Itâ€™s that time of year again â€” when online retailers begin to plan for a tidal wave of festive shoppers. What will AIâ€™s role be during this busiest of all seasons?


Retailers of all sorts are already adapting their approach by timing sales and tying them into holidays or other festive events (e.g. Black Friday and Super Bowl sales in the US; Indian e-tailer ShopCluesâ€™ Maha Bharat Diwali Sale and Amazonâ€™s The Great Indian Festival). But how are they using technology to support their sales efforts?

AIâ€™s Current Role in the Festive Season Shopping

First, letâ€™s consider what AI-embracing retailers like Amazon are already doing with this technology:

  1. Recommendationsâ€”Recommendation engines are the poster child for commercial AI usage. And since weâ€™re all familiar with how recommendations work, we wonâ€™t go into that now. But letâ€™s think about how this can be improved. By looking at customersâ€™ purchase histories, current activity (cart contents and page views), and other linked third-party data, e-tailers can tailor recommendations to quite an individual level, resulting in a customized online shopping experience.
  2. Demand Forecastingâ€”Knowing in advance how much of each product you can expect to sell is an essential part of peak season survival. Using AI to enhance demand predictions can help minimize overstock and out-of-stock situations.
  3. Personalizationâ€”AI systems can delve deeply into customersâ€™ data, finding trends and preferences that we human retailers may not know about. And itâ€™s not just likes and dislikes; AI can weave in spending patterns, product recommendations, and other data sources to come up with a very detailed view. This not only provides the customer with a more satisfactory experience, it also helps retailers hit their sales targets.
  4. Operationsâ€”We are already somewhat familiar with the activities of AI in this area. Itâ€™s already being used on a â€œsmallâ€ scale (sending out confirmation emails) and a very large scale (managing warehouses and monitoring inventory levels). We can look at AI as one of the most impactful technologies of online shopping fulfillment.

What Else Can AI Do?

Now letâ€™s consider some AI applications that will be â€” as they say in the movies â€” coming to an online retailer near you:

  2. Customer Serviceâ€”Â Again, weâ€™re looking at another level of chatbots hereâ€”ones that can learn from the interactions between customers and human reps. The bot can use the data it harvests to create a more personable and personalized interaction forÂ itsÂ Watch this field closely; AI adopters like Flipkart, Google, and Amazon are already pursuing it.
  3. Smarter Searchesâ€”Â Consumers have become used to voice-powered searches, so theyâ€™ll likely also enthusiastically embrace visual searches. For example, an AI-powered matching algorithm could â€œlookâ€ at a picture of a shopperâ€™s favorite t-shirt (now due for replacing) and suggest similar products. We could see voice-powered searches entering the e-commerce arena as well. This information will also feed into the recommendation engine and the customerâ€™s profile, creating a richer data source.

Our guess is that we wonâ€™t have to wait too long to see any of these AI applications become reality. As we stated, companies are either actively researching them, developing them, or implementing basic versions of the underlying technology.
