AI and E-Commerce: Search Gets an Upgrade

Meghan Hall
·4 min read

Artificial intelligence has begun helping leaders take a byte out of sticky e-commerce problems.

New research from Algolia shows that business leaders have an interest in implementing AI for search capabilities in e-commerce, merchandising assistance and improving personalization.

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Some of the most commonly sought after use cases in search are ones that may seem simple, but can be tricky to implement without AI.

Just over half of surveyed leaders said they believe AI will improve the accuracy of search results, while 45 percent said it would improve search result relevance. Some companies are already using artificial intelligence to help tag products with consumer-friendly attributes for these very reasons—for instance, adding natural language a consumer would use, rather than industry lingo a merchandiser might use.

Where merchandising is concerned, about 52 percent of respondents noted that they plan to invest—either slightly or heavily—in AI systems for merchandise planning. 47 percent said their organizations had no plans to invest in that capability in the next 12 months.

“I think they’re in this interesting spot today where they want some of the automation but they also want full control,” Iyer told Sourcing Journal. “I don’t think for too much longer, they can turn a blind eye to the benefits of the AI tools. I think the more brands start to adopt this and we are able to create this sense of shared knowledge for the advantages of AI capabilities…they’ll be amenable to start warming up to the idea of, ‘Okay, this is not just some crazy bot that’s going to take over my strategy, I have full control to come in and override.’”

At present, though, just less than half of merchandising teams have a combination and manual and automated strategies, according to Algolia.

Iyer said that figure surprised her—but in a good way.

“This was a pleasant surprise to see that companies aren’t actually in this mode already. It wasn’t as bad as I had imagined it to be, [and] as we think about the learning curve or the runway to get into the state of a combined strategy, it may not be that far off,” she said.

The research also echoed a common trend that brands and retailers have talked extensively about in the past twelve months: an insistence upon stronger personalization efforts for customers.

Fifty-eight percent of respondents indicated that their organizations are focused on the rapid delivery of desired goods, while 52 percent of respondents noted their organizations have leaned into product recommendations. Exactly half of organizations have payment experience in mind. That could be part of why retailers’ interest in buy now, pay later platforms like Afterpay and Klarna continue to grow.

Iyer said she expects personalization will continue to stay top of mind as brands explore how it can impact their business, conversion rates and customer loyalty.

“Personalization has been one of those which has been talked about for a long time and I think now it’s gonna get its moment of, you know, truly being applied in a very sophisticated way,” she said. “I feel like businesses have been adding additional channels to touch consumers as they’ve moved to various screens and formats of consumption to give them what they want. I think AI is going to play a role in taking personalization to the next level.”

Iyer noted that one way AI could help improve personalization is for first-touchpoint customers. For instance, if a consumer who has never visited a brand’s site before starts a shopping journey on that site, the brand can aggregate data about existing customers through an algorithm to suggest products

As AI systems develop further—and as companies identify their most pressing use cases for it—Iyer said, that capability and others will only become more refined.

“I think we’re at the peak of…that hype cycle. That’s not to say that it’s just hype and there’s no substance to it—there is. But I think we’re deep in testing mode. I think it’s fair to say that businesses don’t quite know what this is going to look like for themselves, [and] they don’t know what it means to apply this for their own business yet,” she said.