Will AI for Ecommerce Go Mainstream in 2021?

Brahm Buck

Buzzwords such as “personalization” and “artificial intelligence” have been around ecommerce for years. But could 2021 be the year these technologies go mainstream? Some industry participants think so, believing artificial intelligence technology and its subset of machine learning are technically ready. For example, Jeff DeVerter, chief technology officer at Rackspace […]

Buzzwords such as “personalization” and “artificial intelligence” have been around ecommerce for years. But could 2021 be the year these technologies go mainstream?

Some industry participants think so, believing artificial intelligence technology and its subset of machine learning are technically ready.

For example, Jeff DeVerter, chief technology officer at Rackspace Technology, noted that earlier in AI’s development, data scientists had “vision for it, but not the capability.” But today, “anybody who has graduated high school and taken good high school math has the ability to spend six months or a year with courses [from Jeremy Howard of Fast.ai] and become a machine-learning and data-science practitioner.”

Next, three trends could be driving the adoption of ecommerce personalization — the process of changing website content, search results, and product recommendations automatically for an individual shopping experience.

Revenue Pressure

“2021 is going to be interesting,” said Searchspring CEO Peter Messana, adding that some retail businesses “are staring at [significant 2021 revenue goals] that they’re going to have to achieve. [Last year’s] spike in online sales … is almost unachievable this year. How do you maintain that level?”

To Messana’s point, an executive at a retail business could face a significant challenge matching last year’s online revenue.

One possible solution to matching 2020 revenue is to offer a better shopping experience. “And that’s where personalization comes in,” said Messana.

Could a personalized shopping experience keep online shoppers buying in 2021?

Customer Experiences

Online shoppers don’t necessarily differentiate the experience of shopping on an app from watching streaming television. And that could be impacting what a shopper expects when she visits an online store.

For example, when looking for a movie on Netflix, a consumer does not see every film in the catalog. Instead, Netflix uses machine learning to offer personalized suggestions.

Likewise, when she visits an online store and searches for a product, that consumer might not want to see every product. Rather, she could be expecting items that interest her, according to Messana.

Interestingly, Searchspring, Messana’s company, acquired 4-Tell, an AI-recommendation platform, in 2020. 4-Tell’s technology was developed more than a decade ago and finished in the top 1.5 percent of entries in 2009’s Netflix Prize, a competition that, according to Netflix, “sought to substantially improve the accuracy of predictions about how much someone is going to enjoy a movie based on their movie preferences.”

Applications such as Netflix are training shoppers to expect personalized recommendations.

Data

A third trend impacting the adoption of AI-driven ecommerce personalization has to do with data.

In ecommerce’s distant past, obtaining data about how a customer behaved and his preferences was a challenge. The problems included collecting shopper information and storing and moving that data. Privacy was also a concern.

The technical challenges with data storage and movement have essentially gone away, according to Rackspace’s DeVerter.

And personalization providers have gotten better at aggregating data. A single provider might collect behavior and preference data from multiple ecommerce sites, remove the personal information, and use what it learns to make better product recommendations.

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