What is Ecommerce AI?

AI-powered customer service chatbots, product recommendations, and personalization has been part of ecommerce for years. But now, new innovations and advances in ecommerce AI are helping businesses create shopping experiences that seemed impossible just years ago. New agentic tools give businesses the power of a limitless workforce, and generative AI is already changing the way shoppers browse and search for products online.

A whopping 84% of organizations say AI gives them a competitive advantage. If you’re looking for ways to implement AI to make a significant impact on your operational efficiency, customer experience, and revenue, here’s everything you need to know.

Natural Language Processing (NLP): This type of AI is what enables computers to understand, interpret, and generate human language. Businesses can use NLP to improve experiences with chatbots and virtual shopping assistants, and for large-scale sentiment analysis. It also helps brands respond to customer queries in real time and in plain language, analyze reviews for product insights, and personalize communication across different communication channels.

Machine Learning (ML): With machine learning, AI uses algorithms to learn from data and improve over time — without being explicitly programmed. This type of AI can power ecommerce experiences like personalized product recommendations, dynamic pricing, and fraud detection.

Deep Learning: Deep Learning is a subset of machine learning that uses layered neural networks to model complex patterns in data. This enables things like advanced visual search, voice recognition, and inventory forecasting. Brands are already leveraging it for features like “shop the look” based on images, smarter voice assistants, and better demand prediction across supply chains.

Our studies show that about 43% of consumers stop shopping from a brand after a poor customer service experience. Luckily, AI can change this. You can effortlessly deliver more contextual, personalized customer service while boosting your customer satisfaction. Here are a few ways AI can improve your service quality:

• 24/7 instant support: Set up chatbots or intelligent, autonomous AI agents like Agentforce to deliver round-the-clock service. They can answer frequently-asked questions (FAQs), handle order management, and offer immediate assistance beyond business hours.
• Personalized interactions: AI analyzes customer data like past purchases, browsing history, and conducts sentiment analysis to provide highly tailored responses and recommendations. It's like having a personal shopping assistant who remembers your preferences and understands your mood.
• Faster issue resolution: AI can quickly identify the intent behind a customer's query and either provide an instant service or route them to the most appropriate team. This reduces long waiting hours and significantly improve customer satisfaction.
• Proactive support: AI can monitor customer behavior and predict potential issues before they flare up. For example, if a delivery is delayed, AI can automatically send proactive updates to your customer. This reduces their need to contact support.

AI can be used in ecommerce in multiple ways, transforming everything — from how customers shop to your business operations. Let’s look at five key applications:

Price changes were once manual, based on tedious market research and demand forecasts. Now businesses can offer dynamic pricing powered by AI. This involves using algorithms to automatically adjust product prices in real time based on factors like competitor research and inventory levels, demand spikes, and individual shopping behavior. The best part? It can all be automated and instantaneous.

Dynamic pricing helps you maximize revenue by capturing the highest possible price, staying competitive, and reducing excess inventory through timely discounts. Ultimately, dynamic pricing with AI leads to smarter pricing decisions, better conversion rates, and higher overall margins.

Of all innovative use cases for AI in ecommerce, visual search will likely be one of the most popular — and one of the most desired by consumers. Traditional product discovery on an ecommerce site involved entering specific keywords into a search bar. For example: “red sweater crop top.” Then, a shopper would browse through product listing pages and sift through a sea of red sweaters. Now, generative AI enables visual search. A shopper can upload a photo of a specific red sweater with a hasty prompt: “I’m looking for this red sweater. Only show me exact or very similar matches.” And viola! AI can return hyper-specific results. No more keywords. No more lengthy browsing sessions. Just speedy discovery and fast conversions.

Ecommerce involves a lot of content: Product images, product descriptions, branding, FAQs, blogs, and more. Generative AI makes these tasks a lot easier, and a lot faster. For example, a retailer with a large catalog and thousands of SKUs needs unique descriptions for each product. With AI trained on product data, customer reviews, and SEO best practices, you can create optimized, detailed, accurate product descriptions for every item, in minutes. In turn, that means marketers and merchandisers can dedicate more time to more valuable, strategic work.

Forty percent of customers agree that AI raises the bar on customer experiences. By now, shoppers are accustomed to personalized product recommendations and relevant promotions. But new innovations are improving on and adding to personalized shopping experiences. In the past, AI was mostly predictive. Now, it can anticipate. For example, advanced neural networks can analyze past behavior, browsing patterns, and purchase timelines to anticipate intent and recommend products proactively.

With the right AI tools and ecommerce platform, your site can show a different homepage to each user based on location, season, and personal shopping habits. AI can also continuously update your user segments based on real-time data. Ultimately, ecommerce AI innovations mean that you can provide hyper-personalized, immediate experiences that resonate deeply with each individual shopper.

In brick-and-mortar stores, sales and service agents are your biggest asset. They can pick up on cues from customers as they shop and suggest appropriate products. Luckily, agentic commerce is here — ‌and it’s a groundbreaking shift from what ecommerce has experienced so far.

AI agents like Agentforce act as sophisticated, independent "agents" rather than just a conversational interface like live chat or chatbots. Unlike humans, agents don’t sleep and can deliver 24/7 customer service. They can deliver omni-channel customer service and effortlessly handle common concerns or frequently asked questions (FAQs). For example, when a customer contacts about a delayed order, Agentforce can check the order, detect a fulfillment issue, and even proactively initiate a partial refund or offer a substitute. Agentforce automatically hands off customer issues requiring human expertise to the most suitable customer service representative. This enables AI to fully resolve complex customer issues, not just answer them.

Product discovery is another key area where agents can help. In fact, about 39% of businesses with AI see a major improvement in this aspect. AI and agents can understand customer intent through natural language, analyze browsing history and preferences to offer tailored product recommendations. AI can also assist with conversational commerce and enable visual or voice searches for a more intuitive shopping experience. This helps customers quickly find exactly what they're looking for, or even discover products they didn't know they needed.

A classic example? If your customer wants to recreate an outfit from the latest Cannes Film Festival or is putting together a sensational piece for Halloween, agents can help them curate a look. Instead of spending hours on an ecommerce website, they can upload a photo or seek recommendations from the AI. Experiences like this increase repeat purchases, and therefore, your customer retention rate.

AI offers deeper insights into your customer behavior, and help answer questions like these:

• What are customers really looking for? AI analyzes search queries, browsing patterns, and even visual inputs to understand intent far beyond simple keywords. This leads to more relevant search results and product recommendations.
• How can we personalize their journey? AI analyzes purchase history, demographics, and real-time interactions to personalize content, offers, and website experiences. This makes every touchpoint feel unique.
• How do customers truly feel about your brand? AI monitors social media, reviews, and customer service interactions to gauge public sentiment about your brand. Best part? It provides insights for ecommerce marketing and reputation management.
• When are they most likely to convert (or churn)? Predictive analytics can forecast buying patterns and identify customers at risk of leaving. It can then retain ‌ customers through proactive engagement and reduce shopping cart abandonment.
• How can we provide instant, intelligent support? AI-powered chatbots and virtual assistants handle routine inquiries 24/7, guiding customers through product discovery, order tracking, and troubleshooting. This way, your team can focus on more strategic, complex issues.
• What complementary products will they love? AI identifies cross-selling and upselling opportunities by analyzing purchase habits and customer behavior. This nudges customers toward additional relevant items.
• How can we personalize search and navigation? AI improves the site search experience by understanding user intent and preferences. This is the cornerstone of product discovery and eventually revenue generation.
• How much should we spend on advertising? AI can analyze the performance of various advertisements, keywords, and creative assets in real-time. It can automatically adjust bids and allocate budgets to improve marketing ROI across platforms like Google Ads and social media.

An immersive ecommerce experience doesn’t end with an order ‌ — it extends beyond fulfillment, too. AI can take up the routine tasks of tracking and collecting customer feedback, sending shipping and order tracking links, and managing returns. AI can send personalized thank-you messages and order confirmations, making customers feel valued and appreciated. Thoughtful acts like these go a long way.

AI can also conduct surveys to gather your customer sentiment. Such insights can help you strategize your ecommerce offerings. Inventory management is another critical area for AI to jump into. It can help your fulfillment partners map out more sustainable delivery routes — all while suggesting cost-effective ways to source and ship items. This is especially useful as shipping costs, sustainability concerns, and inefficient order routing are top business concerns.

About 36% of ecommerce businesses experienced a site outage in the past year, with 57% of them happening during a busy season. Site outages or data breaches can cause significant revenue loss, damage to brand reputation, and frustrated customers. AI helps you shift from reactive to proactive and even predictive maintenance. Machine learning algorithms are trained on historical data to understand "normal" operational patterns. They can then identify subtle anomalies in real-time before they escalate into a full-blown outage or ecommerce fraud. For example, a gradual increase in server load or a slight spike in error rates might be overlooked by human monitoring but flagged by AI.

When a new transaction or user activity deviates significantly from standard user behavior, the AI flags it as suspicious. This includes:

• Sudden, high-value purchases on new accounts
• Multiple failed login attempts
• Purchases from unusual locations or devices
• Rapid changes to account details
• Repeated small orders (often used to test stolen card numbers)

A trusted customer relationship management (CRM) tool like Commerce Cloud can help you defend your ecommerce business like a pro. It’s continuously monitors your site to detect and alerts on potential issues before they cause outages. Commerce Cloud comes built-in with AI that regularly applies security updates and patches to protect against vulnerabilities. It flags high-risk orders for immediate review, and helps you meet regulatory standards like Payment Card Industry Data Security Standard (PCI DSS) to protect customer data. Even small and medium-sized businesses (SMBs) with lean teams and resources can sleep at peace, without worrying about cybersecurity threats or site crashes.

It’s no surprise that a technology as powerful as generative AI will come with challenges. Implementing AI and maintaining trust while you do it requires strategic thinking, loads of planning, transparency, and maniacal focus on what matters most: your customers. Here are a few considerations as you come up against the challenging task of implementing AI.

• AI models are only as good as the data they're trained on. Ecommerce businesses often struggle with messy, inconsistent, incomplete, or siloed data from various sources like website, CRM, enterprise resource planning (ERP), and social media.
• Many established ecommerce businesses operate on legacy systems. And they weren't built with AI integration in mind. Integrating modern AI solutions with these older, often rigid, infrastructures can be complex, time-consuming, and expensive.
• AI models need continuous monitoring and retraining with new data. This is what helps AI remain effective as market conditions or customer behaviors evolve. This adds to ongoing operational costs.
• AI heavily relies on customer data. This may raise significant concerns about data privacy and compliance with regulations like General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA). Mishandling data can lead to hefty fines, reputational damage, and loss of customer trust. It’s critical to partner with trustworthy vendors to ensure compliance.

AI algorithms can unintentionally inherit biases. If biases are present in the training data, this can lead to discriminatory or unfair results. This includes biased product recommendations, unfair pricing, or exclusion of certain customer groups.

When implemented strategically and used correctly, ecommerce AI can elevate customer experiences and increase operational efficiency. The right ecommerce platform will empower your business with out-of-the-box tools and capabilities to keep up with competition, personalize shopping, and improve employee productivity.