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How artificial intelligence will transform e-commerce
Consumer behavior and the development of new technologies are strongly linked, especially with the advent of artificial intelligence (AI). AI is not a single technology, but a convergence of statistical models, algorithms and methods that make software intelligent by mimicking the processes of human reasoning. AI is already present in our digital life, such as in Amazon's dynamic pricing and Spotify's recommendations, although we are now only seeing the beginning of AI’s immense potential.
The most impactful uses of AI will be within e-commerce, an area enjoying continuous growth. We are beginning to see applications that implement AI through cognitive technology, a simulation of human reasoning processes that respond to human language and provide positive experiences for clients. In the United States, 1,800 internet users have experienced an improvement in this area thanks to the launch of GWYN (Gifts When You Need), a digital service using IBM's Watson technology, to help customers find a personalized gift. Rather than using conventional search mechanisms, users can tell GWYN exactly what they are looking for through a simple conversation. Users respond to questions posed by an AI chatbot, receive tailored recommendations, and then can make a purchase without ever leaving the conversation.
The most common criticism of e-commerce is that the experience is sloppy. Having so many options can be too much for even the most savvy consumers, leading users to feel overwhelmed to the point where they simply stop browsing.
Data generated by these browsing experiences contains a wealth of information, but much of it, while collected and archived, is never actually used. This so-called “black data” accounts for up to 80 percent of the data generated by e-commerce sites each day. If AI could be applied to this data, it could have incredible value to retailers. Sophisticated artificial intelligence algorithms applied to “black data” could help retail brands minimize ambiguity and provide a more precise view of consumer behavior. For example, it could allow for fresh segmentation of web visitors, aid CRM, and create user profiles that can help define a target audience.
Brands have to think about developing a data strategy as if they are playing chess, not Tetris. Instead of finding a place for each piece of data individually, as it comes in, they should develop a structured system that stores data in an orderly way, and into which data sequences that do not yet exist can be incorporated later.
The next frontier
AI has made it possible to move from the use of computer screens to manage information, to using reasoning processes independently of a screen. We are moving from graphical interfaces to conversation interfaces. This will be reflected by the rise of digital assistants, such as Apple's Siri, Microsoft Cortana, Amazon's Alexa or the recently launched Google Assistant.
It is inevitable that artificial intelligence will be at the forefront of the transformation of electronic commerce, and retailers and brands should be aware of what it means: surely the best interface in the future will not be an interface at all.