4 Ways Retailers Are Using AI This Holiday Season

For some of the most customer-centric retailers, artificial intelligence will be hard at work this holiday season. While there are many applications of AI for the e-commerce industry year-round, there are a few that are uniquely suited for the holiday rush this year. The global pandemic squeezed budgets for more established retailers, while influencer and microbrands saw a surge in demand from new customers discovering and trying new brands. This all comes at a time when consumer expectations for a flawless, effortless and cross-channel customer journey have intensified as shoppers became even more digitally dependent.

As a result, AI adoption amongst retailers exploded during COVID-19 to help teams scale to handle a surge in ticket volume, unlock new revenue, reduce costs, and meet the demands of the modern customer. This holiday season, the retailers leveraging AI will be able to capture even more of the expected $1 trillion holiday spend.

4 Ways Retailers Will Use AI This Holiday Season

1. Helping shoppers avoid choice paralysis: Retailers need to avoid overwhelming shoppers with too many choices. While it seems like common sense, Hick’s Law states an idea that the more choices you present shoppers with, the longer it will take them to reach a decision. For retailers, this can see shoppers abandon a site to think about a purchase or even deflect to a competitor. Retailers can use AI-powered personal shoppers to combat choice overload and ensure a person converts before abandoning. Virtual shopping assistants can help customers decide between products, answer product-related questions, and spark interest through curated recommendations based on interests, trending items amongst certain audience segments, shopping behavior and more. These agents cross-sell and upsell at the exact moment of relevance to unlock even more revenue.
2. Anticipating and even preventing returns: After the jovial season of gifting comes the sobering season of returns. About 13 percent of all gifts, or $101 billion worth of goods, were returned during the 2020 holiday shopping season. This is because nearly 77 percent of people say they're likely to return gifts. This not only results in lost revenue and merchandise, but also a logistics nightmare. That’s why some retailers are deploying AI agents to identify when a return is likely even before a purchase. These AI agents look at items in a cart, like two of the same item in different sizes, or web activity (checking the size guide) to pre-emptively intervene and offer support: “Can I help you find the right size?”
3. Scaling the seasonal team amid a labor shortage: Customer service is one of the leading seasonal roles for retailers. Filling these seats, though, is going to be harder than ever. That’s because there are an estimated 25 percent fewer customer service agents today than pre-pandemic, and many overseas call centers have yet to fully reopen. This shortage has no sign of abating. The issues are only compounded by the highly competitive job market. In the U.S. alone, there are over 1.6 million results for open jobs on LinkedIn that mention "customer service" (at the time of this post). Everyone seems to be hiring and companies are going all out to tempt weary job-seekers, including sign-on bonuses to financial incentives for even showing up to an interview. The bottom line? Hiring that seasonal customer service workforce is going to be harder than ever. That’s why many retailers have launched AI-powered chatbots to scale teams during times of increased volume, without relying solely on a human-only workforce. AI-powered bots can automatically resolve highly repetitive tickets, like order status or refund requests, instantly. This alone can deflect anywhere between 40 percent to 80 percent of all tickets from human agents, letting them focus on more complex customer needs.
4. Actively communicating through supply chain disruptions: Supply chain issues are a real threat this holiday season. Sixty-four percent of retail executives and 75 percent of shoppers are worried about not receiving inventory on time. AI agents can monitor logistics systems and proactively communicate with customers about shipping delays to get out in front of issues before a customer has to discover the delay on their own. This can ultimately lead to higher customer satisfaction, even in negative circumstances outside of a retailer’s control.

The retailers that have AI in place will be able to bring a sense of normalcy to an otherwise very unique holiday shopping season. With customer expectations heightened, and labor and budget constraints continuing, adopting AI will be essential for retailers to effectively compete this holiday season and beyond.

Puneet Mehta is the founder and CEO of Netomi, an AI customer service startup.