GUEST COMMENT ecommerce and AI advancements – Generative AI, ChatGPT and the revolution of fulfilment operations

The world of ecommerce has grown increasingly saturated in recent years, forcing brands and retailers to work harder than ever to win new customers and retain the loyalty of existing ones. Consumers are becoming increasingly more selective about where they spend their money, and a positive customer experience across every element of an ecommerce order– from the initial landing page to order fulfilment through to delivery and aftercare – has become intrinsic to online success. Help is at hand for many retailers through the changing landscape of technology, which, for many businesses, is proving to be the driving force behind gaining a competitive edge, writes Kamran Iqbal, commerce strategist, PFS.

Artificial Intelligence (AI) has brought about a paradigm shift in ecommerce, fundamentally changing the way online shopping is conducted. Heralded as one of the fastest-growing industries of 2023, the AI market – which currently boasts an impressive value of $328.34 billion – continues to evolve at a rapid pace with the introduction of ChatGPT, Google Bard, Bing Chat and Jasper to name a few. Despite many of these tools still in their infancy in terms of research and feedback-collection, AI advancements are set to revolutionise ecommerce operations by drastically enhancing order fulfilment practices and the way that brands interact with their customers.

Businesses are in reach of bridging the ever-significant personalisation gap forming between the online and offline realms through generative AI. From personalised recommendations to customers, to optimised pricing strategies and even predicting customer behaviour and product demand, the possibilities appear to be endless. Generative AI uses machine learning algorithms to develop new data based on existing data and in the context of ecommerce, can be used to improve the efficiency of fulfilment operations like never before to attract and retain customers.

Improved personalised recommendations
Savvy retailers will know that personalised recommendations are an essential feature of ecommerce platforms. When competing for customer loyalty in a crowded marketplace, businesses can utilise AI to analyse customer behaviour and suggest products based on their preferences to win favour. One of the most significant advancements in personalised recommendations is the use of natural language processing (NLP) technology. NLP allows machines to understand human language and respond appropriately, making it possible for eCommerce businesses to offer more advanced and intuitive recommendation engines. For example, ChatGPT, a language model developed by OpenAI, can understand natural language queries, and provide relevant product recommendations in real-time. This not only provides a better user experience but also allows businesses to offer personalised recommendations at scale, improving their overall conversion rates as well as the experience for the customer.

Through the ChatGPT application and the potential it offers to humanise and replace rigid and overly scripted responses, the same personalised advice a customer would expect to receive in a traditional bricks-and-mortar store can be replicated, helping achieve a seamless online experience and increasing the likelihood of a repeat purchase

Optimising pricing strategies
AI is transforming pricing strategies in ecommerce, one of the most significant advancements being dynamic pricing, which allows retailers to adjust prices in real-time based on changes in demand and inventory levels. Not only does this enable businesses to maximise profits and compete, but also ensures prices remain fair and transparent for customers who are cherry-picking the retailers they spend with. Additionally, AI-powered pricing strategies can help businesses avoid stockouts and reduce the risk of overstocking, ensuring that products are always available when customers want them.

Forecasting and predicting demand
The ability of chatbots, affiliated plug-ins and other automated systems to streamline demand prediction by gathering customer feedback in real-time is significant. ChatGPT, for example, can utilise bespoke plug-ins to create and manage to-do lists, analyse customer queries and complaints and identify potential issues with products or services, allowing businesses to respond quickly and effectively directly to the customer. This type of ‘conversational commerce’ not only improves the customer experience but also allows businesses to identify trends and patterns in consumer behaviour, enabling them to predict demand more accurately and plan their inventory levels. By analysing past sales data and using machine learning algorithms, businesses can forecast demand with greater accuracy, ensuring that they have the right products in stock at the right time.

Additionally, generative AI can analyse historical data and external factors like weather patterns and holidays to predict seasonal demand patterns, enabling businesses to fine-tune their forecasting and adjust their inventory levels, pricing, and promotional strategies, accordingly, helping minimise stockouts or overstocks during peak seasons. By using customer data and market trends to optimise product assortment decisions, generative AI can also help businesses identify the most profitable products and adjust inventory levels and pricing for better inventory management and increased revenue. Integrating generative AI into inventory management processes can bring efficiency and accuracy, but it’s important to consider human expertise and carefully evaluate the reliability of AI models.

Future-proofing fulfilment operations and inventory management
One of the most significant advancements in ecommerce operations is the use of generative AI to automate the order fulfilment process and understand customer orders and preferences, allowing businesses to personalise the packaging and prioritise the delivery process. Additionally, generative AI can communicate with logistics providers and warehouses in real-time, ensuring that products are delivered quickly and efficiently. This not only improves the customer experience but also reduces shipping costs and packaging usage, appealing to consumer concern around retailer commitment to sustainability, and improving overall efficiency.

These advances in technology are also valuable for inventory management as a whole. ChatGPT, for example, can help automate ecommerce tasks within the warehouse setting, like providing a fully automated concierge service, supporting transactional activities like order tracking and product recommendations. With its advanced training methods, it can learn and improve over time, becoming more efficient and effective in its tasks.

As the AI market continues to evolve and with the introduction of advanced chatbots and other automated systems, generative AI has the potential to bridge the gap between online and offline shopping experiences, engaging the customer in a way that keeps them close to the brand however they choose to shop. Despite still being in its infancy, generative AI looks set to make a significant impact on the ecommerce industry through its ability to aid both the management and delivery of stock, revolutionising the way businesses operate and interact with customers in the future.

Kamran Iqbal, commerce strategist, PFS