August 13, 2017    7 minute read

How AI Will Change the Online Economy in the Next Five Years

Technology    August 13, 2017    7 minute read

How AI Will Change the Online Economy in the Next Five Years

While many studies explore the distant future of AI, this article will focus on the exciting developments that we can see taking place in the online economy right now, and what we can expect to see in the next five years. AI is already changing how our work is done; reinforcing the role of people as drivers of business growth, while also improving efficiency through automation. Let’s explore how AI is not only contributing to the growth of the online industry but also how it drastically improves the online shopping experience of customers.

Check out a previous article on the economics of augmented reality for more reading on recent tech developments.

AI: 35 Years Down The Line

Before we look at the here and now, let’s consider where this path of AI may eventually lead us to. (Don’t be afraid of the robots — they’re not going to go away).

A lot of predicted AI-led developments are overwhelmingly positive — lauding the huge triumph of human ingenuity when faced with mounting global and economic challenges.

Accenture have revealed their findings on AI, reporting that developments in the technologies could double annual economic growth rates by 2035, changing the nature of work and forming new relationships between men and robots. AI technologies are predicted to increase labour productivity by up to 40%, drastically improving efficiency rates in the workplace.

The study also suggests that AI is set to double the size of the 12 economies studied in half the time, compared to baseline growth. This growth is even faster in certain areas, such as Japan, which could more than triple their growth in 20 years. (This is partly down to the fact that the Japanese economy is supremely capable of scaling the uses of AI).

The three main ways that AI will affect business are as follows:

  • Human – AI will change how we operate as individuals and a society. It is believed that people will be able to spend more time on creative work and focus on the 20% of non-routine tasks that drive value creation. Task such as creative writing for marketing purposes is one such example of a job that requires a human touch
  • Process – an intelligent automation of processes will mitigate human limitations of time and space. AI will essentially reinvent end-to-end business processes, from lead generation to transaction automation
  • Data – Advanced analytics systems will speed up the way businesses can acquire information and make decisions. Algorithms and transactional data will update and evolve faster, while continuous data analysis will unearth fresh trends and insights.

Existing Impacts of AI on the Online Economy

Here’s how AI will specifically affect the online economy, and in particular how it will impact user experience. AI-led technological developments are already changing our day-to-day online experiences in exciting new ways.

Voice Search, AR, VR and E-commerce

AI will join in with the advances in mixed, augmented, and virtual reality technologies to overcome the drawbacks of the faceless, toneless online experience. AI will spearhead impending changes to search — changing the ways in which products are found, organised, and categorised.

Tech leaders are already leading the way and putting money behind AI search — Microsoft has pledged to invest over $30bn into mixed reality search over the next three years. This investment will hopefully help solve some of the current the problems that customers and online merchants face within the rapidly changing e-commerce industry.

Purna Virji of Microsoft suggests that one key AI-led improvement to the industry would involve the projection of a hologram, allowing customers to visualise the product in a life-like size, before making a purchase. Fear of not knowing what the product will be like in the flesh is one of the key reasons why some customers avoid shopping online. By overcoming this obstacle once and for all, the online industry will grow substantially, and potentially change the face of retail forever.

A slightly simpler way that AI has already been wielded to improve user experience is Sephora’s use of the Modiface platform. This platform allows customers to upload an image of their face, and see how cosmetic items will change their appearance. Allowing the consumer to visualise product benefits post-transaction is a sure-fire way to improve customer satisfaction rates whilst simultaneously personalising the shopping experience — one of the most significant impacts AI will have on our retail economy

Personalizing the Online Shopping Experience

Personalization has come on leaps and bounds since the days of the first ever mail merge, and now businesses have realized that AI can help create a more personalized shopping experience for their customers.

Shoppers often have difficulty in articulating their interests and needs to an online retailer, but now sites can be individually tailored using algorithmic data such as search and purchase history. And AI-led personalization isn’t just a privilege of big enterprise players either — it’s trickled down right down to the entrepreneur and small business level in the shape of AI packages and marketing products.

Online store creators that are popular with entrepreneurs can now engage and convert visitors with intelligent assistance, recommendations, and popups. Apps such as Choice AI give businesses the opportunity to reach out to potential customers with targeted promotions and products that they are more likely to be interested in.

Personalisation

The creation of this personalised experience can be seen in the example above, where a pop-up message allows page visitors to select a specific category to browse from. These categories will vary, depending on what information has already been sourced on that visitor — and the system will keep on learning. Hyper-personalised experiences like these will become a mainstay of e-commerce marketing and online retail. Online stores built using WordPress can also make use of similar apps like this smart assistant.

Pinterest has also picked up on the advantages of AI for more personalised shopping experiences. Their recent update of their extension for Google Chrome allows users to now select an item in a photograph online, and ask Pinterest to scour its database to display a selection of similar items for purchase using image recognition software (often without even leaving the app).

As these uses of AI develop and become even more widely used, we will see a much more personalized retail landscape that’s closely allied with social selling and existing user data.

The Age of the Chatbot

Chatbots are now being widely used by brands as one of the first ports-of-calls for customer service enquiries, and it has been suggested that they could help lower costs of customer service by 30% thanks to the reduction of human labour required, with many benefits to the overall customer experience too.

The ability to respond to customer enquiries, complaints, or suggestions immediately is a great way to make customers feel valued while making brands seem more responsive. Chatbots can operate 24/7 — never sleeping, and never becoming weary of customer questions — constantly learning more about customer language and behaviour and feeding that back into subsequent interactions.

This form of AI is already being used in many industries, including the financial sector, with the Bank of America’s chatbot (Erica) offering a “conversational banking” service where customers can acquire confidential financial information or advice. It’s no surprise that everyone from Mastercard to American Express are embracing chatbots.

Conclusion

Immediate and informed responses lead to happy customers, loyalty, and repeat business — conversational commerce also has the ability to change online selling from a transactional culture, to one founded on exchange and conversation. Even if the conversation is with a smart robot.

We can already see that AI is having a great impact on the online economy, rapidly altering the barriers between man and machine. It’s an exciting time for the e-commerce industry, with new developments becoming more accessible and easier to deploy by regular online businesses.

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