How Does Amazon Use AI to Drive Sales?
How does Amazon use AI? Let’s see how the retail giant uses artificial intelligence to retain customers and increase sales.
Artificial intelligence (AI) is taking over the world, and it’s especially revolutionary in eCommerce, offering many benefits to both businesses and customers.
For sellers, AI eases essential tasks such as inventory management and accurately forecasts sales predictions. For buyers, AI personalizes the shopping experience, recommending products based on past purchases and other behaviors.
AI spending in eCommerce will reach over $8 billion in 2024. Not surprisingly, Amazon is already a leader in AI in eCommerce. But how does Amazon use AI? This guide will answer this question and more.
How Does Amazon Use AI?
There are two main AI applications in eCommerce: improving the shopping experience and making various processes easier for sellers. Amazon takes advantage of both.
Amazon applies AI to various parts of its business–from the shopping experience to advertising. Amazon’s AI capabilities are limitless. It uses the technology in various parts of its business.
For example, it allows the marketplace to identify customer trends and purchasing behavior to improve advertising and the shopping experience.
Amazon is also expanding AI to encourage customers to choose certain products over others.
For example, Amazon’s AI can detect if an item receives negative reviews or mass returns, and can warn customers before they purchase the item. This improves the customer experience, making shopping more convenient and easier.
AI is also beneficial for sellers. Amazon offers various AI tools to create tailored sales campaigns, improve pricing, and more. These tools are often free or at low prices, keeping overhead down while remaining competitive.
How Amazon Uses AI to Drive Sales
Since half of Amazon’s customers complete their purchases in less than 15 minutes, the eCommerce giant needs AI-driven solutions to keep up with the demand. But how does Amazon use AI to enhance their ops?
Personalized Product Recommendations
Since Amazon offers a robust catalog of products, how can consumers find what they’re looking for? By using Artificial Intelligence, Amazon can offer personalized product recommendations.
Amazon’s AI generates product recommendations based on recent purchases, past shopping behaviors, and search history.
Customers will see product recommendations in a few ways. When a consumer visits the Amazon website, the page will display recent orders and top products based on trends and deals.
If a customer visits a product page or adds an item to their cart, they will also see related product recommendations. For example, if a user is interested in buying bath bombs, Amazon will recommend that they purchase lip balm.
This personal touch is one of the most successful applications for Amazon, since it drives 35% of sales, according to Seasia.
Voice Shopping
Amazon’s Alexa owns 77% of the smart speaker market share in the US, so voice shopping is one of Amazon’s biggest successes. Users can shop for products they need or want by speaking to Alexa.
Alexa can respond to many voice prompts, such as “list the most popular children’s books.” If there’s one that piques your interest, you can ask Alexa to add it to your cart. Alexa can access your address and credit card information to complete the checkout process.
Alexa also offers more benefits to consumers. For example, if you tell Alexa you need a multivitamin, they can recommend brands and deals. If you want to purchase multivitamins regularly, Alexa can set up a subscription or purchase reminders.
Many customers love Alexa because they can shop without tapping on a screen or turning on their computer. This hands-free experience is effortless and perfect for busy people.
Advertising
Amazon has a massive target market, and it segments customers based on interests and trends. This is beneficial for advertising since Amazon can segment customers based on who will benefit from the ad.
Because of this, brands can save money on advertising, and consumers can see ads based on their search queries and past purchases.
AI Support
Amazon offers different types of AI support. If customers want a simple question answered, they can search one of Amazon’s many help guides.
Suppose they need help with a specific order or need to initiate a return. In that case, they can access their orders on their account and follow the help prompts to get immediate assistance or chat with a customer representative.
Fraud Detection
Amazon scams only continue to rise. Since this impacts the eCommerce giant, Amazon takes fraud detection extremely seriously. Amazon uses AI to detect and block suspicious sellers, listings, and other activity, making Amazon a safe place for both sellers and customers.
Amazon also has a safety protocol to protect customer data. Often, consumers need to sign in using two-factor verification. Amazon may also send safety notifications before shopping.
For example, if a customer is accessing their Amazon account on a different device, they may need to prove they’re the account holder before completing any other actions.
Warehousing and Shipping
Amazon’s fulfillment centers have powerful shipping tools, so customers can always know when to expect their orders.
This is important, especially for Prime subscribers. Amazon’s warehouse workers can access incredible AI to prevent tedious tasks, such as item scanning. Because of this, they can pack and ship orders quickly and make those time-sensitive overnight order deliveries.
Plus, Amazon uses AI to know the fastest routes. This helps both customers and drivers since more packages can be delivered promptly. Amazon also implements drones to deliver smaller parcels in one hour or less after ordering.
Seller Central Tools
Amazon’s AI has many benefits for customers, but what about sellers? Fortunately, Amazon offers many free AI functions on Seller Central.
Businesses can use AI to identify product trends, forecast sales, recommend the best pricing, and manage inventory. Amazon’s AI can also alert businesses, such as when FBA sellers need to restock.
How does Amazon’s AI handle all these tasks? It uses deep learning, image recognition, and natural language processing to understand trends and create forecasting models to make predictions across different product categories.
While many of these tools are available on Seller Central, some businesses must use third-party tools, such as ChatGPT, to write product descriptions.
How AI Will Affect Amazon in the Future
As stated, Amazon will utilize more AI, such as drones, for speedier deliveries. Amazon has also stated it will use AI for other purposes, such as reducing packaging waste. Amazon has already implemented augmented reality, though it hasn’t taken advantage of virtual reality.
Amazon’s product recommedations and Alexa will improve, enhancing customers’ shopping experiences even more. Amazon aims to increase sales and strengthen relationships with customers and sellers, and it will do so with AI.
AI Is the Future of eCommerce
AI has been integral to Amazon’s success, and they will continue investing in these technologies to increase revenue.
How does Amazon use AI? They offer personalized product recommendations, voice shopping, advertising, AI customer support, fraud detection, streamlined warehousing and shipping, and various AI tools for sellers.
In the future, Amazon will implement more drone deliveries and use AI to be more eco-friendly, such as by reducing packaging waste.
Amazon used AI to unlock its full potential. But what can you do as a seller? Click here to schedule a call with us.
Author
Stephanie Jensen has been writing e-commerce content for seven years, and her copy has helped numerous stores rank on Amazon. Follow her on LinkedIn for more insight into freelance writing and creating high-quality content.
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