5 Minute Read

AI and Ecommerce – A Powerful Partnership For Growth

We highlight how AI can boost eCommerce performance in an increasingly competitive marketplace.

Ecommerce is older than the internet. Yes, we scratched our heads over that one too, but it’s a fact that eCommerce started in the 1970s with teleshopping, and the internet didn’t officially celebrate its first birthday until January 1, 1983. Still the history of eCommerce and the internet is closely connected, with the web providing the technologies for eCommerce to thrive.

In this blog, we’ll bring the story of eCommerce up to date, highlighting the challenges that eCommerce professionals face today in a crowded marketplace, and how AI can help you overcome these challenges to increase sales.

We’ll also share our Top 5 AI benefits and flag up a couple of techniques that you can discuss with your AI team to immediately boost your eCommerce performance

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Recent Ecommerce History

eCommerce may have been around for 40-something years, but it’s only in recent times that people have really embraced it. Sure, the internet was a boost, but it was the pandemic that caused the current explosion, driving 40% of UK shoppers to spend more online by March 2020, with this figure rising to 75% by February 2021.

What’s more, there’s certainly been no going back to the way things were. More than a quarter of UK consumers stated they expected to shift more of their shopping online post pandemic and four out of every five UK consumers today are now digital buyers.


The Challenges Of Ecommerce Today

No-one would question that the size of the eCommerce pie is bigger than ever; however, the leap in the number of businesses trying to get a slice of that pie has grown by just as much.

A quick look at the Office for National Statistics’ figures shows 79,000 more eCommerce websites in 2021 registered in the UK versus 2020. One estimate puts the UK at 1.24 million eCommerce websites today in 2023, second only to the United States.


How AI Can Help Ecommerce Overcome Its Challenges

With so much negativity around AI right now, it’s refreshing to see how gun-ho the whole eCommerce world is about this technology. But who wouldn’t be happy if AI could generate 20% additional eCommerce revenue and reduce costs by 8% in today’s tough business climate?


The Top 5 Applications For AI in Ecommerce

So where does AI fit into eCommerce? Well, AI helps companies optimise the customer experience and increase operational efficiencies end-to-end.

Here are 5 ways that AI can transform your eCommerce operation:

#1 Personalized product recommendations

It’s what digital buyers expect to see nowadays and can increase the ROI on your marketing spend by 5-8 times according to McKinsey. However, it’s something that would be too expensive to do manually for a large customer base.

Using AI, you can automate the personalization process using algorithms that accurately predict buying behaviour based on historical customer data to increase cart size and drive revenue.

#2 Smarter Searches

In the same way AI can personalize recommendations, it can do the same for your searches. It means your eCommerce website can tailor search results based on criteria like a user’s previous searches and purchases. Hence, if a customer types in men’s clothes, the results will include brands the customer has previously bought.

In addition, using AI-based natural language processing algorithms, your site’s search engine can pick out what phrases and words are often used. This way, it doesn’t matter if the searcher doesn’t type the exact product name, and uses jargon instead, like blow dryer instead of hair dryer.

#3 Smart Logistics and Warehousing

Stock outs are your worst nightmare, but overstocks are little better because of the associated costs. The beauty of AI is that it can help you calculate the right amount of product that should be in stock at any given time.

Furthermore, when AI is used in logistics, it can help your company analyse existing routing for optimisation. Going a step further, the predictive capabilities of AI can also help with your basic warehouse maintenance, tracking the performance of the machines supporting your warehouse, so you can plan the most advantageous maintenance schedules. 

#4 Demand Forecasting and Dynamic Pricing

The two go together with demand forecasting and dynamic pricing helping to improve your pricing strategies. In this case, AI analyses market conditions, spots pricing gaps and recommends strategies to realise the opportunities. 

There are different AI algorithms to support different pricing strategies. For example, eCommerce websites can access algorithms to maximise revenues, minimise customer churn rates, increase loyalty and beat competitors on price.

#5 AI Assistants and Chatbots

Aren’t they the same thing? The boundary separating the two may be a bit blurry, but really, they deliver assistance in different ways: Virtual Assistants handle multiple kinds of tasks, and Chatbots tend to engage more with customers.

Chatbots enable conversational commerce and can engage passive visitors through natural language understanding that launches conversations to learn people’s requirements and to guide them to relevant products. Virtual assistants can do things like handle data-sensitive tasks and provide customer support vial phone, email or chat etc.


Your Top AI Ecommerce Techniques

Ratcheting up the techie side of this blog a bit, we wanted to share some examples of AI techniques that are relevant, and you can use. Your AI team will probably be familiar with them too.

Logistic Regression

It’s a kind of statistical analysis for predicting the likelihood of a binary outcome. For eCommerce, it can predict the probability of a customer making a purchase based on their answer to the question, given parameters x, y and z would a promotion get them to buy?


Here the algorithm organises objects into groups based on multiple variables. It can group customers based on purchasing patterns; bunch physical stores together based on performance; and bundle products together based on the same criterion. The process takes you to a deeper level of segmentation, identifying new collections of like-minded people to reach out to.

Sentiment Analysis

A classification algorithm, sentiment analysis reveals subjective opinions or feelings collected from many sources. You can use it for multiple objectives, including market research, precision targeting, product feedback and deeper product analytics. It can also boost customer loyalty, through improved customer service, helping agents resolve customer queries quicker.


The View From Ipsos Jarmany

At Ipsos Jarmany, we work closely with eCommerce professionals looking to improve the performance of their websites. We recently added a section dedicated to AI on our eCommerce solutions page to provide some insights that you may find helpful.

You may also find value in our The 5 Best Strategies to Boost eCommerce Sales eBook and our Ecommerce Intelligence Demo which demonstrates what you can do with the right tools in place to keep track of your eCommerce performance.

What’s clear today is that eCommerce offers great opportunities but presents significant challenges; and that AI is helping businesses overcome the hurdles to make the most of this rapidly growing sales channel.

If this blog has triggered some questions, thoughts or ideas, speak to us today and let us see how we can get your eCommerce business on the path to a best-practice AI adoption.

To learn more about how AI can improve the performance of your eCommerce get in touch with Ipsos Jarmany today and have an honest conversation with our AI experts.

Data-driven decision-making, made easy with Ipsos Jarmany


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