The Gist

  • Enhanced personalization. AI-driven technology elevates ecommerce experiences through hyper-personalized recommendations.
  • Interactive assistance. Conversational AI, like ChatGPT, allows users to effectively communicate their needs for tailored results.
  • Lucrative advertising. Retailers leverage AI-generated hyper-personalization to boost ad revenues and optimize customer experiences.

AI use in ecommerce is nothing new. It’s used to improve search and product recommendations, streamline the supply chain, gain customer insights, offer assistance through chatbots, optimize inventory and a host of other activities that are intended to make the customer experience better or streamline operations on the back end.

“So you could almost go through literally every scenario in ecommerce and there's so many different types of AI that's happening around that,” said Paul do Forno, managing director of Deloitte Digital’s Commerce Practice. 

Some typical use cases include:

  • Image tagging and recognition: Using AI to recommend similar products based on a customer-selected screenshot of a specific product
  • Analytics: AI has been used for years to help marketers spot useful patterns in a sea of seemingly unrelated data
  • Inventory planning and demand forecasting: Using AI to help ensure that the products customers want are available when they want them
  • Creating content: Using AI to generate product descriptions, page content, images, blogs, etc., for web pages
  • Understanding intent: Using AI to figure out where the shopper is in their buying journey and serving up promotions or ads based on that analysis
  • Chatbots: Using interactive, AI-powered chatbots to help customers without having to interact with a live person or scroll through endless FAQ pages

Outside of efforts to optimize the supply and distribution chains through real-time information gathering and analysis, the goal of most of these efforts is personalization, where products and services are tailored to each customer’s preferences and buying behaviors

This is something that even business buyers increasingly want. According to McKinsey’s 2023 Global B2B Pulse, 77% of companies that personalized the B2B experience increased market share. Companies that increased market share by more than 10% a year were investing in “hyper-personalization” technologies such as chatbots. 

“Customers know exactly what, where, how and when they want things,” said Jennifer Stanley, a partner at McKinsey, in a press release. “Companies that adapt and respond to those needs and provide value are being rewarded in multiple ways from higher retention rates, higher sales, and higher market share.” 

Related Article: AI’s Role in Digital and Retail Personalization, Part 1: The Big Picture

ChatGPT Is Just the Beginning

With the advent of truly useful generative AI, what is about to happen will make what has already been happening look pretty pedestrian. When most people think of generative AI ,they think of ChatGPT. It is impressive but it is only one such example of what this technology can do. Going forward, the technology that powers ChatGPT has the potential to hyper-personalize personalization.

Tuned in & Interactive

Imagine an ecommerce experience that is not only tuned to each individual but is also interactive. One where instead of just searching through a list of recommended products, you are able to talk to a virtual assistant, tell it what you need, why you need it, what your budget is, and all the other variables that impact your decision-making and then have it give you back recommendations of not only the product that you are interested in but other products, services and content such as how-to videos that will help you do whatever it is you were trying to do — be it taking care of your lawn or finding a dress for prom — better.

“With the power of generative AI, brands will have the ability to take shopping to the next level and truly deliver one-to-one personalized experiences,” said Eddie Gonzalez, chief strategy officer of performance and experience at the marketing firm Razorfish. “Dynamic messaging, relevant real-time imagery, and predictive recommendations will all be powered by generative AI and will help scale personalization across pivotal moments in a cost-effective way that was not possible by humans alone.”

Profound Technological Shift

Salesforce took a step in this direction in March with the launch of Einstein GPT, a generative AI CRM (customer relationship management) technology that will produce AI-created content such as customer emails for salespeople, personalized specific responses for use by customer service professionals, targeted content for marketers and auto-generated code for developers, Salesforce said.

“The world is experiencing one of the most profound technological shifts with the rise of real-time technologies and generative AI,” said Salesforce CEO Marc Benioff in a press release. “This comes at a pivotal moment as every company is focused on connecting with their customers in more intelligent, automated, and personalized ways.”

Related Article: AI’s Role in Digital and Retail Personalization, Part 2: Changing Rules of Engagement

Learning Opportunities

Greater Personalization on the Horizon

Like Salesforce, Instacart is now integrating OpenAI’s ChatGPT into its offering. The company’s plan is to help customers plan meals and then place an order directly to local retailers through Instacart. They also have plans to make search in the Instacart App more conversational with an “Ask Instacart” feature powered by ChatGPT. They are also using AI to make personalized recommendations as customers add items to a smart cart. Instacart is also testing promotions in real-time, such as two-for-one offers, to see what works best. 

“We’ve been thinking about how to improve our ecommerce offerings and customer experiences with AI for quite a while,” said Jeanette Barlow, vice president of product at Instacart. “As ecommerce evolves, and online and in-store shopping experiences continue to come together, there are many ways we can implement AI to offer more convenient, personal shopping experiences.”

Related Article: AI’s Role in Digital and Retail Personalization, Part 3: Synchronicity for Exceptional Customer Experiences

AI Makes Advertising More Lucrative

Big retailers who run marketplaces that include outside vendors such as Walmart, Home Depot and Amazon are particularly interested in using the hyper-personalization that generative AI can create to sell advertising, not just products, because ads are a growing profit center, said do Forno.

Do Forno is working with clients in the hospitality and travel industry to hyper-personalize travel itineraries so that when someone is booking a trip, AI can recommend places to eat and stay and help put together other itinerary items into an integrated package tailored to the travelers’ preferences.

Contextualizing Experience

One of the keys to improving personalization is contextualizing the experience. So someone shopping for a lawn mower in California versus South Carolina will be served a much different experience based on local conditions. 

He’s also seen where companies are using generative AI to create images and videos that show their product in locations and situations being requested by their potential customer in real-time. 

Real-time dynamic pricing that changes based on location, product availability, customer purchase history and other factors is another use case that's being explored by retailers.

“So, let's say you go to your favorite marketplace [to buy a lawnmower],” said do Forno. “You have a profile on there ... so when you start to search they're going to use that to influence what results come back. Ads would be personalized to you. Then when you see the product page and this is ... one of the biggest things to convert people is how rich is your product page? What if, on my product page, I could upload my backyard picture and then show how the lawn mower could work there or show a product that was tuned to your use case. And so that's AI.”