AI in Retail: How to Personalize the Customer Experience

Few industries move as fast as eCommerce. Marketplaces like eBay and Amazon transformed how businesses sold. Payment services like PayPal made checkouts a breeze. Direct-to-consumer upended traditional business models.

And now, there is a new inflection point for these marketplaces: Artificial intelligence (AI).

It's not a question of if AI will transform the future of the eCommerce industry — it already has. Operations teams tap AI to analyze customer data for smarter business decisions when it comes to stocking, expansion, logistics. Marketers use AI to optimize their campaigns with machine learning. But where we see the biggest impact is in the consumer experience.

AI is revolutionizing how consumers interact with businesses: how they browse, buy, and communicate. It promises a new dawn of seamless, personalized experiences that we never thought were possible.

Here's a taste of how AI tools for retail are already transforming and personalizing experiences.

Humans are hardwired for conversation. It's how we forge relationships, solicit advice, and build trust. When early science fiction wanted to show highly advanced technologies, they showed characters conversing with computers. (Think Star Trek or Knight Rider.) Real chatbots have long promised this future but have only recently begun to deliver.

Today's conversational AIs (such as OpenAI's ChatGPT) can finally replicate human conversations.

You can ask, "Hey, I'm a taller woman with broad shoulders. What sort of dress style would suit me?" and receive a coherent, human-sounding answer: "As a taller woman with broad shoulders, there are many dress styles that can look great on you. Here are a few suggestions: A-line dresses, wrap dresses, and maxi dresses."

Consumers will be able to treat chatbots like an always-available store assistant, one that knows everything about a company, its products, and their shoppers. Unlike human employees, chatbots will pull from your account and purchase history. They'll make personalized product recommendations, even tailoring their communication style, recommendations, and advice.

"Content is king in any digital experience."

The problem is that until recently, most content was static and generic. Consumers all saw the same website copy, product descriptions, and resources regardless of what problems they faced, goals they held, or where in the buying journey they were.

While personalization has created some differentiation, it's a small change compared to what's being offered with generative AI. Generative AI (that's a technology used to produce new content, including text, imagery, and audio) promises use cases like individually tailored content for each individual.

Imagine browsing a fashion store and wondering what a pair of pants would look like on you — a shorter woman, taller man, whatever. Generative AI can create an image to show you.

Or consider product descriptions. Sites like Amazon already collate shopper questions into a Q&A, but AI can use consumer questions to write richer product descriptions in the first place. As shoppers continue to ask more questions, the product description gets stronger and stronger.

However, this still represents a one-size-fits-all product description that interests most consumers, but delights very few. But what if a hardware store knew a consumer only shopped for woodworking tools? Using generative AI, they could create a personalized description and technical specs focusing on a tool's woodworking chops.

With generative AI creating personalized content for each individual consumer, content will continue to reign supreme in digital experiences.

When you walk into Nordstrom, a personal shopper can be by your side. They help you make sense of the giant department store, guiding you from one department to another, selecting clothes, and suggesting new styles.

Algorithm-driven recommendation engines moved the eCommerce experience closer to the in-person shopping experience at Nordstrom.

Imagine uploading your entire store associate training guides, product manuals, and troubleshooting information to a chatbot. Suddenly, every single shopper has access to an omniscient personal shopper — whenever and wherever they are.

Or jump forward a few more years and picture a world where consumers all have a personal chatbot embedded in their phones or smartwatches. It knows everything about you — whether you need a new pair of pants, how full your fridge is, or if your truck needs an oil change. Your personal AI could work with commerce AIs to generate amazing product recommendations. Creepy? Perhaps. But who doesn't want a heads-up that they're almost out of toilet paper?

Despite the rise of conversational AI, consumers still rely on search to discover new products, browse collections, find store information, and more when they shop online. But a generic or ineffective search experience won't fly. Consumers expect their search experience to slot seamlessly into their customer journey. Just as a personal shopper intelligently adapts their service to what you've said and engaged with, so too must search.

AI-powered search presents an opportunity to streamline your customer journeys and drive engagement. Searches are faster and more accurate. Not only that, but you can also insert rich content (maps, videos, documents) and calls to action.

AI and machine learning are transforming eCommerce — how businesses operate and market, how consumers research and buy, everything. Chatbots and AI-powered search promise an always-on digital personal shopper. Generative AI promises a personalized experience for each individual.

The most exciting part of this transformation is that it's still early. Tools and technologies are still evolving and finding their place in the retail industry. While the future of AI in eCommerce is still crystalizing, one thing is for sure. In the future, we'll see seamless, personalized experiences that we never thought were possible — and AI will make it possible.