Generative AI: Gaining a Competitive Edge in E-Commerce

While e-commerce adoption accelerated in the last three years — with nearly three-quarters of Americans (73 percent) now shopping online multiple times a month — e-commerce has become much more competitive. One strategy brands should consider to differentiate is to offer a seamless, enjoyable and personalized shopping experience, enabled by generative artificial intelligence. E-commerce leaders who fully grasp and integrate generative AI into their digital strategy are poised to create a competitive edge.

Conversational Commerce and Higher Conversion Rates

The online buying journey is incredibly inefficient — 97 percent of all buying journeys fail, leading to an average conversion rate under 3 percent. Consumers aren't willing to tolerate complex navigation, endless scrolling, or wait times in their online shopping experience. For example, 50 percent of consumers abandon online purchases due to inadequate product information, despite the likelihood that the information they need is already somewhere on the website.

Adding messaging to the online shopping experience increases conversion rates and online sales. This trend is rooted in human nature — conversation lies at the heart of our interactions. It strengthens relationships, builds trust, and helps decision making. It's the best way to understand specific customer needs and to personalize the experience. Consequently, conversational commerce has become a key element in online shopping, significantly influencing the development of trust that encourages consumers to complete purchases. Conversational commerce works because it personalizes the experience to the needs of a specific shopper and is 10 times more effective at assisting customers.

Generative AI Unlocks Conversational Commerce

There have been two main obstacles to widespread adoption of conversational commerce. First, human-assisted commerce has been difficult to scale and, therefore, has been limited to reactive support. Second, chatbots to automate buyer assistance have often delivered poor quality experiences. Until recently, even AI chatbots couldn't replicate the quality, subtlety and nuance of human conversation. This created a significant challenge in scaling online customer support, keeping brands from reaching and retaining that customer block with just human agents or previous-generation NLU chatbots.

However, the deployment of secure, compliant and reliable AI, like a trusted generative AI tool, marks a turning point. It enables large-scale automation of incoming customer inquiries with a new breed of chatbot designed to exceed high consumer expectations. Rapidly moving into the mainstream and going beyond ChatGPT, generative AI technology is poised to become a must-have for brands and retailers. Highly specialized AI copilots will soon redefine the online shopping experience, acting as efficient, personal shopping assistants that augment and improve the online buying journey.

Learning From Early Adopters of Generative AI

With 42 percent of consumers planning to spend more online over the next 12 months, the resulting increase in online customer interactions makes now the perfect time to test the capabilities of AI. The good news is that you can learn from many others. According to Gartner, 10 percent of companies have recently put generative AI solutions into production.

In e-commerce, some early adopters are already seeing a 24 percent conversion rate post-interaction with generative AI and customer satisfaction scores three times higher than those achieved by previous-generation AI chatbots (NLU). They have been testing generative AI solutions during the demanding holiday season, proving the benefits and learning how to optimize results for other holidays, seasonal sales, product launches and peak periods year-round.

Early adopters are also learning and validating what shoppers appreciate the most. For example, 74 percent of American consumers want generative AI to help them get detailed information on products they’re interested in. Generative AI dramatically increases a brand’s ability to provide high-quality customer support at hyperscale, without sacrificing quality.

An Exciting Time for Online Shopping

The era of long wait times for customer support and tedious product searches is fading. Brands implementing conversational AI copilots on their websites now offer immediate, high-quality, round-the-clock responses. These AI assistants provide detailed product information and tailored shopping advice, proactively addressing customer needs and significantly boosting conversion rates.

Online shopping is transforming into a journey of messaging touchpoints, encompassing everything from product discovery to the final transaction to post-purchase support. Picture a world where navigating through tabs, sifting through customer reviews, and comparing prices is replaced by fluid, personalized conversations with intelligent chatbots. In this new era, the e-commerce experience will be as straightforward and natural as having a chat.

This transformation isn't in the future — it's already underway. Consumers are increasingly leaning towards brands that are adopting these AI advancements to deliver a new standard in e-commerce.

Mike de la Cruz is president and chief strategy officer at iAdvize, a generative AI-driven customer engagement solutions provider.