AI in E-Commerce: How Small Businesses Can Compete with Giants

Some technologies have a higher entry barrier, but AI is not like that. If you have enough data and skills, you can use AI anywhere, as it has applications in almost every aspect of our lives. Small businesses often find it hard to compete with giants in the industry as they cannot gain a larger market share from them and beat them. Brand value also plays a vital role in this. But if you invest in the right technologies as a small business, you can make an impact and create a level playing ground.

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AI is one such technology that can help small businesses compete with giants and, in some ways, beat them at work.

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In this article, we will understand all the types of AI and how you can use it to your benefit.

Types of AI Technologies

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Natural Language Processing

Natural Language Processing is an AI technology that gives computer systems the power to understand human language input. This technology can have significant applications in eCommerce websites, like enabling smart chatbots, improving search queries and results, and many other things.

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Generative AI

Generative AI is one of the newest AI technologies that has taken the market by storm. This technology has great potential in eCommerce as it can generate images, videos, text, audio, etc. Small businesses can use generative AI models to write product descriptions for each product on their website and generate images for such products. This can speed up product onboarding and help small businesses scale their inventory effortlessly.

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Machine Learning

Machine learning is an AI technology that enables small businesses to leverage their operational data, learn patterns from it, and improve their operations over time. Machine learning can help validate the recommendations by observing which recommendations convert into sales, and later, the recommendation engine can be tweaked to give better recommendations.

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As per recent research shows that, 72% of company executives think AI will be used widely  in their companies in the next two years. Having known about the different types of AI technologies now is the perfect time to understand how AI can help small businesses compete with giants. So, let's find that out in the next section.

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How AI Can Help Small Businesses?

Find Optimal Product Pricing

Finding optimal product pricing is the key to increasing sales and gaining market share when competing with giant competitors. An optimal price is one where you always have profits, even after giving generous discounts and accounting for inventory price fluctuations. Finding such pricing is not easy when it is done manually and is a time-consuming process. Small businesses can use AI-enabled models to churn large pricing datasets and find an optimal price range for each product. Once these price ranges are suggested by AI models, you can use them in your eCommerce stores, and you will see an improvement in your sales.

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Apart from finding the optimal price for your products, AI models can also help you create dynamic pricing plans for your product catalog based on demands, inventory, availability of the product in the market, and other factors. Suppose the product demand increases significantly and there is less product availability in the market. In that case, your dynamic pricing models can increase prices on the eCommerce store to get you more profits.

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Personalization Recommendations

Personalization and Recommendations are two critical things when selling more products and generating better profits. Small businesses can use AI models to personalize customers' shopping experience and increase sales.

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Personalization can also be included in marketing campaigns to establish better customer connections and relations. When you connect better with your customers, they will develop loyalty to your products and buy from you frequently.

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Apart from the personalization of the shopping experience, recommending the right products can help you increase sales and improve average order values. Recommendations can be made through AI models by churning large datasets of past customer orders, product browsing history, and other such data points. Once these data points are merged and used to train AI models, you can provide personalized recommendations to your store visitors depending on their order history, wishlists, and frequently browsed items.

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Customer Churn Prediction

Losing customers is terrible, and it is even more impactful when a small business competes with giants for every sale and customer. As a small business, you can use AI and technology to find customers likely to churn before they churn. If you can find such customers before they leave you, you can take preventive measures and save your customer.

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You can create AI models to analyze your customer engagements, past purchases, abandoned carts, and other data points to find customers who may churn. Once you have a list of such customers, you can run targeted marketing campaigns to engage more with them, offer them special discounts, and try to get them back.

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With an accurate churn prediction model, you will never lose more customers, and it will also signal you whenever your customers are exhibiting signals of churning.

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Automate Customer Support

Providing excellent customer support is where most giant eCommerce businesses win over their smaller counterparts, but now smaller companies can also offer better customer support. You can automate customer support by developing virtual assistants and powerful AI chatbots that can understand natural language queries and provide accurate information and responses to your customers around the clock.

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Chatbots can work round the clock and interact with any customer that comes to your website anytime , which is one of their most significant advantages. By automating customer support through AI chatbots, you don’t need to spend much money to get services like other giants in your industry.

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Preventing Frauds

Online fraud has been prevalent since eCommerce started, and it is still happening with lots of small and giant eCommerce stores. But thankfully, there are better ways to safeguard your business from such fraudsters today than ever before.

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eCommerce businesses lose up to $48 billion every year due to the malicious intentions of fraudsters, but AI is here to solve this problem. You can create AI models that are powered by numerous rules and complex data points about a user’s online behavior and their buying history to spot and stop fraudulent transactions quickly.

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With AI models, detecting such fraudsters is pretty fast, and you can instantly stop any transaction if it matches the fraudulent criteria defined in your ruleset. Doing this manually would be a time-consuming process, and you aren’t guaranteed to stop every fraudulent transaction, too, so it's better to have AI models in place.

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Simplify Inventory Management

Inventory management is complex for many small businesses, and they don’t generate more sales due to inefficient inventory planning or running out of popular products quickly. This is where AI can help small businesses. It can leverage predictive analytics and keep an eye on current stock levels.

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Predictive analytics will predict the demand for your products and help you order the right amount of products at the correct time so you never miss out on selling opportunities. Inventory management AI models can also help you find perfect product placement for easier access based on product demands and frequency. This can make your warehouse workers more efficient and the work also becomes easier.

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Cross-sell and Upsell

AI models can use market-basket algorithms to suggest similar or better products to your customers or even provide complimentary product suggestions based on past orders. Suppose a user is buying shoes; your cross-selling AI models can suggest they buy socks or shoe care items with the shoes, and such recommendations have higher chances of being accepted, which can increase your sales of related items.

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Wrapping Up

Coming to an end, AI models are here to stay, and if you adopt them before other small eCommerce competitors, you can gain an edge in the market and enjoy more sales and growth for your business.

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