What is AI in eCommerce and How Does it Work?


Here you are, reading this article, and it is highly likely that some AI powered algorithm made it readily available for you based on your search and other information it might have on you.

Artificial Intelligence (AI) and it’s closely connected sub-term machine learning (ML) still for most people evoke some robot like perception, fueled by movies, comics and what not. In reality, what differentiates AI and ML from other systems in business is the ability to process vast amount of data into actionable insights for business purpose. And on top of that – to learn. These systems can learn in a similar way a person would, from trial and error, just of a much higher scale. That is why you might hear the term – the model is being trained. It really is. And the more training – the better results.

And before going in to how and why, please note – the technology is ready, available and very scalable, and many companies are already feeling it’s benefits, like Netflix for example, with it’s smart recommendation engine.

So, how does it work?

AI in eCommerce can help businesses in several directions:

  • Predictions – by crunching vast amounts of data, it can provide much more precise predictions about the business – be it sales, costs, stock or customer churn, AI based predictions have unprecedented accuracy, which greatly helps planning and decision making process
  • Personalization – like it should be, far above changing the name on top and remembering birthdays – based on learned patterns, it can offer data based recommendations of products to customers that are a far better fit than rule based ones
  • Super targeted campaigns – AI enables fully personalized campaigns, which feature products customers are more inclined to buy or be interested in, again, based on data available. In addition to that, it can learn the most appropriate channel to get a response for each customer. Less clutter for consumer, more relevance.

What are the benefits of using AI?

Maintaining and growing revenue are everybody’s goal, especially in the area of high competition. And data is readily available from every day’s business, although it mostly sits there unused. So why not be smart about it, and use what each eCommerce business already has, just finally making sense from it, with the help of AI based eCommerce solutions.

Using AI and ML solutions in eCommerce you can expect:

  • Higher conversions, in our experience up to as much as 30%
  • Better campaign response due to personalized offer
  • Next level UX for the customer – through UI adaptation and NLP powered chat bots
  • Better understanding of business – segments, trends, planning basis.

What are the essential AI based eCommerce solutions you should consider?

  1. AI powered recommender systems.

Most eCommerce sites use some kind of recommender systems, but as we know from our own experience, the difference in quality of given suggestions is huge. Having a good recommender can boost sales in double digit percentages, by using data about the customer and learning from lookalike clients.

For recommender to work best, it is important to have options for recommendation ranging from simple best sellers for new customers we know nothing about, all the way to sophisticated cross selling recommendations, based on history or similar customers choices. In general, the more data there is about the customer, the more personalized recommendations could be generated.

AI allows a deeper understanding of customer’s need, so it can display far more relevant products to the customer, increasing the basket size. For instance, if a person is searching for a pink modern watch, and returns again, now in the shoes section, the system can suggest modern pink shoes, based on previous experience of color preference. Or when a person suddenly starts buying baby wipes, it might be a good time to offer pram, baby food or similar items.


  1. Smart segmentation.

We are used to devising some sort of customer segments we follow to determine marketing tactics. And this is ok, but limited, because it is based on experience, not the data. AI powered segmentation can sift through much more variables, and detect important segments based on different criteria than the ones we might customarily use. These segments can be used to predict business trends, but also to detect the correct actions to prevent churn by addressing dormant customers and upsell to right people based on the behavior of similar/lookalike customers. Having such a tool enables you to talk to the right people with the right message, and to monitor as these segments change and/or new ones emerge, so the company can act in a timely manner.

  1. AI Powered Smart Search

We search through various websites for items, well, like humans that we are… and in return often get robot like misunderstanding or irrelevant results. Miss one letter or change the wording order, and you get nothing. If a customer can’t find what he/she is looking for, it is not only frustrating, but also hurts sales. Especially if the website has the item, but search could not „find“ it. Luckily, AI can help here significantly. AI powered search engines on websites process languages in a similar fashion a person would, and can provide relevant results in cases of incomplete queries, misspelled words or even for a foreign language. To make matters better, it recognizes the context even if the word is a synonym. This feature is called natural language processing, and increases conversions on site up to 15%

  1. Smart Campaigning

To put things in a perspective very vividly – how many promotional emails have you deleted this morning? We would dare to bet – a lot of them. And likely, none contained anything of interest to you, even if you have bothered to open. Companies are struggling to reach out consumers, and consumers are overwhelmed with irrelevant offers from all over the place. In such context, being able to understand what your customers might really need (based on data) and having tools to offer personalized products to each of them greatly increases chances to convert messaging into purchase. AI powered campaigning tools enable high scale personalization – reaching out to high number of customers and still offer „to each their own“ – determining what products are a good fit for each segment/person, plus selecting the channel to which response is the most likely for a person x.

This might really be the beginning of a win-win marketing – customer gets interesting offers, seller gets high conversions, and everyone benefits.

How to exploit the benefits of AI in eCommerce?

The solutions are many, and above we have just scratched the surface with readily available products companies use the most. To give it a best chance of success, we recommend the following:

  • Start with the business problem – how do you compare to your competitors, how is your revenue trending? Is there anything specific you would like to increase – like basket size, conversion, frequency of visits, campaigning responses?
  • What data do you have? Are you using it? Can you extract all you need?
  • And your web shop – how is the search performing, recommendation system? Can this be improved?

Once you have the issue defined, it is good to talk to the experts. We at Things Solver have significant experience in helping web shops improve many KPIs. Reach out, and we will be happy to arrange a free consultation call to help you navigate and prepare for next level of business results, using AI.