Andy Mulcahy
Strategy and Insight Director, IMRG
AI in ecommerce may avoid the fate of past tech trends due to its potential for clear customer utility, which distinguishes it from previous innovations.
Ecommerce, once hailed as retail’s future, now faces turbulence amid macro events. Following the pandemic boom in online sales, revenue declined in both 2022 and 2023, with IMRG forecasting 0% growth for 2024. What’s more, January started with -7% year-on-year, so growth could turn out far worse overall.
Turning towards AI tech
Ecommerce soared in popularity until 2019. Customers became highly dependent on the convenience of doorstep delivery for nearly all their needs. The pandemic turbocharged this growth to unsustainable levels. Coupled with rising living costs, buyer hesitancy surged, leading to two years of consistent industry decline.
In recent years, various tech has been touted as the answer to these declines including voice activation, the metaverse and AR, to name a few. Each of these has merit, though none have made any notable headway.
However, with AI, the end goal is clearer. Retailers have talked about offering hyper-personalised experiences for years; AI integrated into the platforms they use promises to make it a reality.
Personalised experiences were considered
‘important’ by over 86% of respondents.
Demand for personalisation
In recent IMRG research* that surveyed the opinions of 1,000 UK respondents, personalised experiences were considered ‘important’ by over 86% of respondents. There are numerous ways to infuse personalised experiences on websites.
However, among the most important are live search, which automatically filters and ranks products (42%), automated product recommendations (35.7%) and an automated live chat to answer queries immediately (32.8%).
Furthermore, 75% felt personalisation made them feel more loyal to brands. By personalising content to reflect customer preferences and making them feel valued, AI offers genuine promise in enhancing revenue metrics including conversion rates, spend and purchase frequency.
Getting around the expense of AI
Knowing the turbulent state of the online market, highly intelligent and complicated forms of AI on retailers’ websites may be too expensive to implement. Promisingly, there are plenty of affordable ways to personalise the online experience.
One core element of personalisation is creating human-like interactions. Effective ways to offer this cheaply include making language more direct and personable across all channels, implementing a loyalty programme to establish a community and experimenting with an array of free/cheap AI tools.
Retailers can also optimise customer data and segment their customers based on shopping behaviour and purchasing patterns. Subsequently, they can send more targeted emails and personalised campaigns, helping boost conversion. AI may well prove worth the buzz.