By Ellie-Rose Davies, Content Executive at IMRG

AI is transforming the retail landscape, offering innovative ways to enhance the customer experience and drive operational efficiency. This blog explores insights from industry experts on how AI can be used to its best effect in 2024.

Read on to discover:

  • The growing popularity of AI
  • How to balance the artificial with human touch
  • Ways to create tailored customer experiences
  • Tips to improve customer satisfaction
  • AI’s role in fraud prevention

The growing popularity of AI

IMRG research supported by Adobe Commerce has shown that AI is becoming more integrated and optimised in the world of ecommerce. Our data reveals that most customers are positively responding to the use of AI in their online shopping experiences, where 86.2% of 1000 UK customers revealed that some form of AI personalisation feature would help them to make a purchasing decision.

As James Bentley, UK Strategy Director at Awin notes, ‘Since the launch of ChatGPT4 in April last year, there has been a Cambrian explosion of closed and open-source AI models. These models have democratised mass access to advanced capabilities in conversational AI chat experiences, image recognition, voice recognition, speech generation, and even autonomous teams of AI ‘agents’ that can plan, iterate on, and deliver tasks.’

‘With new models and capabilities arriving each week, many brands, and their development teams, are overwhelmed by the pace of innovation, and unsure of what types of AI powered customer experiences to explore.’

To a retailers’ advantage, ‘Many machine learning powered technologies operate on a pay-per-sale basis, offering a low-risk high-yield path to AI optimised experiences.’

CEO and Founder of ASK BOSCO®, John Readman, also reflects on how ‘The fascination with AI has intensified since the emergence of ChatGPT 18 months ago. However, AI’s role as a dependable copywriting tool remains uncertain. We’ve witnessed numerous missteps, notably the DPD AI chatbot’s infamous declaration that DPD is useless—perhaps suggesting that AI isn’t entirely foolproof.’

‘Amidst this buzz, are retailers overlooking a critical opportunity with AI? AI excels in handling large-scale data processing and tackling complex numerical problems.’

‘According to IMRG, online sales are stagnating or declining for most, even as Google raises ad costs and posts record profits. Who is benefiting the most here – the retailers, the customers, or Google?’ John asks the pivotal question: ‘Is it time to leverage AI to regain control from dominant ad platforms like Google and Facebook?’

How to balance the artificial with human touch

Often overt uses of AI can make a customer feel uneasy when shopping with an online retailer, alienating them from the brand and leading to an increase in exit rates. This is why it is important that retailers do not forget the human touch, which can help when building a loyal customer base/brand community.

AI, Artificial intelligence, robot and human hands are touching and connecting, unity with human and ai concept, machine learning and futuristic technology background

Karl Stone, Regional VP of UK&I at Voyado reflects on how ‘The integration of AI in the retail industry is transforming customer interactions and services—and this is just the beginning. However, the true challenge lies in incorporating these technologies without compromising the unique human touch that defines a brand’s identity and customer relationships. The ability to leverage AI and customer data to gain insights into individual preferences and drivers, enabling personalised communication at scale, will be a critical factor in success.’

He continues, ‘AI is a revolutionary tool for retail; like all tools, it needs to be operated by a person using good judgment to get the greatest benefits and avoid the risk of damaging a brand or reputation.’

VP of Marketing, Dan Bond at RevLifter tells us of the importance of keeping the human element, saying, ‘We are in the very early stages of AI maturity, but some clear use cases are emerging. The key, as with any new technology, is how it can help you automate and accelerate your work to get the answers and results you need faster – combining human and machine intelligence.’

‘We’re seeing a lot of value from a testing perspective,’ says Dan. ‘Generating offer, copy, and image variants quickly and at scale and then optimising live tests to automatically serve the best performers. As the technology learns more, it can start to predict what the best interventions will be before you run them. But you should always validate hypotheses – human or machine-generated!’

A great way to keep the human element is by prioritising conversational commerce, that is according to Tjeerd Brenninkmeijer, Executive Vice President at Bloomreach, EMEA. He exclaims, ‘AI has the potential to shape and change how retailers communicate with their customers and engage with them on a personal level that we haven’t seen in e-commerce before. Conversational commerce, in particular, will be an integral part of that.’

‘Being able to communicate with a customer during their shopping journey and help them find exactly what they’re looking for, is going to majorly improve the customer experience and establish a new level of brand loyalty.’

Tjeerd says the biggest challenge is ‘getting the tone right.’ ‘Conversational AI serves as an extension of a brand, and that means it should sound authentic to them as a business. The solution will be to correctly train the AI. Teams should experiment with it regularly, expose it to brand guidelines and content that will better adapt to their tone of voice. It’s vital to do stress testing before exposing it to customers and a broader audience.’

Ways to create tailored customer experiences

In 2023, just shy of 75% of customers said they feel more loyal to brands that are personalised to them and their interests, that is according to IMRG and Adobe Commerce’s research. Methods such as tailored product recommendations and advanced search and discovery experiences are driving this.

Bethany Fulton-Wise, Shopify Developer at Dark Matter Commerce says, ‘We’re seeing retailers really see the benefits of AI for functionality such as on-site searching. Whether that’s using keyword matching and linking to gain a better understanding of what customers are really looking for, tailoring search results to specific customers’ preferences based on their browsing history, or prioritising products that are high net worth, AI can be hugely beneficial to both the customer and the retailer.’

Using AI, retailers can ‘link together complementary products to increase average order value or create synonym groups so that whether your customer types in “jumper” or “sweater” they’re still going to end up where they want to be.’

Andrew Harkness, VP of Sales and Marketing at Huboo explores how ‘Retailers can leverage AI to analyse customer preferences and spending habits, and then offer tailored discounts on related products – hitting consumers with highly relevant items, at a highly relevant time.’

‘When it comes to generative AI, we’re already seeing great use of this in industries like beauty and fashion. For example, beauty brands can recommend specific products based on individual skin scans, allowing customers to find the perfect product, without having to visit a physical store and test out samples in person.’

‘In addition, AI-generated models, like those used by Levi’s, allow retailers to show customers what their clothing will look like on different body shapes and sizes,’ says Andrew. ‘Not only does this help the retailer save both time and money, but it also creates a better, more inclusive, shopping experience for the customer.’

Tips to improve customer satisfaction

AI can drastically improve customer satisfaction, leading to less pressure on customer service teams and heightened loyalty.

Nick Williams, Parcel Services Director at PayPoint shares how ‘AI has the ability to dramatically advance and evolve a customer’s experience through personalised loyalty programmes that can predict buying habits and offer tailored rewards’.

Customer Satisfaction Survey Concept, Users Rate Service Experiences On Online Application, Customers Can Evaluate Quality Of Service Leading To Business Reputation Rating.

‘Operationally, smart inventory management can also ensure that shelves are stocked efficiently, reducing waste, and keeping popular items available.Customers have become more sustainability focussed and reducing waste has become more of an expectation. Also, becoming known for generous stock on popular items can help retailers stand out during increased competition, boosting key metrics such as conversion rates which have been seeing significant declines.

Nick continues, ‘AI’s analytical power can turn customer feedback into actionable insights, driving improvements and fostering positive customer relationships.’ This is a tactful use of AI considering that the top reason customers leave negative reviews is in hope that their issue will be rectified.

Simon Dyer, Regional Vice President, UK & Nordics at Mirakl reveals that ‘AI is invaluable for the growing number of companies like ASOS, B&Q, Debenhams, Secret Sales… that have introduced third-party marketplaces into their eCommerce. It can enhance product catalogue accuracy and boost SEO on third-party products. AI can also streamline after-sales incident resolution, reducing times by 90%.’

The post-purchase stage is most often the time when things go wrong. Having some AI in place that can mitigate these issues or solve them more quickly is especially important for customer retention.

Co-Founder and Chief Technology Officer at parcelLab, Julian Krenge, says ‘AI is revolutionising retail by enhancing the customer experience and operational efficiency. We’ve seen AI optimise post-purchase processes, significantly improving delivery estimates and customer satisfaction. Retailers can use AI to offer personalised product recommendations during high engagement post-purchase touchpoints, driving loyalty and sales.’

Julian reflects on future customer-centric trends that ‘include advanced chatbots for seamless customer inquiries and AI-powered insights to reduce returns.’ ‘AI, if used appropriately, says Julian, ‘can fundamentally reshape how retailers operate, making them more agile, efficient and customer focused.’

Deb Richards, EVP of Global Customer Success at Brightcove goes also recommends generative AI technology such as AI-powered chatbots ‘to provide instant responses to customer queries, offering assistance 24/7. AI-driven virtual assistants can also help guide customers through their purchase journey.’

Brightcove have seen for themselves the host of benefits that AI brings, where Deb has seen it ‘improve internal processes, enhance the customer experience, automate timely tasks, find answers faster and make a difference in the quality of support for global customers.’

AI’s role in fraud prevention

As noted by Xavier Sheikrojan, Senior Risk Intelligence Manager at Signifyd, ‘We’re focused on how AI can drive personalisation and profit, but that overlooks the impact on the fraud-scape.’

Signifyd are seeing a rise in ‘AI-generated fraud: deepfakes and synthetic personalities across customer service using text, sound, and imagery to create near-perfect imitations of real people.’

Xavier’s answer to combatting these innovative schemes: ‘fight AI with AI (and intelligent machine-learning models). This approach allows for continual feedback into AI models, which builds resilience and improves risk mitigation capabilities, but also ensures a smooth consumer experience for loyal customers.’

‘AI is an exciting capability for those in ecommerce, but it’s also a huge liability that needs addressing so that retailers can fearlessly combat fraud,’ says Xavier.

Monica Eaton, Founder and CEO at Chargebacks911 expresses how ‘With cybercrime as a whole expected to cost the world $10.5 trillion annually by 2025, there is no simple way to counter it ‘by hand.’  She says, ‘Our industry deployed AI and machine-learning technology many years ago to aggregate and segment large sets of transaction data to help guide policies and decision making.’

She continues, ‘Over many years, these technologies in anti-fraud applications have become so adept at finding fraud and representing chargebacks because computers are uniquely good at spotting patterns and irregularities, and learning the specific nuances of how fraudulent chargebacks affect individual industries like retail.’

Want to read more? Here are some other IMRG blogs that cover a range of ecommerce topics:

Innovative Conversion Tactics Implemented By Retailers In 2024 – IMRG

Ecommerce Merchandising: Optimising Product Displays, Recommendations, & Navigation – IMRG

The Real Reasons Gen Z Are More Likely To Return Gifts Than Their Grandparents – IMRG

How Is The Luxury Market Accelerating Growth For 2024? – IMRG

Top Ways To Improve The Post-Purchase Customer Experience – IMRG

Published 22/05/2024




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