With shoppers spending more time online than in physical stores many brands are leveraging data to convert searches into sales.
According to Dow Jones, online stores are supercharging search-and-recommendation engines by feeding data into sophisticated algorithms, building predictive models with a level of accuracy unimaginable just a few years ago.
How it works
Shoppers generate data on retail websites every time they place an item in a virtual cart, hover over product pages, click on product recommendations and ultimately make a purchase. Stores create more-robust customer profiles by adding their shoppers’ ages and genders, where they live, the local weather or seasonal events and holidays — and in some cases data drawn from all over the internet by third-party services.
Gartner research shows that 77 percent of retailers plan to deploy AI by 2021, including using it for product recommendations and searches.
Amazon’s A9 search engine, for example, is a system which decides how products are ranked in its search results. As the world’s largest online retailer, Amazon has a vested interest in promoting listings which are more likely to convert into sales and will rank listings with a strong sales history and high conversion rate more highly.
“So much of our shopping has drifted online and there’s a lack of tolerance for companies that aren’t getting it right,” Jon Duke, a vice president for retail insights at tech research firm International Data Corp, told the Wall Street Journal. “These tools are proving their worth during the crisis.”
Brands are already using AI to recommend clothes to customers based on their height, weight, shape, and current size and to minimise return rates, which are a near 50 percent of all purchases. By logging sales, returns, and online purchases, retailers can keep track of stock and gauge which products are selling well.
According to Capgemini, analysts have estimated that global annual spending on AI by retailers is estimated to reach 7.3 billion by 2022. Capgemini insights also show AI could help retailers save 340 billion dollars annually, by enabling efficiency in processes and operations.
Image: Pexels; Article source: Dow Jones and Wall Street Journal