"British consumers are expected to spend £280 each on gifts over the weeks leading up to Christmas. More than half of these purchases will take place online." reports Rikke Duus, Senior Teaching Fellow in Marketing, UCL and Mike Cooray, Professor of Practice, Hult International Business School.
Almost a third of people will rely on online reviews to make their buying decisions, although recommendations from friends and family are still the main source of persuasion.
Online shopping is estimated to rise by 24% by the end of this year. However, as consumers are looking for more sensory and immersive shopping experiences, the pressure is on for online retailers to find new ways to excite customers and keep them satisfied – and artificial intelligence (AI) is the new technology they will use. It is allowing businesses to analyse customer behaviour, predict consumer wants and offer tailored customer experiences. In short, AI is expected to make online experiences altogether more personal.
There are already many ways that retailers use AI to interact with their customers. This type of AI is primarily based on learning customer preferences, behaviours and providing tailored recommendations at a mass scale – also referred to as a mass customisation.
The online fashion retailer Stitch Fix gives customers five curated pieces of clothing each month and the customer then decides which pieces to keep. The selection of items is based on customer surveys, Pinterest boards, weather patterns and personal notes to the stylist. From this data, algorithms help the personal stylists to pick out the items the customer is predicted to like the most...
With extensive choice online, retailers try to simplify the buying process. If you are in a shop you are familiar with, browsing is easier. You can glance at a jumper on your way to the toy section, or spot a tea towel down one aisle while spontaneously examining a Star Wars figurine in another.
That dynamic doesn’t work on the internet and so one of the key objectives of using AI in online retail is to assist consumers find what they are looking for and narrow down their potential choice. A new study showed that once consumers have made a decision to purchase within a product category, having a smaller range of potential products to choose from reduces choice overload.
The positive effect of assortment size on purchase likelihood: The moderating influence of decision order.