Pain Points of E-Commerce Retailers & the Role of “AI Effect” to Overcome Them

When it’s about trends in e-commerce, the effect of AI is considerable.

Simply being online is no longer enough for your e-commerce site. The “AI Effect” can be useful for you in facing challenges and competing with brands like Amazon.

Pain Points that Can’t Be Overlooked

Inconsistency between channels — In the midst of trying to connect to every shopping channel, e-retailers create inconsistencies in brand and experience.

Inventory management — Managing inventory across channels is the main challenge for most e-commerce businesses.

Shipping and Returns — E-commerce brands need to apply clear and flexible returns with labels for every product purchase. Also, e-commerce businesses want delivery of their goods safely and on time.

Payment Methods — The payment methods in e-commerce include digital wallets and other alternative payment methods. Retailers risk ending up with outdated payments process.

All these serve to create high customer expectations for any e-commerce site hoping to compete in the market. However, AI in e-commerce is helping online stores to tackle all the pain points creatively, effectively, and hold their ground.

Stats on the Effects of AI in E-commerce

  • By 2020 over 80% of the overall customer interactions will be handled by AI.
  • By 2021, the early adopters of AI visual and voice search to their e-commerce website will increase revenue rate by 30%.
  • And, around 40% of customers today use AI chatbots to ask for offers and deals.
  • With AI-based recommendations, brands like Amazon and Netflix got a 29% and 75% increase in their revenue rate.

Solving Pain Points

Here’s an overview of how retailers are planning to leverage AI in the near future:

Read on the comprehensive list of factors on how AI solving the pain areas of e-commerce businesses:

Managing Channel Conflict

Channel conflict in the e-commerce industry occurs when businesses want to sell their products directly to the end customers without using existing channels. Today more and more businesses are looking for some good options to sell their goods online, but want to avoid to create conflicts with the existing retailers, and sales channels. What’s the solution? Artificial intelligence.

You can judge sales behavior on your e-commerce website with AI algorithms. Companies use this method to know their customers’ buying behavior that will help you decide upon choosing the appropriate product giveaways, deciding on the discount ratio on particular products, and like.

Avoiding channel conflict is an easy procedure that you can do by finding ways to choose product giveaways and ways to offer indirect discounts on the offered goods.

Smart Inventory Management

Warehouse operations and shipping process both are the main components of the e-commerce industry. Artificial intelligence automates the warehouse operations with a self-learning mechanism that focus on decision-making and learn to identify patterns from data of the entire logistics system. AI also plays a great role in improving human-machine interactions. Suppose you’re equipping your order picking personnel with AI-enabled tools and glasses for completing a variety of tasks.

It is predicted that by 2030 warehousing and logistics in the e-commerce industry will become fully automated. And, it’s already working, for example, JD.com employed robots to automate their product delivery operations. Also, Rolls Royce uses AI algorithm to track what is around their ship and around in the water, so that they can act accordingly to the danger they sense.

AI in Payment Methods

There are dozens of online payment methods for e-commerce, it is important to choose the best one that better suit your e-commerce site, and provide your customers with an easy to use and safe platform to make payments. PayPal is the best example of AI/ML enabled payment method and it is excellent in fraud detection and can compare thousands of thousands of transaction flows without any error.

According to sources, PayPal has also reduced its payment fraud rate to 0.32 percent as compared to the average rate of 1.32 percent.

Solving the Problem of Return

Artificial intelligence in e-commerce is being applied in different ways for reducing returns and increasing customer satisfaction. Supply.AI is an artificial intelligence platform that is helpful in detecting consumers return behavior on a retail store.

It is also helpful in analyzing online shopping trends, shipping patterns, and return history of purchased goods. No doubt, AI is changing the entire e-commerce industry by helping retailers to predict and prevent returns.

Recommendation Engines

Most e-commerce businesses today are using AI enabled recommendation engines to analyze customer behavior on websites. It works on AI algorithms to look or the searches made by the potential customers, what products are liked by customers, and provide details on the product being searched by most of the customers. Based on the data of the algorithm, the recommendation engine generates the report or recommendation for the browser and also list them on their product dashboard that helps customers to find the products quickly.

Amazon’s Alexa is the best and popular most example of AI-based recommendations that allow Amazon to predict what products will be most demanded by the customers.

AI Chatbots

AI chatbots can’t be missed when it’s about e-commerce websites. You can see these chatbots on the home page the e-commerce websites and mobile applications. AI chatbots communicate just like a real human or you can say in a more personalized way. AI chatbots for e-commerce sites help the customers in looking for the right product, check for the product availability, making the product comparison, and also guide in making payment.

A good example of AI chatbot in e-commerce can be Alibaba AI assistant that process around 95% of customer queries in a day and also provide product and search recommendations to all of their customers.

Bottom Line

While the impact of AI in e-commerce is expected to increase, this will allow businesses to tackle the problem of personalization and privacy in their retail stores. The developers today developing sophisticated AI software solutions for e-commerce businesses to give them a customer-centric and safe shopping experience.

I hope you found this article to be helpful in learning about the role of AI in e-commerce and how retailers can work to solve the common pain points of the e-commerce industry.


Pain Points of E-Commerce Retailers & the Role of “AI Effect” to Overcome Them was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.

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