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Anticipating consumer behavior is an art form as old as time. From the silks and spices in ancient times to modern-day e-commerce sales of holidays and toasters — traders and merchants have always used predictable behavior to sell their wares.
It took until the 1940s before marketers began tapping into the scientific study of consumer spending patterns — viewing them from a psychological, sociological, and behavioral economics standpoint.
Fast-forward to today and add artificial intelligence (AI) to the mix, and retailers have access to potent real-time applications that capitalize on existing consumer behavior and perhaps pioneer new trends.
Utilizing advanced AI and machine learning (ML) algorithms, marketing departments can analyze vast consumer data sets in seconds. The results can determine an individual consumer’s spending habits, anticipate their needs, and even strategically advertise a bespoke product or service at the exact point of sale.
Yet, there are several surprising benefits for customers, including elements such as augmented reality (AR) and 3D applications that allow for more immersive product experiences before making purchases.
Join us as we explore how AI is positioned to further monetize consumer behavior and the Faustian pact with consumers who do receive both time-saving while shopping and accurate “You might like…” recommendations in return for leaking data to pretty much every organization out there.
Key Takeaways
- AI leverages psychology, sociology, and behavioral economics to provide deeper insights into current and future consumer spending practices.
- AI applications like augmented reality and personalized recommendations offer customers personalized, immersive product and service experiences.
- NLP chatbots and virtual assistants streamline the sales process while reducing costs for retailers.
- Real-time competitor monitoring allows AI to automate price optimization and advertise products and services at the point of sale.
AI & Enhanced Customer Service and Experience
While sceptics will highlight a brand’s ability to exploit customers’ and clients’ purchasing behaviours for personal gain, we must first look at how the continued integration of AI in commerce can also benefit consumers.
First off, AI is already enhancing the shopping experience with its ‘try before you buy’ applications.
Speaking to Veronika Ballardini, Head of Marketing at Yord, a leading AR, VR, and Metaverse studio, “the integration of augmented reality into mobile apps and websites allows customers to visualize products in their own environment before making a purchase.
“This has been particularly impactful in furniture, home decor, and fashion, where seeing how a product fits or looks can significantly influence buying decisions.”
One such example is the IKEA Kreativ app, which brings product visualization to life in your own home, or Dulux letting you try out different paint shades on your walls.
While they are not alone in embracing mixed reality technologies to improve prepurchase experiences, the continued rollout across the e-commerce sector is an avalanche of: “See it in your home and then buy it!”.
At the checkout, we have AI-powered chatbots and virtual assistants who provide instant customer support, immediately addressing any questions, queries, or complaints. And while AI chatbot capabilities continue to advance, they’ve essentially reduced the need to queue to speak to in-person shopping assistants or holding for hours to customer helpline call centers.
And let’s not forget the AI-inspired product recommendations, carefully gleaned from a thousand data points about you collected from dozens of ad agencies.
Consumer Behaviour Driving Efficiency and Profitability
Unsurprisingly, the ongoing investment in AI’s adoption is ultimately driven by the retail and service sectors, despite the advertised benefits it offers to customers.
After all, consumer behavior analytics enables artificial intelligence to optimize every step of the process, spanning from manufacturing and marketing to point of sale and post-purchase aftercare.
Even now, forward-thinking marketers harness AI to conduct ‘social listening,’ screening social media platforms to identify and engage with their desired target market, often based on their collective consumer behaviours.
Similarly, aspects such as AI’s power to anticipate consumer needs ahead of demand can lead to better retail inventory management and supply chain optimization – slashing delivery times and, of course, costs.
E-commerce websites in highly competitive marketplaces such as supermarkets also use AI for price optimization practices. Here, AI systems can predict potential consumer demands and monitor competitors’ prices in real-time to capture the largest market share. As a result, they can drive up sales by remaining ultra-competitive without time-intensive manual interventions.
Finally, we must factor in how natural language processing (NLP) chatbots and virtual assistants are replacing a comparatively expensive in-person labor force.
Ignoring, for now, the ethical dilemma of replacing the traditional human workforce in customer-related tasks and interactions, AI can logically not only better anticipate a consumer’s needs and wants but, beyond the initial cost of implementation, accelerate a company’s profitability.
The Bottom Line
It’s hard to imagine the trend of AI’s integration in the world of commerce ever regressing.
On the face of it, leveraging ML algorithms can help retailers capitalize on previous consumer behaviors and predictable character traits to generate increased sales while, in contrast, helping us streamline the time spent shopping, instead freeing up time for other pursuits and pastimes.
Sure, the debate about the morality of AI replacing human shop assistants with automated chatbots and depriving shoppers of that personal touch will always ring true. But AI is simply better and certainly faster at analyzing customer behavior and making accurate real-time decisions than we are, and for both modern-day businesses and consumers – time is invaluable.
AI’s impact on the future of e-commerce will certainly see sales revenues continue to grow, while the presence of in-person sales staff will undoubtedly dwindle. And, while this could spell the end of traditional high street shops, perhaps it’s those of us who inherently don’t enjoy shopping who might benefit most.
