Transforming eCommerce Merchandising With AI: 6 Strategies and Tips for Success

Adeel Qayum - Writer for Fast Simon
By Adeel Qayum
Kirsty Macdougall - Editor for Fast Simon
Edited by Kirsty Macdougall
Oli Kashti - Writer and Fact-Checker for Fast Simon
Fact-check by Oli Kashti

Updated February 23, 2024.

A person using a laptop computer with a graphic depicting AI on the screen

It's estimated that by 2032, the eCommerce AI market will reach a staggering $45.7 billion. Brands are increasingly recognizing the transformative power of AI, starting with their customer experiences.

Integrating AI into online merchandising practices unlocks a store's potential for improving the shopping experience, nurturing customer relationships, and driving sales. Here are six strategies and tips on using AI to transform your eCommerce store's merchandising.

6 Ways to Transform Your eCommerce Merchandising With AI

  1. Harness AI for personalized product recommendations
  2. Optimize pricing with AI dynamic pricing
  3. Streamline inventory management with AI forecasting
  4. Enhance visual merchandising with AI image recognition
  5. Optimize customer service with AI chatbots
  6. Leverage AI for sentiment analysis and customer insights

1. Harness AI for Personalized Product Recommendations

AI is revolutionizing the way companies offer personalized product recommendations. Using smart algorithms, AI tools are able to analyze vast amounts of customer data, such as purchase patterns and browsing history. This information allows businesses to leverage personalization and enhance the post-purchase experience.

Some benefits of using AI for personalization include enhanced customer experience and improved conversion rates.

Pro tip:

Use an AI-powered recommendation tool to provide personalized and valuable suggestions to shoppers. For instance, the online clothing retailer, Fashion Nova, uses Fast Simon's personalized recommendation engine to display the best items based on site search queries, purchases, and other behavioral data.

a screen shot of a storefront page

» Learn why product recommendations require merchandising rules for maximum returns

2. Optimize Pricing With AI Dynamic Pricing

Have you ever heard of the Amazon effect? It's essentially the continuous adjustment of prices to outpace competitors and maximize profits. AI can help you replicate this effect by implementing dynamic product pricing.

This means that AI can analyze your product's demand and adjust prices in response to market shifts. This approach offers several key benefits, including maximizing average order value and improving cash flow.

Returning to our example of Amazon, they're estimated to change the price of their products 2.5 million times a day, which has helped increase their profits by 25%. How do they achieve this? Using AI to track and analyze vast amounts of data, like inventory levels, shoppers' buying and browsing history, and competitor pricing.

Pro tip:

Utilize AI-driven pricing algorithms, like predictive analytics software, to dynamically adjust prices and optimize revenue. These algorithms analyze diverse data sets in real time, providing accurate pricing models aligned with customer preferences.

3. Streamline Inventory Management With AI Forecasting

It goes without saying that optimizing stock levels is one of retail businesses' top priorities. AI is a key tool in this regard, reducing the costs and time associated with inventory optimization.

AI algorithms analyze historical sales data, market trends, and external factors to accurately predict future demand. For instance, they can forecast whether your best-sellers have low or high inventory.

This allows you to make informed decisions regarding their placement. It also helps to ensure that you have sufficient stock to meet customer demand while avoiding inventory depletion. As a result, you'll save valuable time and resources that you can allocate toward other critical areas of your business.

Pro tip:

Implement AI-powered inventory management systems to forecast demand and ensure optimal stock availability. These systems automatically update inventory as new products arrive, existing ones sell out, and new eCommerce trends emerge.

4. Enhance Visual Merchandising With AI Image Recognition

Visual merchandising is the new way for stores to promote their products. It involves using rich imagery to promote and display products at their best. However, the images must be properly optimized and easy to navigate.

That's where AI comes into play. Using image recognition technology, the tool improves visual merchandising by automatically tagging and categorizing product images. Accurate product categorization leads to better merchandising and intuitive customer navigation.

Pro tip:

Use AI visual discovery to create an immersive shopping experience. With features like auto-tagging and product categorization, shoppers can find relevant products in your store fast. They no longer have to sift through menus to find their desired product/category—visual discovery puts it in front of them.

5. Optimize Customer Service With AI Chatbots

Potential customers may have questions before making a purchase. Answering them instantly can set you apart from others competing for their business, and AI-powered chatbots can be immensely valuable in this regard.

These chatbots enhance customer service experiences by addressing customer inquiries, offering product recommendations, and facilitating seamless transactions. You can configure them to answer customers in your brand's voice as well as connect to a human agent in case someone wants real-time support.

Pro tip:

Add AI-powered chatbots to your customer service toolkit. They can free up your time by answering simple questions without intervention. Chatbots are accessible to all shoppers, and even those who aren't tech-savvy can use them without hassle.

The curated shopping membership company, CURATEUR, conveniently offers shoppers customer service even when their support staff is offline. They do this through their easy-to-use AI chatbot, as shown below.

a woman is holding a cardboard box

6. Leverage AI for Sentiment Analysis and Customer Insights

Understanding customer sentiment regarding your merchandise is crucial to developing an effective business strategy. Analyzing this can be challenging, but AI makes it much simpler for everyone.

AI can evaluate customer feedback to provide granular insights into their preferences and needs. It can also analyze social media posts' likes, shares, and reactions to understand how customers received them. This can help you determine what customers are looking for and optimize your eCommerce merchandising strategy for the best results.

Pro tip:

Use AI sentiment analysis to gain valuable customer insights from interactions. Use them to guide your decision-making, inform product development, and create targeted marketing campaigns. This is just one way AI can improve your conversion rates.

eCommerce 2.0: Using AI to Transform Your Business Fast

When done strategically, AI can drastically impact your brand's performance. If you're looking to grow sales and stay competitive in today's ever-evolving online marketplace, start implementing the six strategies and tips now. AI in eCommerce merchandising isn't just a passing trend—it's a growing practice that will only continue to evolve and revolutionize the industry.

» AI's not only making waves with merchandising. Discover the benefits of AI in eCommerce personalization