6 Benefits of Using AI in eCommerce Personalization

Jameela Ghann - Writer for Fast Simon
By Jameela Ghann
Michelle Meyer - Editor for Fast Simon
Edited by Michelle Meyer
Oli Kashti - Writer and Fact-Checker for Fast Simon
Fact-check by Content writer and fact-checker Oli Kashti

Updated February 26, 2024.

Man Pointing at the Benefits of Using AI in E-commerce Personalization

Personalization is here to stay. Up to 63% of your customers expect personalized recommendations from you. This might feel like a lot of pressure, but you can easily tick all the personalization boxes by incorporating AI into your personalization strategy.

This means using capabilities like machine learning, natural language processing, and predictive analysis to give your customers personalized product recommendations, emails and messages, social media content, and more. Below, we discuss the benefits of using AI in eCommerce personalization to help you take your store to a new level.

6 Benefits of Using AI in Personalization

  1. Enhanced customer experience
  2. Increased customer loyalty
  3. Improved sales performance
  4. Cost savings
  5. Competitive advantage
  6. Scalability

1. Enhanced Customer Experience

Happy customers are more likely to return, leave positive reviews, and recommend your business to others. AI can help you create an exceptional customer experience by:

  • Making data-driven recommendations AI can provide personalized recommendations based on a customer's browsing and purchase history, making it easier for customers to find the products they want.
  • Offering personalized customer service Personalized chatbots can elevate your customer service. Available 24/7, chatbots can instantly answer customer queries and provide support when your customers need it. This quick and seamless experience can boost customer satisfaction.

By enhancing customers' experience with AI, your eCommerce business can build long-lasting relationships with customers, driving revenue and growth.

» Boost your chatbot service by including ChatGPT in your eCommerce strategy

2. Increased Customer Loyalty

Customer loyalty is important to any eCommerce business because it leads to:

  • Repeat business
  • Positive word-of-mouth marketing
  • Higher lifetime value for each customer

AI-powered personalization can help you increase customer loyalty by:

  • Offering personalized rewards AI can help you improve traditional loyalty programs by giving your customers personalized rewards based on their behavior. By analyzing past purchases and overall engagement, AI can work out which rewards are best suited for each customer.
  • Interacting with customers in real time AI-powered systems can monitor store and customer activity in real-time. So, if a customer has added products to their cart but isn't completing the purchase, AI can immediately react. By offering a limited-time discount or personalized reward, AI can encourage the customer to finish their buying journey.

These personalized interactions with your customers not only encourage them to make more purchases but also make them feel valued and appreciated.

» Enhance your customer interaction by understanding the difference between personalization vs. customization

3. Improved Sales Performance

AI-powered product recommendations and upselling and cross-selling opportunities can significantly improve your business's sales performance.

  • Upselling AI can analyze customers' browsing and purchase history so it can recommend relevant products to upsell. For example, if AI picks up that a customer is buying the individual components of a specific product range, it can upsell the entire bundle as a complete set.
  • Cross-selling Similar to upselling, AI can use customer data to cross-sell relevant complementary products to customers. For example, if AI notices that a customer is browsing your store for a new camera, it can suggest a compatible tripod when the customer checks out. So, AI will also be able to determine at what stage of the sales funnel it's best to cross-sell.

» Explore additional benefits of upsell and cross-sell personalization

4. Cost Savings

AI can be a cost-effective solution for eCommerce businesses because it automates their personalization efforts and eliminates the need for manual labor in many cases.

Sephora: Your Personal Makeup Artist

Sephora uses an AI-powered app to help customers with product recommendations, beauty advice, and easy shopping. But the app's most interesting feature is the Virtual Artist. Its AI capability allows the customer to "try on" different beauty products, play with different looks, and follow makeup tutorials for their face shape and skin type. AI allows Sephora to put a 24/7 makeup expert in their customers' pockets—reducing costs associated with sales reps, overheads, and product samples.

Example of Sephora using AI to personalize their customers' e-commerce experience

Screenshot of Sephora's Virtual Artist that uses AI to help customers with make-up

5. Competitive Advantage

When you use AI effectively, you can set yourself apart from your competitors. This isn't just in terms of customer experience but also making sure you stay ahead of trends.

H&M: Predicting Personalization to Stay Fashion Forward

H&M uses AI to predict fashion trends by analyzing large amounts of data from search engines and blogs. The algorithms inform decisions such as how much to buy, when to buy, and where to place products in stores. This helps to reduce waste and make more sustainable decisions. H&M's data-driven approach gives them a competitive advantage, allows them to stay ahead of trends, and provides customers with what they want.

6. Scalability

The culmination of all the AI benefits discussed so far can help you scale your personalization efforts and, ultimately, your business. By processing large amounts of data and providing real-time recommendations, you can personalize the shopping experience for each customer. AI can help you identify patterns in customer behavior and preferences, enabling you to make data-driven decisions about which products to offer, how to price them, and how to promote them.

Use AI to Personalize Your Site Fast

AI can bring significant benefits to your eCommerce personalization strategy. You can:

  • Provide an enhanced customer experience.
  • Increase customer loyalty.
  • Improve sales performance.
  • Save costs.
  • Gain a competitive advantage.
  • Achieve scalability.

However, it's important to remember that your store is unique. Consider carrying out A/B tests to find out what's the best way for your business to incorporate AI into your personalization strategy. Once you're in the right groove, you'll grow your eCommerce store in no time.

» Incorporate AI into your customer communication: Here's how to use AI in personalized email marketing and to optimize social media