AI-Powered E-Commerce: The Key to Future-Proofing Your Business
By Roopak Pathak
Artificial Intelligence (AI) is transforming the e-commerce landscape, reshaping how businesses engage with customers and streamline their operations. AI has become a critical growth driver in online retail, and companies like Amazon, Sephora, and Walmart are leading the charge, showcasing how this technology can redefine success in e-commerce. A O ne of the most impactful ways AI is being used in e-commerce is through personalisation. Amazon’s recommendation engine powered by AI, suggests products based on users browsing habits and past purchases. This simple yet effective feature accounts for 35% of Amazon’s total revenue.
AI analyses vast amounts of data to deliver relevant product recommendations to individual shoppers, creating a tailored experience. And it’s getting even smarter—future improvements in machine learning are expected to further boost customer retention and conversion rates by 15-20%. Beyond personalised product suggestions, Amazon has integrated AI into customer service through Alexa, its voice-activated assistant. Alexa lets customers search for products, reorder items, and receive personalised recommendations all through voice commands. This voice commerce solution has generated more than $5 billion in sales, particularly during busy shopping periods like Prime Day. With voice shopping becoming more popular, voice-driven transactions are projected to hit $40 billion by 2032, highlighting the growing importance of AI in shaping the future of retail.
AI in Customer Service
Sephora Model AI
The Sephora Model AI is also revolutionising customer service in e-commerce. Take Sephora, for example. The beauty brand has launched Sephora Virtual Artist, an AI-powered chatbot that lets customers try on makeup virtually and receive personalised product suggestions.
This innovation has led to a 30% increase in customer engagement via Sephora’s app. By automating customer interactions and providing tailored advice, AI chatbots not only enhance the user experience but also reduce operational costs by handling routine queries. As these AI tools continue to advance, Sephora expects mobile app engagement to grow by 20%, offering even more personalised and immersive shopping experiences.
