Today, Artificial Intelligence (AI) in e-commerce is pervasive. Big brands, food giants, and fashion labels are leveraging AI to create immersive consumer interactions and highly personalised buying experiences. The success stories are plentiful, highlighting how AI-driven campaigns have developed customer-relevant content, driven up interest, strengthened brand images, and improved engagement and sales.
Hyper personalisation is the buzzword of the moment. According to a 2022 Salesforce survey on customer engagement strategies, 73% of customers now expect companies to understand their unique needs and expectations. This shift towards a digital-first shopping experience is only expected to grow.
The Allure of Hyper-Personalisation
This trend is driving many companies to use AI to meet these expectations. AI powers exclusive playlists based on previous listening choices, specific clothing designs and colours, travel advice, and even lifestyle recommendations. For many, this hyper-personalisation is both interesting and welcome.
Take Shopify, for example. They’re using AI to generate product descriptions. Sephora has integrated voice search capabilities into its online beauty marketplace, and Burger King employs AI algorithms to create visuals and content for personalised advertisements. This level of personalisation is immersive and engaging, enhancing brand recall and boosting business.
Concerns About Over-Personalisation
However, not all customers appreciate this high level of personalisation. Some worry that online shopping will become too customised, leaving them with no real choice. They fear that everything they might need will be served to them on a platter, stripping away the joy of discovery in shopping.
How AI Transforms E-Commerce
In the current fast-changing and competitive e-commerce landscape, AI and Machine Learning are invaluable. They help organisations make sense of vast amounts of data, deliver powerful search experiences, offer relevant product recommendations, and enhance customer engagement. AI learns customer behaviour by tracking their activities on e-commerce sites, using this data to recommend products tailored to their preferences. This creates a tailored, relevant, and often entertaining shopping experience.
AI also boosts productivity by automating repetitive tasks within the e-commerce workflow, improving efficiency and reducing operational costs. These savings can then be reinvested in other areas of the business. Dynamic pricing is another significant benefit, with AI adjusting prices based on real-time customer behaviour, supply and demand trends, and competition. This real-time pricing helps e-commerce companies remain competitive and attract more buyers.
AI’s role extends to product search and customer support. Optimised search engines guide shoppers to the products they seek, enhancing the online shopping experience. AI-driven chatbots and customer service initiatives handle customer inquiries efficiently, providing 24/7 support and increasing customer loyalty and repeat purchases.
The Pesky Problems of AI
While AI-driven hyper-personalisation has many benefits, it also has its drawbacks.
1. Overwhelming the Customer: Imagine walking into a store and being bombarded by salespeople with various products. Similarly, too many recommendations can overwhelm online shoppers, confusing them and potentially driving them away.
2. Losing the Human Touch: AI-driven recommendations, while accurate, can create a sense of discomfort among customers who feel watched and judged. This lack of human interaction can be off-putting, especially for older generations.
3. Eliminating the Brand Discovery Experience: Hyper personalisation can pre-empt consumers’ needs, presenting them with products before they even realise they want them. This convenience can detract from the enjoyment of browsing and discovering new brands and products.
4. Data Privacy Concerns: Hyper personalisation relies on vast amounts of consumer data, raising concerns about privacy and security. The collection and use of this data can make both e-commerce companies and their customers vulnerable to data breaches, cyberattacks, and online scams.
Striking a Balance
AI has undeniably transformed e-commerce, helping consumers navigate the cluttered online shopping space and enabling companies to improve customer experiences, strengthen marketing campaigns, and boost customer engagement. However, when it comes to hyper-personalisation, brands must strike a balance. They need to ensure that customers feel involved in the shopping process rather than being served everything on a plate in a calculated manner.
AI-driven hyper-personalisation offers numerous benefits, but it’s essential to address the concerns it raises and find a middle ground that satisfies both the business and its customers.
This thought leadership is written by Vikram Kharvi, CEO at Bloomingdale Public Relations.
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