AI In E-Commerce: Using AI To Maximize Margins

Smart machines aren’t just a luxury for scientists and huge corporations anymore. Independent businesses can finally put AI to use on any scale, and the benefits are huge.

Worldwide data will grow by 61% by 2025 – how can you make sense of it all and still have the time and resources to act on those insights? The answer is Artificial Intelligence. It’s no coincidence that 77% of marketing teams in high-performing companies use AI in marketing efforts.

AI enables companies to collect and assess vital data at a rate that no human ever could. Thanks to machine learning, AI can direct your business services – marketing, sales, customer service – based on the data it has collected. And after automatically assessing the success of those transactions, the AI will refine the systems to improve them in the next customer interaction.


What is Artificial Intelligence (AI)?

Artificial Intelligence is the pursuit of creating algorithms that are inquisitive, meaning they learn from their environment and become capable of near-human problem solving. In other words: machines that are programmed to systematically learn.

What is Machine Learning?

Machine Learning is a subset of AI in which a machine can review data and improve itself without being explicitly instructed to do so. In other words, a machine uses its own experiences to refine its systems of performance. It learns on its own.

Machine Learning’s Online Evolution

The notion of machine learning has been discussed by scientists since the 1950s. In the internet age, with the advent of big data and neural networks, machine learning is in practice all around us. And the applications are intensely refined.

Twenty years ago, you might use a map app to figure out your ideal bus route to work  – the AI would synthesize the local bus schedule with a visual map. Today, thanks to machine learning, Google Maps can anticipate individual bus delays, traffic conditions, and even how crowded your bus will be.

The implications of this for e-commerce and retail marketing are huge. Where once we were left to guess at the habits and desires of customers, and scrambling to employ a team of savvy sales, marketing, and customer service agents, now we have the data to stop guessing, and the machine power to deliver.


Using AI In E-Commerce

AI is so prevalent in digital life, it’s easy to overlook the nuanced applications we engage with everyday. Here are some of the leading ways that AI is enhancing relationships in e-commerce.

Voice Search

Google’s predictive search has been incorporating deep machine learning for years. But with the advent of Siri, Alexa, and Google home, voice search brought machine learning to our spoken habits. The next step? Conversational A.I.

Visual Search

Now that 62% of millenials want visual search while they shop, retailers are answering the call. Alibaba, ASOS, Neiman Marcus, and Nordstrom have incorporated visual search into their e-commerce sites or apps. Upload a photo of a product you like and Neiman Marcus’s app will show products that might fit the bill at their store.

Predictive Analysis

A.I. is responsible for 35% of Amazon sales and 75% of Netflix viewing selections. The great new music discoveries that float your way on Spotify? You can thank A.I. for those. It has also employed its first-party data in clever ad campaigns.


Chat with a friendly, conversational bot on the The North Face website, and they’ll help you select the perfect jacket in a matter of minutes. The upscale outdoorswear company charted 60% click-through rate and 75% conversion rate thanks to AI.

The head of customer experience for fashion retailer Alibaba boasted that 100% of customer service inquiries are handled by chatbots, 50% from start to finish. The bots, he said, can resolve customer problems in 30 minutes. “There is a lot of low-hanging fruit to help [sellers] reduce the burdens of their customer service team.”

Social Media Marketing

Possibly the most powerful way to get noticed online, 80% of Gen Z and 72% of millenial shoppers say that social media affects their purchases.

Marketers are using round-the-clock automation and an ever-growing wealth of social media data to target customers on their preferred platforms with their preferred content at the perfect time.

Direct Marketing 

Now that we can collect data down to the ‘micro-moment,’ retailers can predict not only the ideal offers for an individual customer, but also the ideal time and platform to deliver it. Businesses can reduce shopping cart abandonment with a re-targeting campaign led by AI and reward loyal customers with exclusive offers at optimized rates.

The Men’s Wearhouse captured in-store data and with a new A.I.-driven offer and adapted it for digital marketing campaigns that boosted sales by $19 million. With a growing global market for digital sales, the retail chain was able to increase revenue by amplifying its exclusive discount offers – optimizing mobile delivery, controlling access, and collecting valuable data.


The Benefits Of AI In E-Commerce

Reduced Costs

By automating so many of your team’s marketing, customer service, and clerical tasks – and knowing that it will all be done precisely – you can slash labor costs. More precise marketing campaigns also mean reduced ad budgets and optimizing discount offers means a higher ROI.

Consistent Controlled Customer Experience

A majority of customers now expect companies to provide realtime answers to their questions. Chatbots do that consistently and economically. And bots, unlike human service agents, don’t go off-script. They provide the precise responses that you want.

In customer support, 63% of people actually prefer chatting with bots over speaking with humans. That’s one reason why the largest sector for AI investments globally this year ($4.5 billion) was customer service agents.

More Precise, Effective Marketing

Personalization is no longer optional in digital marketing. 80% of frequent shoppers says they only shop with brands that personalize experience. AI allows more precise, personalized and segmented marketing – and it’s all automated.

Segmentation derives from causality. With data rich management systems you can segment potential clients based on causes of behavior in addition to standard behavior profiles and demographics. This means that you can target clients and target the types of offers that perform best with those specific clients.

First-Party Data & Analysis

Third-party and second-party data is useful, but it’s simply not as granular as a marketing campaign needs. Broad demographic data is useful, but it only gets you so far.

By collecting your own first party data through your transactional sites, you’ll get purchase behavior data with which you can generate a true causal relationship. Plus, it’s yours. You have data, you know it’s accurate, and it’s growing every day. You can even compile data on your competitors online to better assess market trends.

E-Commerce Discount Management & AI

Properly managed, personalized offers will target your ideal customer base, present them with offers that speak to each person individually, and make sure that they are the only people to redeem it.

There are ways to improve your offer marketing without AI. You might A/B test a 20% against a 25% discount to see which yields a higher ROI. This is certainly an improvement on the old model of guesswork.

But more precise analysis is available, and it requires tracking many different variables. Analysis that formerly required a team of data scientists is now performed by cloud-based algorithms in an instant.

Offer Management Platforms

Offer Management Platforms (OMP) are cloud-based, user-friendly systems that help retailers keep their discount campaigns more consistent, precise, and secure. Built on vast databases and machine learning, OMPs integrate with your other marketing platforms for seamless workflow. Promotional and direct marketers can implement, control, and analyze marketing campaigns across platforms and media.


AI-Powered E-Commerce Discounts

With the RevTrax Offer Management Platform incorporating AI, retailers can generate offer rates dynamically. Drawing on data structures like Bayesian Networks and probability theory,  they predict the precise offer amount to maximize the likelihood of purchase.

Why offer a 25% discount when 12% will win the customer over?

With dynamic offers, retailers save money and execute more effective deals with every single targeted audience member. Meanwhile, the system builds its own first-party database as it campaigns progress. So over time, it becomes more knowledgeable, efficient, and builds a more data-rich profile for prospective clients.


Ready to Use AI to Optimize Your E-Commerce Discounts?

AI has revolutionized nearly every aspect of modern life – from the morning commute, to our social networks, and thanks to cloud-based services, AI computing power is available to any e-commerce company. Choosing to harness that data power is commitment to a more efficient, effective business in the digital world.

Ready to learn more about how AI can work for your business? Contact RevTrax today!

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