Dom Individual Report (Final)
Dom Individual Report (Final)
Dom Individual Report (Final)
DOM- 205
TECHNOLOGY AND DIGITAL ECONOMY
“ARTIFICAL INTELLIGENCE
AND E-COMMERCE”
SUBMITTED BY:
Neha Reddy Kuthuru
1710110232
DATE OF SUBMISSION – 12.09.2018
Page 2
TABLE OF CONTENTS
2 Abstract 3
3 Introduction 4
10 Conclusion 15
11 References 17
Page 3
OBJECTIVE
The purpose of this report is to understand artificial intelligence and its applications in
e-commerce and retail industry. It also talks about how the implementation of artificial
intelligence is transforming e-commerce. It also focuses on the economic impact of
implementation of artificial intelligence and the scope for improvements in the future.
ABSTRACT
AI is beginning to embed itself into all aspects of our lives. From the growing number
of self-checkout cash registers to advanced security checks at the airport; artificial
intelligence is everywhere. It’s widely anticipated that AI is set to go into turbo drive
in the next couple of months with giants like Google and Microsoft already investing
heavily into new AI initiatives. Google’s £400m purchase of a start-up DeepMind1 the
artificial intelligence company that specializes in algorithms and machine learning for
positive impact, is one of the many expected acquisitions as the potential of such
technology becomes a reality. Thus the advent of artificial intelligence has opened
doors for revolutionising various sectors. E-commerce is one of them. It has unlocked
new opportunities and increased the scope for retailers witnessing an exponential hike
in their sales. Thus AI has helped e-commerce sites in providing a better user
experience and leveraging the sales.
1
“Google buys UK artificial intelligence start-up DeepMind”. BBC. 27 January 2014. Web. 20th August 2018.
Page 4
INTRODUCTION
India is one of the fastest growing e-commerce markets worldwide, with millions of
new internet users taking advantages of cheap mobile connections to send mobile
messages, watch online videos, use mobile services and of course to shop. According
to recent market research, mobile phone internet user penetration in India is projected
to reach 37.36 percent of the population in 2021, representing a huge potential in
terms of digital and mobile buyer audience. Total internet audiences in India are
estimated to surpass 635 million online users in 2021.2 Considering that we are
growing at a huge rate, say it in terms of population, scripted knowledge, tasks etc
increasing in scale also increases the disorderliness in system, demanding huge
number of tasks to be automated and centralised. This is when artificial intelligence
made an appearance and effected the e- commerce industry in a very significant way.
2
“Retail e-commerce sales in India from 2016 to 2022.” Statista. Web. 20th August 2018.
3
Poole, David; Mackworth, Alan; Goebel, Randy. Computational Intelligence: A Logical Approach. New York: Oxford
University Press, 1998.
4
Russell, Stuart J; Norvia, Peter. Artificial Intelligence: A Modern Approach (3rd ed). Upper Saddle River, New Jersey:
Prentice Hall. 2009.
Page 5
Since we live in a global economy where sales happen at all hours of the day and
consumers can purchase goods from all over the world, businesses need to be
operating round the clock and should always be in service to their customers. Artificial
intelligence in e-commerce enables organizations to collect and analyze data in real-
time thus allowing businesses to be more efficient and to alter and enhance their
operations according to the needs and preferences of the consumer. With the current
status of the online marketplace, e-commerce has become more saturated and
competitive, meaning that for a business to succeed, it needs to be faster and smarter.
Well that’s exactly where AI comes in and its changing up the online marketing game
in a big way.
5
Bloomreach homepage. Web. 21st August 2018.
6
Twiggle homepage.. Web. 21st August,2018.
Page 6
search results for online shoppers. This ensures that the shopping experience is very
user-friendly with customers being exposed only to the products that they would be
interested in.
3. Visual search
One of the biggest openings for AI technology in e-commerce is helping clients find
products faster. It can be achieved using chatbots or making textual search more
semantic, but one of the most promising technologies is visual search through image
recognition. The technology benefits all: customers instantly find exactly what they
want and thus allowing the business to minimize the time required for evaluating the
user journey.
7
Chatbot. Investopedia. Web. 21st August,2018.
Page 7
Pinterest’s lens tool8 is one of the brightest examples of visual search. The brand
partnered with fashion companies to find the matching items in store directly from the
image found on Pinterest. Fashion giant ASOS launched a similar tool allowing
customers to find items on the site like the ones on their Camera Roll.9 This generates
customer satisfaction because it reduces the cumbersome process of going through
hundreds of products.
8
“Introducing the next wave of visual search and shopping.” Pinterest Newsroom. 14th November 2017. Web. 23rd
August 2018.
9
Moon, Mariella. “ASOS adds visual search to ease your fashion hunt.” Engadget. 8th October 2017. Web. 23rd August
2018.
10
Amazon Alexa. Web. 25th August 2018.
11
Microsoft. Web. 25th August 2018.
12
IBM Watson. Web. 25th August 2018.
13
Krauth, Olivia. “How 68% of consumers are already using AI without knowing it.” TechRepublic.. Web. 25th August
2018.
14
Markman, Jon. “Netflix knows what you want….before you do.” Forbes. Web. 26th August 2018.
Page 8
15
Neff, Jack. “Cloudy with a chance of meatballs: How weather forecast predicts Walmart’s sales outlook.” AdAge
India. 27th October 2014 Web. 26th October 2018.
16
Reddy, Trips. “How chatbots can help reduce customer service costs by 30%.” IBM Watson. 17th October 2017. Web.
27th August 2018.
Page 9
In another study, it is found that 3 out of 4 online retailers in the fashion industry have
plans to invest in AI over the next 24 months. The same research also shares that 67%
survey respondents believe that AI will help them enhance their organization’s
efficiency.18
Not only these, a report19 shares that shoppers that interact with online opinions and
reviews have 97% more chances of converting with a seller in compared to those who
do not. According to the same report, Revenue per visitor for retailers increases 106%
when customers interact with CGC [consumer generated content] versus those that do
not. For brands, revenue per visitor sees a 75% lift due to CGC. Consumers crave
authenticity from the brand they are engaging with and the reviews by fellow shoppers
may serve as a genuine validation. Due to the growing amount of user generated
content on the web and its impact on the sales, it has become important to ensure the
quality of the content. AI could thus be employed to filter the genuine reviews and
help the marketers to capture attention, build trust and accelerate the sales by tackling
the fake reviews.
17
“IDC FutureScape: Worldwide IT Industry 2017 predictions.” IDC. November 2016. Web. 28th August 2018.
18
“Artificial Intelligence- an investment to transform online sales performance.” Apptus. Web. 28th August 2018.
19
“Consumer-generated content helps drive online sales.” Business Insider. 4th May 2016. Web. 29th August 2018.
Page 10
According to a study by IMRG & Hive, Three quarters of fashion retailers will invest
in AI over the next 24 months and e-commerce giant, heavily involved in fashion
retail, Alibaba, already invested $15bn in R&D labs in a push to become the AI
leader.20
Asos’ “Style Match” visual search tool is available for both iOS and Android. The
reverse image search feature lets customers take or upload a photo to the app to find
visually comparable clothing styles that are available to shop. Asos reported that in
2017, 70% of their UK orders came from mobile devices. With the implementation of
their visual search feature, they expect sales to grow by 30 to 35%.21
Nordstrom Rack has seen a 75% increase in conversions22 among customers who
encountered visual search in the sales process.
20
“Three quarters of fashion retailers will invest in AI over the next 24 months. Realwire. 10th May 2017. Web. 30th
August 2018.
21
Peregud, Irina. “How visual search is disrupting the retail industry.” InData Labs. 6th February 2018. Web. 6th
Septrmber 2018.
22
Biron, Bethany. “Retailers continue to experiment with visual search.” Digiday. 11th October 2017. Web . 6th
September 2018.
Page 11
By 2021, it’s estimated 75% of all retailers are planning to invest in some sort of
cameras and video analytics to enhance the customer experience, both in-store and
online.23
23
“Reinventing retail: 2017 Retail Vision Study.” Zebra. Web. 7Th September 2018.
24
“The Amazon Recommendations secret to selling more online.” Rejoiner Resources. Web. 30th August 2018.
25
“Rewire for Growth.” Accenture. Web. 30th August 2018.
Page 12
With the AI solutions by Boxx.ai26, Nearbuy observed an overall increase in the click
to-open-ratio (CTOR) by 35.7%, in response to the email notifications that were
communicated to the customers. As a response to the app notifications, an overall
increase of 51.6% was achieved in the revenue generated.
But with the technological advancements and the increase in automation, there will
also exist negative repercussions on the society.
The McKinsey Global Institute published a report about automation and jobs and how
the technology might take a turn and how its going to effect the jobs of workers from
various countries.28
It is estimated that between 400 million and 800 million individuals could be
displaced by automation and the need to find new jobs by 2030 would increase
tremendously. Of the total displaced, 75 million to 375 million may need to switch
occupational categories and learn new skills.
The automation could displace huge amounts of labor but jobs involving managing
people, applying expertise and social interactions wouldn’t be affected.
To realise the full potential of AI, India needs more concentrated effort at the national
level with collaboration between policy makers, civil society and the private sector to
26
boxx.ai. Web. 31st August 2018.
27
“Artificial Intelligence will create more jobs than it eliminates.” Gartner Newsroom. 13th December 2017. Web. 31st
August 2018.
28
James Manyika, Sausan Lund, Micheal Chui, Jacques Bughin, Jonathan Woetzel, Parul Batra, Ryan Ko and Saurabh
Sanghvi. “Jobs lost, jobs gained.” McKinsey Global Institute. November 2017.Web. 30th August 2018.
Page 13
develop a long-term vision and action plan that unites all the sectors of the society and
addresses technical and ethical questions as they arise. Apart from this, the country
also needs to increase investments for research and development of technology which
will enable greater access to the data and its consolidation.
29
Serrano, Stephan. “Complete list of cart abandonment statistics : 2006 – 2018.” Barilliance. 28th February 2018. Web.
31st August 2018.
30
“Study finds sales and marketing wasting 50% of time and money on leads.” Conversica. Web. 1st September 2018.
Page 14
When browsing through large online marketplaces, it can be difficult for the
everyday consumer to identify a counterfeit product from a third-party seller. When
the consumer buys a product that looks legitimate but performs poorly, it can leave
a sour taste and negatively impact the consumer’s perception of the brand. Thus, I
believe, machine learning and artificial intelligence systems could be employed to
spot the counterfeits and help the businesses understand how consumers are
discovering their products. This ensures that customers are being offered with
genuine products and helps increase brand loyalty among the customers.
One of the many perks of in-store shopping is that the customer has an opportunity
to directly engage in a conversation with the store assistant. This advantage is
limited to online shopping. AI could be implemented to introduce something
similar to ‘virtual personal shoppers’ which will enable the customers to quickly
discover the items they were looking for. Amazon’s home assistant, Alexa is
31
Gibbs, Samuel. “Computer says no: Amazon uses AI to combat fake reviews.” The Guardian. 22nd June 2015. Web.
6th September 2018.
Page 15
perfectly suited in providing the modern shopping experience for customers. Alexa
simply needs to verify your voice pattern and could place an order on your behalf.
These virtual assistants could prompt the customer if there is a drop in the cost
of the item in which the customer showed interest and if directed, it can also
buy that item on behalf of the customer. This feature if incorporated into an e -
commerce website, can prove to be highly beneficial for the consumer and lead
to a considerable amount of cost savings. The most problematic area could be
voice recognition because of the countless variations in the way people speak. If
this problem can be dealt with then the AI assistants could create an experience that
feels more like interacting with a human and not a computer.
CONCLUSION
Although the term ‘artificial’ may imply something negative or dehumanised, artificial
intelligence allows businesses to provide a more personalised experience for their
customers. AI makes it possible for e-commerce retailers to analyse millions of
interactions every day and ultimately target offers down to a single customer – an
experience every marketeer dreams of providing.
A recent study by Accenture32 predicted that AI has the potential to double annual
economic growth rates in developed countries by 2035, with the U.S. and its
entrepreneurial economy seeing the most benefit of all countries. Productivity gains
will be driven by AI technologies that make people more efficient, letting humans do
what they do best — create, imagine and invent new things.
The global GDP will be 14% higher in 2030 as a result of AI. It is also expected to
provide a $15.7 trillion boost to GDP worldwide by 2030.33 With statistics and figures
32
“Artificial Intelligence is the future of growth.” Accenture. Web, 7th September 2018.
33
“AI to drive GDP gains of $15.7 trillion with productivity, personalisation improemnts.” PWC. 27th June 2017. Web.
7th September 2018.
Page 16
like these it is quite evident that artificial intelligence has a very promising future and
when leveraged in a right way could be very economical for the online retailers.
But there exists certain limitations that might not be very beneficial to the retailers.
The creation of such smart technologies can be expensive due to their complex nature
and the need for repair and ongoing maintenance. Customer privacy and potential lack
of transparency could also be very problematic.
The displacement of jobs due to automation is going to be huge and hence arises a
need to redeploy the existing employees. This is not very cost effective and hence not
economical for the organisation. But the benefits automation generates by reducing the
manual tasks will reduce the cost of product involved.
But as digital transactions become the standard method of purchasing goods and
services, leading eCommerce firms are exploring how AI can enhance brand
competitiveness and customer loyalty. Whether it is to create such highly
personalized experiences that combine the personal feel of an in-store experience with
the ease and convenience of online shopping, or to increase their ROI by optimising
their operations, e-commerce players have now begun to adopt artificial intelligence
and data analytics, as the sophisticated tools, to achieve the desired results.
Page 17
REFERENCES
“Google buys UK artificial intelligence start-up DeepMind”. BBC. 27 January 2014. Web. 20th
August 2018.
2
“Retail e-commerce sales in India from 2016 to 2022.” Statista. Web. 20th August 2018.
3
Poole, David; Mackworth, Alan; Goebel, Randy. Computational Intelligence: A Logical Approach.
New York: Oxford University Press, 1998.
4
Russell, Stuart J; Norvia, Peter. Artificial Intelligence: A Modern Approach (3rd ed). Upper Saddle
River, New Jersey: Prentice Hall. 2009.
5
Bloomreach homepage. Web. 21st August 2018. https://www.bloomreach.com/en
6
Twiggle.homepage. Web. 21st August,2018. https://www.twiggle.com
7
Chatbot. Investopedia. Web. 21st August,2018.
8
“Introducing the next wave of visual search and shopping.” Pinterest Newsroom. 14th November
2017. Web. 23rd August 2018.
9
Moon Mariella. “ASOS adds visual search to ease your fashion hunt.” Engadget. 8th October 2017.
Web. 23rd August 2018.
10
Amazon Alexa. Web. 25th August 2018. https://developer.amazon.com/alexa
11
Microsoft. Web. 25th August 2018. https://www.microsoft.com/en-in
12
IBM Watson. Web. 25th August 2018. https://www.ibm.com/watson/
13
Krauth, Olivia. “How 68% of consumers are already using AI without knowing it.” TechRepublic..
Web. 25th August 2018.
14
Markman, Jon. “Netflix knows what you want….before you do.” Forbes. Web. 26th August 2018.
15
Neff, Jack. “Cloudy with a chance of meatballs: How weather forecast predicts Walmart’s sales
outlook.” AdAge India. 27th October 2014 Web. 26th October 2018.
16
Reddy, Trips. “How chatbots can help reduce customer service costs by 30%.” IBM Watson. 17th
October 2017. Web. 27th August 2018.
17
“IDC FutureScape: Worldwide IT Industry 2017 predictions.” IDC. November 2016. Web. 28th
August 2018.
18
“Artificial Intelligence- an investment to transform online sales performance.” Apptus. Web. 28th
August 2018.
19
“Consumer-generated content helps drive online sales.” Business Insider. 4th May 2016. Web. 29th
August 2018.
20
“Three quarters of fashion retailers will invest in AI over the next 24 months. Realwire. 10th May
2017. Web. 30th August 2018.
Page 18
21
Peregud, Irina. “How visual search is disrupting the retail industry.” InData Labs. 6th February
2018. Web. 6th Septrmber 2018.
22
Biron, Bethany. “Retailers continue to experiment with visual search.” Digiday. 11th October 2017.
Web . 6th September 2018.
23
“Reinventing retail: 2017 Retail Vision Study.” Zebra. Web. 7Th September 2018.
24
“The Amazon Recommendations secret to selling more online.” Rejoiner Resources. Web. 30th
August 2018.
25
“Rewire for Growth.” Accenture. Web. 30th August 2018.
26
boxx.ai. Web. 31st August 2018.
27
“Artificial Intelligence will create more jobs than it eliminates.” Gartner Newsroom. 13th
December 2017. Web. 31st August 2018.
28
James Manyika, Sausan Lund, Micheal Chui, Jacques Bughin, Jonathan Woetzel, Parul Batra,
Ryan Ko and Saurabh Sanghvi. “Jobs lost, jobs gained.” McKinsey Global Institute. November
2017.Web. 30th August 2018.
29
Serrano, Stephan. “Complete list of cart abandonment statistics : 2006 – 2018.” Barilliance. 28th
February 2018. Web. 31st August 2018.
30
“Study finds sales and marketing wasting 50% of time and money on leads.” Conversica. Web. 1st
September 2018.
31
Gibbs, Samuel. “Computer says no: Amazon uses AI to combat fake reviews.” The Guardian. 22nd
June 2015. Web. 6th September 2018.
32
“Artificial Intelligence is the future of growth.” Accenture. Web, 7th September 2018.
33
“AI to drive GDP gains of $15.7 trillion with productivity, personalisation improvements.” PWC.
27th June 2017. Web. 7th September 2018.