How Amazon Leverages the Power of AI to Dominate E-commerce?

How Amazon Leverages the Power of AI to Dominate eCommerce?

5 Use Cases of AI in Amazon

Have you ever wondered how Amazon provides an incredible customer experience? It uses Artificial Intelligence and Machine learning for comprehending consumer preferences and providing accurate recommendations to customers. Amazon is an E-commerce giant that always keeps up with new trends. It has been using and integrating AI very early which helps them build a competitive edge over others. Amazon uses AI in its operations to better understand customer search queries and to know the reasons behind why customers are searching for a particular product.

Amazon uses an algorithm called item-based collaborative filtering that helps in providing personalized product recommendations to customers after their online purchases. Artificial Intelligence helps in understanding the intention behind customer search queries.

In this article, you will get to know how Amazon uses Artificial Intelligence –

1. Personalised product recommendations – Personalised product recommendation is an AI-enabled marketing technique for increasing customer experience by anticipating the needs of the customers. This feature is based on an algorithm called item-to-item collaborative filtering and provides recommendations by compiling customers’ previous purchase data and similar products.

It analyzes:

a) Customer’s previous purchase data

b) Items viewed and Items in the cart

c) Most searched products

d) Analyzing the buying behavior of customers

Customers can see the Personalised product recommendation by clicking on the recommended one for you. According to some reports, personalized product recommendations drove 35% of total sales from the Amazon website. Amazon is personalizing its store for every customer based on their preferences and interests. Amazon’s frequently bought together feature works by analyzing the purchase history of each customer and the purchase history of other customers that purchase the same product. Personalized product recommendation is only possible with sophisticated AI by analyzing tons of data.

2. AI-powered voice shopping with Alexa – Alexa is an AI-enabled voice assistant introduced by Amazon for helping customers to find products, add them to their cart, and complete the purchase and checkout process with voice commands. All that can be done without even touching or clicking on the screen. It also helps in providing convenience to customers by giving reminders and recommendations about their purchases.

How it works – Alexa-enabled voice shopping is implemented with machine learning. The process starts after activating Alexa and users can list items that they want to buy, search and add to the cart. It analyses the users’ requests and sends this to the secure cloud. After that, the user’s request is processed by the cloud and the answer is sent back to the user.

 3. AI-optimized Amazon Warehouses – Amazon has been continuously adapting and implementing AI in every field. It uses AI for optimizing warehouses and inventories. It uses AI in the warehouse to predict consumer demand automatically which helps in managing the inventories. It also helps in optimizing delivery routes and evaluating product availability. AI-enabled techniques are also used for tracking the supply chain.

AI also plays a big role in easing the delivery process by determining the most effective route for the delivery of a product from point A to point B. Amazon has also started delivering products quickly to users with the help of drones. AI helps in automating and optimizing Amazon warehouses which helps streamline supply-related operations and increase the customer experience.

4. Amazon Go – Amazon introduced Amazon Go stores that allow users to take the products from the shelf and leave the store. All the purchase is automatically recorded and billing is done through the Amazon app and customers don’t have to wait in line. These stores are also called “just walk out stores” that work with AI and machine learning technologies.

It works with the help of computer vision and deep learning technologies. When a customer takes a product from the shelf, the system automatically collects the information about your purchase and the final amount of information is provided to the customer on the Amazon App. These AI-enabled stores are pioneers in technology and help customers to doesn’t have to wait in line like the traditional physical stores. This data gathered from Amazon Go stores can also be used for increasing the customer experience on Amazon’s E-commerce app. There are nearly 33 Amazon Go store locations in the USA and 15 in the United Kingdom.

5. AI optimized search – AI implementation in Amazon is also really effective in increasing the search relevancy that helps increase the purchase rate. AI is really helpful in making the search relevant to customer preferences and likes. It helps Amazon in increasing its sales as there are more chances of purchasing with similar search results. Machine learning algorithms are used as well as browsing history and purchase history and customer behavior analysis used to provide search results to relevant customers.

How Amazon Integrated AI successfully into their business

Amazon has integrated AI from top to bottom in their business. The secret is they use the “Flywheel approach” for properly managing and implementing AI in their business. Flywheel is an engineering term that means storing rotational energy efficiently and using this energy when the machine is not working. Flywheel always keeps the energy constant and distributes this energy to other areas also.

Similar to the flywheel, AI also uses a lot of energy to get started and after that, it just needs smaller boosts to keep it going. With the flywheel approach, AI innovation always keeps humming in the organization. The data sets made by AI innovations are used across every department of the organization. The continuous flow of data and AI innovation helps keep the entire organization going on.

Conclusion – AI helps Amazon a lot in dominating the E-commerce space and having a competitive edge over its competitors. It is using AI in almost every field of its business be it retail stores, warehouses, etc. Amazon will surely continue to implement more AI technologies in the future also. Other companies should also implement AI from top to bottom for increasing the customer experience. AI-powered business analytics and data science can be really important for a business to help grow its business.