Top 5 Generative AI Use Cases for Retail and E-Commerce Businesses

Last Updated on: January 11, 2024

Top 5 Generative AI Use Cases for Retail and E-Commerce Businesses

The past few years have completely changed the way people shop. Especially since the COVID-19 pandemic, there has been a huge surge in online shopping with 67% of consumers reporting a difference in shopping patterns according to Bigcommerce

With the ongoing technology developments, the way consumers shop online is only going to become more sophisticated. Generative AI is emerging as one of the pillars in this process, all set to revolutionize the customer experience of online retail and e-commerce businesses for good! 

According to research, the anticipated market size for Generative AI in the e-commerce sector is projected to reach approximately USD 2,123.6 million by 2032, marking a substantial increase from USD 529.5 million in 2022. 

This blog will delve into 5 potential use cases for generative AI for retail and e-commerce. Dive right in!

5 Interesting Use Cases of Generative AI for Retail and E-Commerce 

1. Personalised Product Recommendation

Imagine getting lost in a huge supermarket, not able to find what you’re looking for! It does leave you a bit frustrated, isn’t it? 

The same feeling can be experienced by consumers while visiting an e-commerce website or app, not being able to find exactly what they are looking for! 

Personalised product recommendation is an essential feature that can enhance the overall shopping experience and reduce friction. Generative AI algorithms evaluate data & insights from previous purchases and come up with personalised product recommendations. This in turn helps customers to quickly pick what they want without scrolling through the entire items list! 

Amazon is already using generative AI to create tailored product recommendations for its customers by analysing their browsing habits and past purchases. This strategy has proven instrumental in enhancing customer retention and boosting sales for the company.

2. Virtual Try-Ons & AR Shopping Experiences

How many times have you refrained from shopping online because you’re unsure if the clothes or accessories going to even look good on you? Especially in the case of wearables like clothes, accessories, etc., consumers may second guess whether or not they should continue buying online. But thanks to generative AI-powered virtual try-ons and AR shopping experiences, the lines between physical and virtual shopping experiences are finally blurring. 

Brands and e-commerce chains such as Shopify and Macy’s have seen a significant drop in product returns providing their customers with virtual try-ons and AR experiences. 

To make virtual try-ons even more realistic, Google has developed generative AI models that are able to produce life-like imagery of clothes and accessories on people. 

3. Inventory Management & Demand Forecasting

Efficient inventory management and accurate demand forecasting are crucial for any retail or e-commerce business. Generative AI has the potential to play a key role in optimizing these processes. 

By analyzing historical sales data, market trends, and various other factors, generative AI models can provide accurate predictions about future demand. This enables businesses to stock the right products in the right quantities, reducing excess inventory and minimizing stockouts.

Many renowned businesses including Amazon, Walmart, and Zara are using generative AI for inventory management and demand forecasting. 

Amazon is utilising Generative AI algorithms to anticipate upcoming demand trends and suggest the most effective approaches for restocking inventory.

Walmart and Zara have integrated generative AI to optimize inventory management and predict future demands. 

4. Enhanced Customer Service

What’s one goal that every business owner truly aspires to? Delivering exceptional customer service! Customer experience is a cornerstone for retail and e-commerce businesses given the cutthroat competition and a plethora of options available for the consumers. 

Generative AI can enhance customer service in various ways. Chatbots powered by generative AI can respond instantly to customer inquiries, offering round-the-clock support. These chatbots are capable of understanding and generating human-like text, providing customers with personalized and helpful information.

Moreover, generative AI can be used to automate responses to common customer service queries, freeing up human agents to focus on more complex issues. This not only improves response times but also allows businesses to allocate their resources more efficiently.

Currently, many retail and e-commerce brands already have gen AI chatbots up and running on their apps and websites. According to a report, 17% of global shoppers have confirmed already interacting with an AI chatbot while indulging in online shopping experience. 

Companies like Alibaba and Lexus have implemented generative AI-powered chatbots, resulting in improved customer satisfaction scores. 

5. Fraud Detection

In the fast-paced world of online retail, fraud detection is a critical concern. In the year 2022 alone, the e-commerce industry lost $41 billion in online fraud. 

Generative AI can be a powerful tool in identifying and preventing fraudulent activities. It can analyse patterns in transaction data, detecting and highlighting any anomalies that point out fraudulent behaviour. 

Generative AI models keep on evolving with newer data sets, helping them stay on top of the potential frauds. With this proactive approach, retail and e-commerce businesses can not only protect themselves from financial losses but also save their reputation. 

Companies like Rainbow Apparel and Clearsale have successfully implemented generative AI-powered fraud detection systems, to significantly reduce instances of fraudulent transactions.

These were the top 5 Generative AI use cases for the retail and e-commerce sector. The technology holds great potential to address the present shortcomings of the industry and help it reach newer heights. 

At Systango, we help retail and e-commerce clients reach the optimal potential in their business domain with our custom Generative AI solutions tailored to match the pace of the dynamic market. For any custom AI solution, you can get in touch with us today! 

Leverage Generative AI for your retail & e-commerce business | Systango

Mayank Khare

September 28, 2023

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