Online retailers turn to AI to fight Amazon dominance

online shopping 20Amazon’s vice-like grip on the ecommerce market and global logistics are pushing online retailers to embrace artificial intelligence tools in an effort to boost customer experience and – ultimately – drive topline revenues in the run up to Christmas.

That is according to a study by autonomous business monitoring company Anodot, which also reveals that while retailers are bullish about sales this season – 85% are expecting to see a year-over-year increase – over two-fifths (42%) are worried about supply chain disruptions having a negative impact on stock and deliveries.

These concerns have driven retailers to begin offering Black Friday sales promotions even earlier this season. The report warns that the stakes are higher than ever this year, with retailers being forced to execute a seamless shopping experience to avoid losing customers and sales amid an increasingly competitive environment.

With consumer choice now greater than ever, small to medium-sized retailers will not get a second chance if cannot provide that seamless experience. In fact, 82% of consumer respondents say that a negative experience with an online retailer is somewhat, very, or completely likely to turn them away from that merchant, and most likely into the arms of Amazon.

Last year, Amazon swallowed 51.2% of all online sales. Not surprisingly, 55% of consumers named Amazon as their retailer of choice while 48% of retailers named Amazon as their largest competitor. Amazon’s seemingly limitless inventory, easy-to-navigate website, recommendation engine, and one-click shopping have set the bar for the consumer shopping experience.

One of the key findings from the survey is that retailers have prioritised addressing the issues that consumers have identified as critical factors in their shopping experience. The survey highlights that retailers and consumers are aligned with the most important pieces of the shopping experience where AI can be of great help.

The top four areas are websites that are easy to use; in-stock inventory; competitive pricing; and fast check-out and payment processes.

Retailers have continued to make big investments in AI, and 81% said they expected to increase their AI budgets in 2021. Beyond anomaly detection, online merchants are also using AI to drive topline revenues, with nearly one-third saying they believe AI can drive a 40% increase in revenues.

The survey shows online retailers are allocating their increased AI budgets to improve fraud detection (81%); improve customer retention (55%); enable targeted marketing campaigns (22%); create dynamic pricing (20%); identify when a server is down (19%); marketing automation (19%) and to anticipate sales trends in different geographies (18%).

Anodot founder and chief executive David Drai said: “Based on spending projections, there are high hopes for this holiday season, but there are warning signs on the horizons.

“Supply chain disruptions have caused inventory issues that have shoppers nervous and retailers feeling unprepared. Providing a seamless experience is critical, and retailers are integrating AI to prevent the customer experience and supply chain issues that can frustrate shoppers.

“AI-based anomaly detection isn’t new to the business sphere, but traditionally has been relegated to technical performance.

“As companies scale, they’re finding it imperative to automate the way they monitor the entire business, from customer experience to revenue and costs, so they can meet consumer expectations. This survey confirms the expanding role of AI in ecommerce today and the applications that are proving most valuable to the business.”

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