In recent months, Artificial Intelligence (AI) has become a viral topic thanks to the release of OpenAI company products like ChatGPT. AI is present in various areas of our lives, and its role is growing each year. This also includes the eCommerce industry. From personalized product recommendations to chatbots, the ideas for utilizing AI in this sector are constantly developed. AI eCommerce personalization allows tailoring the shopping experience to each individual customer’s preferences and needs. eCommerce businesses can increase customer loyalty, boost sales, and increase revenue, making their online stores stand out from the competition.
In this article, we will explore the topic of how AI can help with eCommerce personalization, give examples of it and explain innovative solutions powered by artificial intelligence.
The power of eCommerce AI personalization
As mentioned above, AI solutions revolutionized the way businesses operate, and eCommerce is no exception. A particularly important aspect that AI affects is personalization. AI-driven personalization helps to personalize various brands’ marketing messages (commerce personalization), products and services, and relevant content in general, thanks to the use of processes like machine learning, deep learning, and natural language processing (NLP).
Along with the constantly increasing competition on the market, personalized shopping experience became an extremely important factor for online retailers to stand out. This personalization strategy can lead to higher conversion rates, increased customer loyalty, and a better overall process of shopping online.
Before we start to describe the most popular use cases of AI in eCommerce, let’s explain the two concepts that may be a little bit confusing.
What’s the difference between customization and personalization?
In eCommerce, the terms personalization and customization are often used interchangeably, but they actually have distinct meanings. The difference between personalization and customization lies with who is making the changes.
Customizations are made to fit the needs, for example, customizing the eCommerce website by the business owner. On the other hand, the term personalization refers to tailoring the online shopping experience to individual customers based on their preferences, behavior, and past purchases. This can include recommendations for products or services, personalized offers and promotions, and even personalized content and messaging.
Customization is done when a user manually makes changes to meet his expectations. Personalization is done through the data and predictive technology.
6 popular use cases for AI-powered personalization
AI algorithms track and analyze the customer’s purchase history and browsing behavior in real-time and create a unique shopping journey for each customer. This understanding customer preferences allows for more accurate and relevant product/service recommendations and enhancing customer engagement. Generative AI takes personalization to the next level. Here is the list of use cases of AI technology for B2C or B2B eCommerce personalization that would benefit your eCommerce store.
Personalized product recommendations
Personalized product recommendations are one of the most popular and effective use cases for eCommerce personalization Machine learning allows computers to learn from data and improve over time. When it comes to personalized product recommendations, it can analyze a customer’s purchase history, search history, and other behavioral data to recommend products they are more likely to be interested in. These recommendations can be displayed on product pages, in shopping carts, or even through email marketing campaigns. As an eCommerce merchant, you want to keep your existing customers buying as it is more profitable than getting new customers, and what is important, you don’t have to manually analyze customer data. Personalized AI interactions increase customer satisfaction and brand loyalty in online retail.
Targeted marketing
By leveraging machine learning algorithms and predictive analytics, businesses can analyze vast amounts of customer data to identify patterns and trends and create targeted ads and campaigns that are more likely to resonate with individual customers.
This can include personalized content and messaging, targeted offers and promotions, and even dynamic pricing, which will be described later in this part.
By tailoring marketing efforts to specific customer segments, online retailers can create a more relevant and compelling shopping experience that builds brand loyalty and provides a seamless customer journey.
AI-powered chatbots
Another popular use case of AI personalization in eCommerce is the use of AI-driven chatbots, which surge in popularity can be seen among all kinds of online stores. By leveraging natural language processing and machine learning algorithms, chatbots can provide personalized customer support and 24/7 assistance.
Chatbots help customers find products, answer questions, and even make (and repeat) purchases, creating a more streamlined and efficient shopping experience. It is a great way of answering the needs of customers in real-time while saving resources and time. The additional advantage is the fact that chatbots can gather valuable data on customer behavior, which can be used to improve personalized experiences.
Product discovery with visual search
AI-powered visual search enables customers to look for products by uploading images. Instead of providing just a few words, an image search gives a lot of information to the system so it can deliver product results that are closely matched with the client’s desired item. For example, by typing “blue shirt,” the system will show all the blue shirts available in the store. However, when the image is uploaded to the visual search, a system already knows that it is a blue shirt for men with a particular graphic on the front and the two buttons. Many online retailers are already using Visual Search as one of the features on their platforms, thanks to its benefits. What’s more, visual search can recommend similar products that the customer may like when the desired one is sold out.
Personalized pricing
The price of the products plays a key role in eCommerce. Thanks to AI analytical capabilities, retailers can tailor prices to individual shoppers, taking into account a range of factors such as purchase history, browsing data, demographics, and even location. The result is a unique shopping experience that feels awesome for a customer and makes him feel special. This way, an online store can gain loyal customers that will be happy to purchase the product for a good price. Nonetheless, this strategy must be implemented with care and consideration and make sure that it follows legal regulations regarding data collection.
Customer segmentation strategy
Customer segmentation means dividing customers into groups based on shared characteristics. The division can be based on factors like gender, age, or location, as well as first-time customers or regular customers.
In this area, AI tools also came handy. Thanks to it, customer segmentation has become more accurate and dynamic. With the information gathered by AI, companies can tailor their marketing and customer experiences to each segment, resulting in better recommendations, recognizing potential issues, and increased customer satisfaction. Furthermore, AI can continually modify these segments as new data becomes available, keeping the strategy up-to-date and effective.
To empower your brand awareness, you should offer what customers demand: eCommerce personalization through marketing automation, AI personalization platform(s), tailored product detail page, and influencing search behavior. All the factors mentioned above will ensure personalized shopping experiences and may raise an average order value.
Benefits of AI-powered personalization
By leveraging AI, companies can deliver more tailored product recommendations, better customer service, and deeper insights into their customers. AI-powered personalization has the potential to revolutionize the way companies interact with their customers, allowing them to provide a more personalized experience that drives customer loyalty and increases sales.
The main benefit of eCommerce customization is that it helps brands interact with customers more meaningfully. Consumers are more likely to engage with a brand when they are presented with relevant content, including products with similar characteristics to those they have purchased in the past. This data-driven approach helps create a more tailored experience that eliminates irrelevant items and enables customers to find exactly what they are looking for.
Let’s take a look at the benefits of AI-powered eCommerce personalization:
- Gathers important customer data
- Helps to create product recommendations
- Greater customer understanding
- Marketing campaigns are more effective
- Reduces operational costs by automating some personalization processes
- Improves customer interactions, e.g., via chatbots
- Provides a better overall customer experience
- Increase customer satisfaction
Personalization in Shopware
When it comes to AI personalization in Shopware, there are a number of plugins and tools that can be downloaded from the Shopware Store that aims to engage with customers and attract new ones. Here are some examples of them that you may find useful for your website:
This plugin offers translation of all of the content on your Shopware shop, including product descriptions, landing pages, email templates, and many more. The process itself takes only a few minutes, and the translations are professional and context-based. Obviously, the plugin provides the ability to review and edit the translations to ensure accuracy and quality.
Nosto enables retailers to deliver authentic and relevant online shopping experiences across every touchpoint and every device. It uses customer-specific data such as order history and search patterns to generate real-time personalized recommendations. Thanks to the Commerce Experience Platform (CXP), retailers can build and optimize personalized commerce experiences very easily. Nosto’s features also encompass category merchandising, content personalization, and more.
Algolia plugin helps websites and applications implement fast and flexible search functionality. With Algolia, users can experience increased search speed and relevance, as well as easy access to search analytics. The software also allows theme extendability, enabling websites and applications to display search results in a way that best suits their theme. Algolia’s focus on speed and user experience makes it a popular choice for businesses looking to improve their search functionality.
Thanks to Clerk.io, you can turn your online shop into an advisor. The software algorithm behind it, named ClerkCore, gets to know the customers more and more and improves automatically, thanks to analyzing customer behavior. Due to that, they get personal recommendations for their desired products. Moreover, this plugin can also be used in marketing by sending personalized emails.
As mentioned before, a Visual Search is a tool that allows customers to search for products using a single picture, making it easier to find the exact product they are looking for. This feature can significantly increase conversion rates for online stores, as customers can quickly and easily find what they are looking for without having to type in specific search terms. One of the key benefits of this plugin is that it does not require any user privacy data or the use of cookies, making it a secure and privacy-friendly option. The visual search plugin is available for any category; however, it will work best in the fashion and furniture industry.
Want to explore the best eCommerce technologies and deep dive into Shopware? Check out our free e-book – A comprehensive guide to choosing the best technologies for eCommerce
Summary
As we look to the future of eCommerce, it’s clear that artificial intelligence will play an important role in driving innovation and growth, as its potential is very promising. As shown in this article, AI functionalities are already a valuable arsenal that should not be overlooked. When utilized properly, artificial intelligence can take your eCommerce personalization to a whole new level.
Overall, AI-powered personalization is key to creating a great customer experience and getting a competitive advantage. It is essential for any eCommerce platform to remain competitive and achieve success. It helps brands to engage customers more effectively and tailor the overall digital experience to the individual customer, which can lead to increased sales, improved loyalty, and driving customer satisfaction. It also helps to identify customer needs and measure key metrics, allowing brands to understand better how to meet the needs of their customers and achieve their desired business goals. Keep an eye on this exciting and innovative field to be one step ahead of the competition! If you are considering implementing AI in your Shopware store, feel free to contact us!