While AI has been around in various conceptions for many years, it exploded into public consciousness with the release of ChatGPT in November 2022.
Public opinions on ChatGPT vary, with some heralding it as the future of technology and others fearing it as a harbinger of technocracy. But one thing is clear: AI excels at what it does.
Although much of the public fear of AI stems from misunderstandings about AI, those who understand its capabilities see an incredible opportunity to revolutionize how we conduct business. AI is not a panacea for ecommerce profits, but it is too good of a tool for ecommerce companies to ignore.
In this guide, we’ll explain what AI is and discuss four ways you can move beyond ChatGPT to maximize your profits today.
Key Takeaways:
- While AI has recently enjoyed widespread popularity, it also suffers from misinformation and distrust.
- When used correctly, AI can maximize profits through dynamic pricing, inventory management, personalized recommendation systems, and automated fraud detection.
- Hypersonix’s Profit OS empowers your ecommerce company with AI to take your profits to the next level.
What IS AI?
Generally speaking, Artificial Intelligence (AI) is any software that tries to simulate human intelligence. AI has various applications, such as image recognition, text generation, and data quality verification. These applications share a common scope. They are all considered to be “narrow” AI, which describes software that’s only good at mimicking one aspect of human intelligence. This is the type of AI that’s available today.
The counterpart to “narrow AI” is “general AI,” also known as Artificial General Intelligence or AGI. Pundits fearing AI taking over the world usually refer to AGI – a technology so distant that experts are divided about if it’s even possible.
AI imitates human intelligence, but it is not inherently intelligent. To make the most of AI, understand that it is a tool for skilled and creative users to wield effectively, not a skilled or creative force on its own.
AI is not capable of the kind of general creativity that humans perform so effortlessly, but it excels at niche tasks with clear boundaries and definitions.
Dynamic and Personalized Pricing Strategies
One of the biggest opportunities of an ecommerce platform is the ability to change prices dynamically. In a traditional brick-and-mortar retail store, prices are not set in stone – anybody who’s shopped for groceries in the last year knows that prices change all the time. However, ecommerce is more agile and more customizable, which means that ecommerce platforms can adjust their prices on the fly based on factors such as the time of day, the habits of a particular consumer, and item stock levels.
AI is ideally suited for this kind of pricing strategy because it excels at following rules and learning what works. A human could sit at their laptop, monitoring site users and creating customized prices for each one. But that requires significant time and effort, and humans aren’t as good at processing large volumes of data. AI excels at learning from patterns, making it the ideal tool for implementing dynamic and personalized pricing strategies.
Demand Forecasting and Inventory Management
In 2019, Popeyes debuted their new chicken sandwich to rave reviews. The chicken sandwich soon became a phenomenon, with lines wrapping around restaurants, a constant string of inventory outages, and news story after news story about the craze.
Had Popeyes better understood the demand for their new product, they could have avoided these inventory crunches and their consequences, which ranged from frustration to financial loss.
AI is not a magic bullet for inventory management, but it can help conscientious retailers manage their inventory and set accurate future expectations. AI can analyze consumer behavior trends, detecting patterns that would be invisible to even an expert human eye. This means that ecommerce platforms that use AI for demand forecasting and inventory management have a significant advantage over those that don’t.
Recommendation Systems
In the early days of grocery stores, grocery clerks knew customers by name, providing recommendations, cultivating ongoing relationships, and familiarizing themselves with their clients’ unique wants and needs. The industrialization of the grocery industry has all but erased this personal touch, but online grocery shopping has the opportunity to bring it back.
AI can “learn” individual customers’ preferences, directing them to items that best suit their needs. This is a win-win for both grocers and shoppers: grocers enjoy increased revenue because AI can suggest items customers may have otherwise neglected, and customers appreciate the personal touch AI can provide.
While AI is no replacement for the full-time attention of a human clerk, it bridges the gap in a world where personalization is no longer scalable by meeting customers’ needs amid the demand for more efficient, optimized operations.
Security and Fraud Detection
While humans are naturally gifted at things like creativity, empathy, and relationality, AI is naturally “good” at recognizing data patterns.
That makes AI an incredible tool for security and fraud detection because it can recognize patterns that are difficult for humans to notice. For example, AI can analyze a user’s location, purchase history, IP address, and other factors to determine whether a purchase is likely to be legitimate or fraudulent. While humans can approximate this, they lack the same level of precision or scalability.
AI is not a replacement for human judgment, but it is an effective way for ecommerce companies to augment their security to detect fraudulent behavior that is opaque to most humans.
Next Steps with Hypersonix
AI is neither a one-step fix for profitability nor an imminent threat to your business. Instead, it’s a tool that – when used correctly – can improve your outcomes by helping you make smart, data-driven decisions.
While AI remains widely misunderstood, now is the best time to start incorporating it into your ecommerce platform to help with essential disciplines like inventory management and dynamic pricing.
Hypersonix is uniquely poised to take your ecommerce company to the next level through the power of AI-driven profit optimization. As a profit optimization platform, Hypersonix brings leading AI and machine learning technology to retail, eCommerce, and grocery companies.
To get started with Hypersonix’s AI-powered ProfitGPT, talk to an expert or request your demo today!
