min read
December 8, 2016

How Natural Language Processing & Artificial Intelligence are Changing Ecommerce

Artificial Intelligence

As the ecommerce landscape becomes more customer-friendly, brick-and-mortar merchants are turning to AI for ways of improving the in-store customer experience.As artificial intelligence (AI) begins to penetrate every niche of the digital world, developers are beginning to ask if it can improve the ecommerce experience as well. The question is timely and the answer is an emphatic "Yes!" Although ecommerce has disrupted the traditional marketplace, it has yet to achieve its full potential. If you've noticed that conversion rates on your site are low, you're not alone: Online cart abandonment rates in 2016 are hovering around an average of 70 percent. Artificial intelligence, especially its emerging function of natural language processing (NLP), promises to boost these rates by bringing a whole new level of ease to the online customer experience.When people shop in a brick-and-mortar store, they rely on the actual intelligence of another human being to help them find what they're looking for. Online stores, on the other hand, have not been able to benefit from the organic conversation that happens between two people. Instead, they have had to reproduce that kind of natural interaction in the digital world, and it's been a long developmental pathway. With the growing sophistication of AI, your eCommerce site can integrate new efficiencies in understanding and orienting your customers.

Beginnings of AI in Ecommerce

Artificial intelligence was first noticed for its advances in gaming, toys and physical industries such as manufacturing -- but it may turn out that one of its most important functions is in the world of online shopping. Gartner predicts that by 2020, 85 percent of customer interactions will be managed without human intervention. The only way this will be possible is by substituting artificial intelligence for direct human intelligence, and so the race is on to develop the most sensitive and responsive AI interface.You may already use some early aspects of AI on your ecommerce site, such as automatic suggestions for additional products or comparison pricing between different vendors. While these functions are helpful, they haven't entirely neutralized the basic limitations imposed by keyword search impatience, and carts are still being abandoned. This is the question that online marketing technology is grappling with now: Where can your industry's leaders and start-up disruptors invest to make sure that AI is injected seamlessly into your customer experience in order to build conversion rates? One of the most promising answers to this question is NLP.

NLP: Putting the Human Touch Back into Ecommerce

The key capability for AI in ecommerce is natural language processing. Algorithmia defines NLP as "a way for computers to analyze, understand and derive meaning from human language in a smart and useful way." Basically, NLP enables computers to understand how human beings use language. The way we express ourselves in words is full of ambiguities, shortcuts and personal quirks, while computer systems have traditionally been designed around purely defined commands. Artificial intelligence is beginning to bridge that gap, using NLP to comprehend what users really want when they type or speak a phrase into a search field.NLP can bring tremendous value to your eCommerce site by helping your customers find what they're looking for, making them less inclined to abandon their shopping cart. This new avenue for powering conversions is beginning to spread throughout the online marketplace. Artificial intelligence platforms like Viv are emerging to provide "an intelligent interface to everything." As you make your website increasingly welcoming to the human users, "intelligence becomes a utility," in the words of Viv Labs.

NLP in Action

One example of NLP in actual use can be found in an experiment being conducted with integrating an "expert personal shopper" into the North Face website. Using IBM Watson, the North Face website is gearing up to understand colloquial customer questions. Instead of having to narrow down a question to a few unnatural keywords, the North Face search field asks (as an in-store associate would): "How can I help you?" The customer can enter an inquiry like, "I'm gearing up for a two-week backpacking trip. What equipment do I need?" and then go on to ask about reviews and definitions. With each further inquiry, the site contextualizes the customer's questions and displays the exact resources that are needed. In this way, the customer doesn't end up leaving the website to check online ratings or learn a particular technical detail; all the information is organically supplied from within the North Face website.

Personal Shopping Assistants Leverage NLP

While NLP can be used to power traditional search engine modules, its true potential lies in its ability to create personal shopping assistants. These bots draw on customer preferences to bring a truly seamless buying experience to the online marketplace. Gartner predicts that, by 2018, personal assistants will be able to recognize shoppers across channels by facial and voice recognition, thus leveraging a customer's online history to provide them with exactly what they're looking for.

Someone to Talk To

Amazon's Echo is currently at the front of the NLP pack with voice recognition, which is the next step in reproducing the experience of interacting with a human representative. It's more natural, after all, to express ourselves vocally than in writing, and Amazon Echo is building a loyal following by taking advantage of this preference. Shoppers who have purchased Echo increase their spending by 10 percent overall, with half of this increase going directly to Amazon products.

AI Improving In-Store Service

Interestingly, as the eCommerce landscape becomes more customer-friendly, brick-and-mortar merchants are turning to AI for ways of improving the in-store customer experience. Macy's On-Call is a working example of an AI-powered mobile shopping assistant. Using the mobile app, which draws on the IBM Watson platform, customers can ask questions in their own words and the app will direct them to the part of the store that has what they're looking for. In some of the stores using this beta-test function, the app also summons a human helper if the customer wants one.Amazon Go is another experiment that has recently been in the news, as it enables shoppers in a physical store to simply scan themselves in and out without having to go through any form of checkout line. Technologically, it's a step forward from today's "self-checkout" stands, and it promises substantial savings from shrinkage due to customer theft. Along similar lines, TechCrunch reports a demo of the Viv application in which remote payment can be initiated with a simple voice request.

Visual Search

One new potential use of AI circumvents the need to use any words at all, as customers simply upload a photo of the item they're interested in. The intelligent application then scans and analyzes the shape, color, size and so on, bringing the customer to a site or physical location where a similar item can be purchased. These visual search capabilities are moving in the direction of merging the online and offline worlds; one of the uses anticipated for visual search is for users who see an item that someone else has that they're interested in buying. It's similar in concept to the current apps that can listen to a song playing in a physical environment, analyze it and bring the user to a site where they can purchase the song.

Simplification Increases Conversion

The primary goal of introducing AI into the shopping ecosystem is to simplify the environment and reduce the overwhelming number of choices,a real phenomenon called "The Paradox of Choice." Research has found that when consumers are faced with too many choices, they tend to feel stressed and they often react by retreating without buying anything at all. Artificial intelligence promises to simplify the shopping environment by letting people express what they're looking for and then find it quickly and seamlessly. Their stress levels decrease, they have a more enjoyable customer experience and your conversion rates increase.It's clear to see that the overall trajectory of ecommerce is in the direction of improving your customers' experience. The easier and more pleasant you can make their experience, the better your conversion rate will be. After all, ease is at the foundation of all technological development. As Information Age puts it, "The convergence of ecommerce and AI poises a multi-trillion-dollar industry on the precipice of a complete and utter transformation -- one that will forever alter the way we buy and sell. In fact, it's already begun."

Centric Digital