matador and bull in the ring

How AI Is Challenging Ecommerce Relationships

6 minute read
Boris Kraft avatar

Artificial intelligence (AI) is not just transforming ecommerce. It’s also breaking down barriers and challenging assumptions on buyer-seller interactions.

Ecommerce came about because the internet made it easy to find what you were looking for. The digital age made the physical world appear closer, so you could buy things from distant countries. 

Early adopters assumed ecommerce would be fueled by economics of scale and lower costs, but those weren't the main drivers: It was convenience.

Websites made information freely available. Every budding entrepreneur put their wares in online catalogues and stores. 

But now the overabundance gives us the same stuff, only from different vendors under different conditions. There’s too much information and it gets annoying. 

AI Refines Search

Consumers have to search, (re)search and deal with the paradox of choice. 

If I’m looking for a certain model of running shoes, I could find them on the brand's online store, or a discount apparel chain, or on eBay. But that doesn’t help narrow my choices. Of course they’ll be differently priced, so how would I know what made the difference or where I would get the most value for money? 

What’s missing are search fields specific to product categories and industries.

Enter AI, which is changing ecommerce by smoothing out the search glitch. AI is increasingly improving search functions, from using natural language processing to making the search more intuitive, right up to visual search. The company at the forefront of search — Google — is known for using AI to refine its search algorithms. 

In the age of Instagram and Snapchat, visual search capabilities are shortening the lapse between that moment of impulse and the actual purchase. So if someone likes her friend’s dress, she can snap a shot with her mobile and find matching items online. Retailer Neiman Marcus, for instance, already uses visual search provider Slyce for its “Snap.Find.Shop.” feature.

Smarter Personalization

AI is also making personalization better and smarter. It allows marketers to get closer to behaviors in a scalable and practical way. AI can pick up on where loyalty programs have failed. They build loyalty by understanding your individual needs, the best times for various triggers, how sensitive you are to price differences and your preferred channels. 

AI has the power to orchestrate all the parts of ecommerce into one seamless, logical flow. What’s more, it can do it in a way that’s truly personalized and individualized for each customer. 

If you use AI on your ecommerce platform, you’ll need to use APIs to embed the buying ability within that customer journey. Your ecommerce bricks need to be tightly and consistently integrated, from CRM and ERP to product information management and payment system. The platform you use for ecommerce has to be robust to manage that kind of integration. 

Challenging the Interface

But beyond that, AI alters the way we react. And the interface may not be through designed webpages. 

If AI suggests products to us automatically and makes intuitive recommendations, how much longer will we need catalogues? The best ecommerce interface might well be no interface — AI bots act as personal shoppers to cater to your every whim and fancy, before you know it. 

Gartner predicts that by 2018, customer digital assistants will recognize customers by face and voice across channels, and by 2020, 85 percent of customer interactions will be managed without a human.

Lots of supermarket chains have customer cards of some kind or other. They’re collecting huge sets of data about our shopping behaviors: when and where we shop, what products are our staples, whether we go for the premium line. 

Learning Opportunities

Most of them are using simple, rules-based AI to pepper us with discount coupons or special offers. A few are experimenting with AI to create true omnichannel experiences. Your mobile app could act as a store assistant guiding you through the shelves to find all the ingredients for the perfect lasagne bolognese. Interactive Q&A chatbots and real-time pricing displays might become a reality. That scenario is not so far off.

Behavioral marketing has pushed businesses into new platforms and tactics. Digital businesses are building brick-and-mortar stores. Amazon launched its first grocery store last year: a store without checkout lines where customers use the Amazon Go app to grab what they need. AI technologies track stocks and follow up on payments automatically.

Fusing Brands and Channels

AI is challenging conventional marketing by enabling connections that were previously difficult or impossible to make. 

One of the hardest things to do in ecommerce is to build seamless, consistent customer experiences across different channels, as they take varied journeys on desktops, mobile or physical stores. AI is already being used to smooth these customer journeys, by making logical connections and machine learning to create scenarios.

Think about how you could use AI to combine brands, experiences and audiences in specific moments? With this strategy, you’re not as concerned with tracing out relevant journeys, but rather catching customers at significant points in time and matching them with brands that amplify the way they experience a certain channel. 

When the Apple Watch hit the Swiss market a couple of years back, taxi service Uber and online retailer Brack teamed up for a pre-launch special: Order an Apple Watch before 10 am and get it delivered on the same day, only in Basel and Zurich. 

The coup: Order the Apple Watch via the Uber app and have it delivered via Uber vehicles. 

That’s a one-off marketing gag, you might say. But it’s a prime instance of how a retailer has combined brands and experiences to connect with a particular audience.

Here, the retailer did not use AI itself for super search or ultra personalization to sell watches. It simply partnered a mobile channel that has disrupted conventional taxi service. 

This channel, with its inherent all-seeing, all-tracking AI elements, sells the captive audience in its reach: the app-toting, upwardly mobile consumer with little time to spare. The channel tops it off by enriching both the online experience (don’t just order a taxi with an app but shop with it as well) and the physical experience (not just a taxi ride, but one which comes with a nicely boxed wrist gadget). 

We could be seeing more such partnerships in the digital ecosystem, where brands who don’t directly compete come together to resonate with target audiences. Another example might be a bookstore staging a Valentine’s Day shopping event for bookworm singles who link up over an online platform. That meshes customer journeys in different realms, and takes ecommerce to a new level by amplifying customer experiences simultaneously across the online and physical worlds.

About the author

Boris Kraft

Boris Kraft has been creating and selling software since the age of 16. He is the co-founder and Chief Visionary Officer of Magnolia International, a Swiss-based open source CMS vendor.

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