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Artificial Intelligence in E-Commerce has seen rapid development in recent times. As AI continues to impact every industry that exists on earth, the e-commerce industry seems to be the most affected. Each year the technology improves itself making the customer experience better and only better. With its almost human-like intelligence, AI has taken the world by storm and will continue to do so with upcoming trends. AI technology has surely fascinated the world in the current times.

Artificial Intelligence in E-Commerce is a game changer. However, there’s a debate surrounding the pros and cons of the speedy development of AI. As the common belief goes, if this continues, AI might replace humans in various fields, very soon. Also, the future holds a lot of secrets about the trends of growth in AI and its future. Although, thinking that AI can completely replace humans would be an exaggeration. However, the probability does exist in the long run.


So, let us understand Artificial Intelligence a bit more and then move on to see how it has been impacting a major industry i.e. E-commerce.

Artificial Intelligence in E-Commerce
Shopping on E-Commerce Websites

What is Artificial Intelligence?

Artificial Intelligence is a technology that uses systems, computers, and machines to apply human-like intelligence in solving problems and improving decision-making abilities.

For instance, AI-enabled systems can capture real-time data and can also generate real-time reports.

However, there is a fear it may replace the human race once, more advanced. 

Artificial Intelligence is so subtle that many, even do not know they are using it. Also, in many cases, the AI gives possible suggestions to the human decision-maker based on the information captured. Artificial intelligence has currently become the talk of the world right now, with ChatGPT, a chatbot launched in November 2022.

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Importance of Artificial Intelligence in E-Commerce:

E-Commerce, also known as electronic commerce has brought the world closer. With the latest technologies developing every day, the E-Commerce industry has also undergone a massive change in the last 10 years. The E-Commerce giants across the globe are continuously applying methods that bring in huge sales and customer satisfaction. 

However, keeping your head above the water has become tough due to excess competition. Therefore, it is important to update the technologies regularly.

This will help us to gain a competitive advantage and growth. Artificial Intelligence plays a major role here. Wondering how? 

Let us look at a few factors where AI technology is a lifesaver for the E-Commerce industry:

  • Mapping Customer behavior: 

AI technology records and analyses customer-generated data which helps in mapping the behavior pattern of customers over a while.

  • Understanding and reporting purchase patterns:

Through AI technology we can generate the reports on customer purchase behavior. This drives better decisions by E-commerce companies.

  • Understanding and forecasting demand and supply:

Since the E-commerce business is operating 24×7 around the globe, the volume of data is huge. In such a situation, the AI captures demand and supply data, converting it into accurate forecasts.

  • Dynamic economic environments:

The economic environment around the world keeps changing continuously. To keep up with the pace of such dynamic changes AI helps E-Commerce companies.

  • The threat of cyber crimes:

The reason for resistance towards E-commerce comes from the threat of cyber crimes. With the help of AI technology, it is possible to develop safe payment ecosystems. This reduces cyber crime probability and brings down resistance towards E-commerce.

application of AI in E-Commerce
Inventory management using AI technology

The importance of AI in E-Commerce makes it mandatory for every E-Commerce company to use AI and its applications optimally. Let us now see some impressive applications of AI in E-Commerce.

10 Impressive Applications of Artificial Intelligence in E-Commerce:

1. Customer Acquisition and Retention:

Customer acquisition means when you convert a potential/ new website visitor into a customer who completes a purchase transaction with your website. 

Whereas, customer retention is more involved with making sure your customers repeat their visits to your website and keep purchasing things from it. Artificial Intelligence in E-Commerce helps in achieving this. 

AI helps in tracking real-time behavior of customers on your website. This helps in getting access to information about the likes, preferences, and decision-making patterns of the customers. Accordingly, targeting these customers in marketing campaigns becomes easy.

2. Improve Your Website Conversion Rates

A website conversion is when a person visiting your website makes an actual purchase. Whereas, a website conversion rate is the number of people visiting your website in comparison with the number of people completing a transaction.

For instance, 100 people visited your website and only 80 completed purchase transactions. So your conversion rate would be 80%.

Many times shoppers visit and surf your website, but abandon their carts midway without completing a transaction. This can be frustrating for e-commerce retailers. However, Artificial Intelligence in E-Commerce can help solve this issue. With the help of AI, you can track your website visitors across other online platforms and also approach them via email. 

Through this email or in-app notification, you can remind the visitor to complete their transaction. In a few cases, websites also offer promo codes, and discounts . This is the most common application of AI in E-Commerce.

3. Customized Suggestions

Have you ever purchased a book online, or just searched for a book and later found suggestions on E-Commerce websites concerning similar books? This is due to AI technology. It tracks every customer activity on the website. Then it sends personalized suggestions to the customers. 

The AI records and analyses information first. Then, it determines the likes and preferences of a website visitor. Every customer has unique set of  needs and requirements.  Artificial Intelligence in E-Commerce helps in catering to these needs. This enhances the overall shopping experience of each individual visiting the website. This is again the most used application of AI in E-Commerce.

4. Customer Experience Enhancement

The more fun and convenient the customer experience is, the more is the conversion rate of a website. Every E-Commerce company is taking efforts in innovating ways to enhance their shopper’s experience. The implementation of Chatbots and Voice assistants is one such example. 

Earlier, the lack of human touch was a limitation of E-Commerce websites. However, today as soon as you visit an E-Commerce website, you may find a chatbot ready to chat with you exactly like a human retailer. This makes a customer’s experience smoother on your website. This is what makes them come back next time. 

With Artificial Intelligence in E-Commerce, the interest in voice searches has increased. Here, you don’t need to type for searching any product, just speaking the name of your desired product would help you get it on the webpage. Be it Google Assistant, Amazon’s Alexa or Apple’s Siri, these voice assistants have made the application of AI in E-Commerce more fun.

5. Process Automation

An E-Commerce business works on many preset standard systems and processes. This means a lot of repetitive work. Well, Artificial Intelligence in E-Commerce takes care of this.

The standard processes are all automated thereby, reducing repetitive work. Also, it saves a lot on employee costs. This makes time for more productive activities.

For instance, the opening of a new bank account has a preset standard process. A potential bank customer can just log in through the bank’s app or website. The technology used here is AI. In case of any issue, chatbots and voice assistants help the bank customers in solving the same.

6. Optimizing Pricing:

With the help of AI technology, it is possible to know the average price range within which a customer makes purchases on a website. With the help of AI you can identify regular website customers. Accordingly, offer them discounts and promo codes. AI technology also helps brands on E-Commerce websites, to understand their customers and their purchasing power better.

7. Order and Inventory Management 

Order processing and inventory management require a lot of repetitive processes. When it comes to inventory, E-Commerce businesses face issues with overstocking and understocking. This takes place when you do not have accurate numbers of the demand for the products in the market. AI technology gets you those numbers by tracking real-time data and passing it on to the respective source. Accordingly, required products will always be in stock in the right proportion. 

Artificial Intelligence in E-Commerce, helps well in order and inventory management.

8. Logistics Management

There are no geographical boundaries when it comes to an E-Commerce business. However, distribution and logistics play a very important role here. Getting the right products at the right place and that too at a right time is a task. However, AI can co-ordinate logistics well. Using Artificial Intelligence in E-Commerce, we can maintain inventory records accurately. This will notify the balance of stock available. This makes order placement, supply, and distribution smooth. 

Also, due to the unique barcode label on every product, you can track your order geographically. One can determine expected arrival of the order. Also, one can determine the real-time location and order status of their ordered product. 

9. Use of Virtual Assistants

Running a full-time E-Commerce business is a time-consuming task. Being the owner of such a widespread business won’t allow you the time to attend to every customer query. Hiring employees for doing the same, would add to your operating costs. So, it’s time to use Artificial Intelligence in E-Commerce i.e. to make use of virtual assistants.

These virtual assistants are Chatbots that attend to customers’ queries and problems and try to solve them. Virtual assistants also provide information and product descriptions to customers. This might be when a customer raises a query or as autosuggestion.

Virtual assistants carefully transfer information received from the customers to the company database for future use.

10. Fraud and Spam Prevention

Millions of people use E-Commerce websites every day. This calls for a secure payment ecosystem. When a person visits a website, makes a purchase, and shares crucial payment credentials, the customer is in a way trusting the website’s security.

It is important to protect this trust. It is crucial to regularly maintain the website against malware. Artificial Intelligence in E-Commerce helps in exactly doing this. While a website runs, AI technology in the back end and front end protects against any malware by implementing firewalls. Also, by using the AI technology we can easily remove the website bugs. 

Another interesting application of AI in E-Commerce is, identifying spam and fake reviews. With the help of artificial intelligence it is possible to remove fake reviews and comments. Thereby, providing the customers with the right inputs. 

The Infamous Debate on Artificial Intelligence:

Artificial Intelligence is not the technology of the future. It is the technology of the present. Also, it is said that AI is being used for around 70 years or so. However, researchers came up with AI technology to improve the productivity of human beings. Replacing humans was never the goal.

What do the experts feel?

Although, with rapid AI development, Elon Musk the futurist, believes we are “summoning the demon.” Celebrated researchers, investors, and business magnets have different views and opinions on Artificial Intelligence as a technology. AI in E-commerce is also facing the same dual opinions. So, to understand this better, let’s discuss the pros and cons of Artificial Intelligence concerning E-Commerce.

Pros and Cons of Artificial Intelligence in E-Commerce


1. Customization

So far, this is the best service that AI can provide through E-Commerce. Through a customized experience a customer feels more valued and repeats website visits.

2. Quick customer service

Handling customer queries and problems is not an easy task. Whenever a customer raises a query, it can be immediately solved using AI technology.

3. Smooth inventory management

The application of AI in E-commerce keeps a continuous check on the inventory balance. Systems are used to calculate economic order quantity, closing stock balance, and valuation.

4. Fraud prevention and detection

Through the appropriate use of AI, online frauds can be prevented as well as detected and solved. With the help of artificial intelligence, continuous safety checks are run over multiple pages of the website.

5. Smoothly plan digital marketing campaigns

Access to market data is the biggest resource. While making a strategy for digital marketing campaigns, this data can be used to reach target customers effectively. 


1. Risk of data privacy:

Data security is the most common concern in any E-Commerce business. Customers trust websites with their confidential personal data. Protecting this data, which is generated in large volumes is a task. Sometimes, even AI may fail in protecting the privacy of a website. This might happen if AI technology is not regularly tested and updated.

2. Over-dependence

We all have become dependent on online websites and applications for our daily needs. With almost every business going online our dependence on online E-Commerce websites and applications has increased too much. This is leading to overdependence on AI technology. If the technology crashes the world is facing a larger risk of shutdown.

3. High installation costs

Developing, testing, and regularly updating the AI technology for E-commerce websites is expensive. Technology is that one thing that never remains constant. Adapting to new AI technology and installing it is surely expensive.

4. Misconceptions about AI 

Myths and misunderstandings about AI technology have become common. But because of this, resistance is observed to adapting to new technologies in society. This is because of a lack of efforts taken to educate people and businesses about the emerging new AI technologies in E-Commerce

Future of Artificial Intelligence in E-Commerce:

By now, the world has witnessed the massive power of the application of AI in E-Commerce. Keeping the recent trends in mind, let us have a look at the prospects of AI technology in E-Commerce.

1. Advanced Automation

The automation of every process, system, and software would be possible if we keep on developing AI technology. Advanced automation would be possible in search engine results, the interaction of robots with humans while shopping, customized advertising, self-development technology of the systems, and so on. This will earn maximum customer brand loyalty.

2. Breakthrough Research

With the speed at which the current AI technology is expanding, there will surely be breakthrough research results shortly. One might be able to self-check in and check out of online retail stores just by using a unique QR code. Face analysis may be possible to understand the satisfaction level of the customers during shopping with the E-Commerce website.

3. Advanced robotics

Robotics is an inherent part of  AI technology. They are designed to carry on repetitive human tasks. Be it human interaction while placing orders or solving a customer issue, robots are everywhere. They are in popular demand as they need one time investment and updation. This saves a lot on human salary.

4. Human Collaboration

AI technology will soon be advanced enough to work in collaboration with humans on many projects. It will just be like working with another coworker. AI technology is making efforts in applying human-like intelligence in almost all the tasks and decisions that are being taken. However, whether it would be able to apply common sense, would be another topic of debate.

5. Ethical Understanding

Currently, AI technology works only on programs. It does not use an actual human ‘brain’. However if, we incorporate knowledge of ethics in AI technology, reducing cyber frauds, and crimes will be possible. No one would be able to use AI for any illegal or unethical practices.

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As it is quite evident, Artificial Intelligence in E-Commerce is transforming the online business industry every day. It is all set to bring about a 360° change in the E-Commerce industry. AI-powered applications and software are changing the game of market data analytics. This further, leads to an enhanced shopping experience, advanced customization, and smooth handling of inventory and logistics. AI has made E-Commerce available to customers 24×7. This further adds to customer convenience.

So, the application of AI in E-Commerce is touching every dimension of the industry which brings in brand loyalty and high profits.

It is a powerful tool and has to be used with extreme care and caution. The right technology in the wrong hands might create disasters for the human race. But all in all, AI technology and its role in E-Commerce is proving to be a revolutionary game changer.

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Frequently asked questions:

Q.1 What is AI technology in E-Commerce?

It is the use of technology to automate processes and use algorithms to collect, store and analyze customer data. Its aim is to improve customer experience on the E-Commerce website.

Q.2 How is AI improving the shopping experience in E-Commerce?

AI captures data of the customer in real-time while they are surfing online on various websites. Later, by analyzing this data it provides a customized experience to customers based on their likes and preferences. This is a common application of AI in E-Commerce.

Q.3 Is the application of AI in E-Commerce safe?

Yes, it is completely safe to use and incorporate AI in the E-Commerce website. It is designed to continuously secure E-Commerce websites.

Q.4 What is the biggest challenge in incorporating AI in E-Commerce?

High installation and maintenance costs are the crucial challenges in the application of AI in E-Commerce. This makes it difficult for small business owners to use AI technology.

Q.5 In future can AI completely take over the E-Commerce industry?

This is a topic of debate. AI technology uses human-like intelligence. But, it lacks the trait of common sense. If this too is programmed, it might take over every industry on this globe.

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