Artisan vs. Goliath: How AI Helps Digital Merchants Compete in the Age of Amazon

Everyone in retail has lamented, at one point or another, that “it’s everyone vs. Amazon.” Even the largest retail brands, like Target and Walmart, struggle to match the e-commerce machine of Amazon.com.

Amazon itself started off (literally) in a garage, selling one thing: books. It disrupted the book sales industry with aggressive adoption of the internet, a simple buying experience, and fast delivery. But the internet is everyone’s market now, and an exploding number of online merchants are competing effectively against Amazon and other goliaths with quality products and amazing experiences made possible by artificial intelligence (AI).

Retailers (of all flavors) will spend a staggering $8 billion on AI, with 77 percent of them deploying some aspect of it by 2021. What’s the big fuss? AI is driving significantly higher conversion rates, greater average order volumes (AOVs), and increases in brand satisfaction. Here’s a deeper look at how.

Advanced AI is Affordable and Readily Available

Until recently, advanced technologies were out of reach for all but the largest online retailers. Cutting-edge technology was clunky, expensive, and often required armies of technical and data staff to keep writing and tuning algorithms as models drifted.

But now, advanced technology is increasingly mainstream. The cloud and SaaS put resources and applications at a merchant’s fingertips. All of the off-the-shelf shopping platforms, from Shopify Plus to BigCommerce, have marketplaces filled with technology, including cutting-edge AI for search, merchandising and other functions.

Predicting Intent: Combining Personalization and Search Strategies

Shoppers spend more time and money in stores that offer personalized experiences.

Personalization is a key component to any online retailer’s marketing strategy. And it’s not necessarily new. Even physical stores recognize the value of personal service and salespeople.

Bridging the gap between brand and person can be hard in digital commerce, even with boutique-size inventories. If a search delivers an inaccurate or overwhelming result, shoppers instantly go elsewhere. They're massively irritated when searches deliver irrelevant or unavailable products.

Enter AI and the first critical stop in personalization: search. AI is able to overcome the time constraints and shopper variables that hinder personalized experiences.

It can quickly crunch a lot of data on past and present actions to get to the intent of the shopper as they search. Correlating shopping history, demographics, and personal preferences all lead to a better result, and a prediction on the next intended action. Big e-commerce vendors already appear impersonal due to the vast amount of product choices and sponsorships. Other merchants can use AI to seize upon that and create faster, more relevant experiences that feel just right.

Modern AI-Driven Merchandising

Customers want tailored buying experiences and a simple path to purchase. Recent research shows that online shoppers are abandoning their buying journeys at alarming rates.

Merchandising is how a merchant sells a product. How it’s presented, described and essentially sold to you. Good merchandising convinces a consumer to buy that product, and ideally suggests upsell and cross-sell opportunities. AI adds science to the art of merchandising. It allows merchants to move from static presentations into dynamic ones tuned to both the shopper’s desires and the merchant’s needs. By taking instant, adaptive control of the shopping journey, merchants can reduce cart abandonment.

One of the greatest values of AI in merchandising is how it aligns technology with business goals. It delivers more fine-grain control to the merchant. You have business goals — e.g., certain inventory to move, promotions, revenue metrics to hit, etc.— and by setting those strategies, the AI system can enforce them seamlessly while still delivering outstanding shopping experiences.

Automation and Intelligence Amplifies the Human Touch

Salesforce research shows that 80 percent of customers feel that an experience is as important as products and services. More than 80 percent of consumers will also turn away if they feel like a number. And although Amazon can be fast and efficient, it struggles to be more human at all turns.

There are simple things, like a “complete the look” option that can show shoppers the items worn by a model, based on many different signals, and then deliver pleasing images of the items in real-life situations. It brings shoppers closer to the best of physical commerce: being able to touch and try products in-store. Furthermore, it drives upsell and cross-sell by showing a personalized package, like matching jeans and shoes for that sweater.

Ironically, one of the greatest advantages of AI technology is how it frees up time for creativity and amplifies human efforts. AI shouldn’t take over everything, but it can automate tasks to reduce friction and create room for humans to shine.

Merchants have time for small touches like personalized notes in shipping boxes and rapid (human) support. They can invest heavily in personalized loyalty programs that go beyond counting points and include meaningful, human interactions and communities of like-minded shoppers.

And most of all, AI delivers intelligence that informs and amplifies creative products and amazing experiences. Brands have more time and knowledge to dig deeply into specializations and stand out in the big-box (and digital big-byte) sea of sameness.

Zohar Gilad is the co-founder and CEO of Fast Simon, a provider of AI-powered shopping optimization.