commerce will continue to skyrocket after this pandemic dies down. Now the only question that remains is: are companies ready to rise to the challenge to give their customers the shopping experience they are looking for?




Edgar Vela - Product Marketing Engineer

Edgar holds a B.S. in Computer Engineering from the University of Texas at Dallas