Revolutionizing retail: The silent rise of AI in e-commerce

BF Firos |
In the bustling markets of the Middle East, a silent revolution is underway that is reshaping the landscape of retail - the integration of Artificial Intelligence (AI) into the operations of e-commerce platforms. As the region experiences a digital transformation, businesses are leveraging cutting-edge technologies to enhance customer experiences, optimize operations, and stay ahead in the highly competitive e-commerce space.

Advanced algorithms, machine learning, and AI-driven innovations converge with the rich tapestry of Middle Eastern commerce. AI is becoming an integral part of the e-commerce ecosystem, offering a glimpse into the future of retail in the region.

AI is not just a tool but a transformative force. E-commerce giants are employing AI to tailor personalized shopping experiences, predict consumer preferences, and create targeted marketing campaigns that resonate with diverse and dynamic consumer bases.


Customer experience

Take the case of Kibsons, which provides fresh fruit and vegetablesin the UAE. The company has internal algorithms that have been cleverly designed to follow the learnings of our past experiences and mimic the decision-making choices of senior minds to automate our local procurement process, says Halima Jumani, CEO of Kibsons.

E-commerce platforms currently leverage AI for various operations, including personalized recommendations, demand forecasting, fraud detection, and chatbots for customer support, says Ahmed Elgebaly, Regional Head of MENA, Globale Media.


He provides a detailed breakdown as follows:

  1. Personalised recommendations: AI algorithms analyze user behavior and preferences to provide personalized product recommendations, improving the overall shopping experience.
  2. Predictive analytics: E-commerce platforms use AI for demand forecasting, inventory management, and pricing optimization, helping to minimize stockouts and overstock situations.
  3. Fraud detection: AI algorithms analyze transaction patterns to identify and prevent fraudulent activities, ensuring secure online transactions.
  4. Image recognition: Visual search and image recognition technologies allow users to search for products using images, making the search process more intuitive.
  5. Customer service automation: AI helps automate customer service tasks through chatbots and virtual assistants, handling routine queries and improving response times.
  6. Supply chain optimization: AI is employed to enhance the efficiency of supply chain processes, from logistics and transportation to warehouse management.
  7. Behavioral analytics: E-commerce platforms analyze user behaviour through AI to gain insights into shopping patterns, helping them refine marketing strategies and enhance user.

E-commerce platforms have embraced AI in a number of ways, observes Lisa Lee, Vice President and Head of Business Development, Perfect Corp.


According to her, AI solutions have simplified the process for customers to discover desired products, while also facilitating brands in effectively meeting their requirements.

“One fundamental aspect of the AI revolution in e-commerce is the use of AI-powered personalised shopping experiences. One such example is our Virtual Try-On technology. This tool utilizes augmented reality to allow customers to virtually test beauty products with incredible accuracy, easing online purchasing hesitations. The technology also uses AI to determine information about users’ specific facial features and skin tone, generating personalized makeup recommendations based on their unique facial features.

The AI-driven Skin Analysis and Product Recommendation tool also enhances personalization by recommending tailored skincare solutions based on individual needs and preferences by detecting the unique skincare concerns of the user’s skin,” says Lee.

She adds that these AI solutions redefine beauty e-commerce, creating a harmonious blend of personalized experiences and streamlined operations for both consumers and retailers.

On the motivation behind the adoption of AI in its e-commerce processes, Halima Jumani said: “The challenge is to control our costs and remain competitive on prices. The fresh produce industry is price-sensitive and prone to high food wastage. Internally designed generative AI model based on data patterns and machine learning techniques help us control our wastages much lower than industry averages.”

AI enhances customer experience by analyzing user behaviour to offer personalised product recommendations, providing chatbot and virtual assistance for quick customer queries, and optimizing search algorithms for better results, says Ahmed Elgebaly.

He adds that e-commerce platforms use AI to adjust prices dynamically based on various factors such as demand, competition, and customer behavior, optimizing revenue.

Lisa Lee observes that the adoption of AI in e-commerce is motivated by various factors. First and foremost, she adds, it aims to improve customer engagement and satisfaction by tailoring product recommendations to individual preferences.

“It also provides a competitive edge by offering superior customer service and more targeted products. Brands that have adopted AI-powered virtual try-on solutions have seen impressive benefits. In some cases even marking over 300% increases in conversions and site dwell times,” she adds.

Halima Jumani says that Kibsons uses smart competitor price analysis to be able to give its customers guaranteed low prices on our platform.


Customer experience

AI plays a pivotal role in elevating the customer experience on e-commerce platforms, says Lisa Lee. Personalized product recommendations make the shopping experience more enjoyable and efficient.


"AI-powered Virtual Try-On allows customers to preview products virtually, overcoming the limitations of online shopping while AI-driven Skin Analysis tailors product recommendations, creating a personalized skincare journey. Perfect Corp.’s AI Skin Analysis for instance, analyzes up to 14 distinct types of skin concerns, and is able to realistically simulate improvement of 9 these issues with AR technology.

We also recently partnered with Unilever to create a try-on experience for their Tresseme brand. The experience used AI-Generated Content to allow users to try on a range of different highly-realistic hairstyles before committing to a specific look. This level of personalization enhances customer satisfaction, loyalty, and overall shopping experience by giving customers a unique tailored experience.


Supply Chain

AI plays a key role in revolutionizing supply chain management and inventory forecasting. AI transforms the landscape, ensuring efficiency and accuracy for e-commerce platforms.

Halima Jumani says that 80% of their locally sourced SKUs are fulfilled by system-generated purchase orders.

“This reduces considerable time spent on demand planning/ forecasting. In the fresh produce industry, excess ordering can result in wastages and conservative ordering can result in unfulfilled customer service in the form of undelivered items to customers. Our internal algorithms developed over months of planning and research help us find the right balance between food wastages and fulfillment shortages. At the same time, our inventory cycles are also carefully optimized as part of the algorithm set up, thereby reducing stock holding costs and supply chain management,” she adds.

According to Ahmed Elgebaly, AI contributes to supply chain management by optimizing routes, predicting demand, and automating inventory management, leading to more efficient operations and reduced costs.

“AI algorithms analyze historical sales data, market trends, and external factors to predict future demand more accurately. This helps in optimizing inventory levels and reducing the risk of overstock or stockouts. AI-driven models continuously assess inventory levels, reorder points, and lead times, enabling more efficient stock management. This prevents excess inventory and minimizes holding costs,” he adds.


Challenges

What challenges or obstacles do e-commerce platforms face when integrating AI into their e-commerce business, and how do they address them?

Ahmed Elgebaly says that challenges in integrating AI include data quality issues, resistance to change, and the need for skilled professionals.


  1. Data quality and accessibility: AI models require large amounts of high-quality data, and ensuring data accessibility and quality can be challenging. E-commerce platforms invest in data management practices, and data cleansing, and may use data augmentation techniques to enhance data quality. They also employ data governance frameworks to ensure compliance and security.
  2. Costs and ROI concerns: Implementing AI involves upfront costs, and measuring the return on investment (ROI) can be challenging.
  3. Talent and skill gaps: There is a shortage of skilled professionals with expertise in both AI and e-commerce.
  4. Ethical and privacy concerns: AI applications may raise ethical and privacy concerns, especially when dealing with customer data.
  5. Constant technological evolution: AI technologies are continually evolving, and keeping up with the latest advancements can be a challenge.

Integrating AI into e-commerce has traditionally come with its set of challenges, says Lisa Lee. These included high initial development costs, aligning AI with specific business objectives, and navigating regulatory compliance.

Nowadays, she adds, the bar to entry is much lower.

“Perfect Corp. has broken down down many of the barriers by offering cost-effective solutions that are simple to use and easy to integrate. The AI algorithm has been put to the test in many commercial scenarios, is trusted, and has delivered results for many large global brands,” she adds.

For Halima Jumani, the fresh grocery shopping patterns are complex and different to other household products in the market. For example, she adds, AI could possibly suggest a tennis ball to be bought along with a tennis racket, but we cannot presume onions will always be purchased along with potatoes.

“Household fresh grocery shopping patterns are different from each other and even different from their own shopping patterns each week. For example, family members may be travelling or have preferred diet plans each week. Having said this, our internal AI team is working on data insights to understand shopping patterns, consumer profiles, frequently purchased items or weekly items missed,” she adds.

Data privacy

Data privacy and security are crucial in e-commerce. E-commerce platforms need to ensure the protection of customer data in AI-driven processes.

Data Privacy is crucial and of utmost importance at Kibsons, says Halima Jumani.

“As a family business, we respect that consumer details must not be shared with any third-party service providers, and therefore we are focusing on building our own inhouse machine learning techniques,” concludes Halima.

E-commerce platforms prioritize data privacy and security by implementing data encryption, access controls, and regular audits, says Ahmed Elgebaly.

“Platforms use encryption techniques to secure customer data both during transmission and when stored. This helps prevent unauthorized access to sensitive information. Strict access controls are implemented to limit access to customer data only to authorized personnel. This includes role-based access, ensuring that employees have access only to the data necessary for their responsibilities. Platforms adhere to data protection regulations such as GDPR, HIPAA, or others applicable in their region. Compliance ensures that customer data is handled responsibly and by legal requirements,” he adds.

Our approach to solving this problem was to develop our AI solutions as edge solutions, states

Lisa Lee. This means that zero data transmission from users’ devices to the networks is required.

"All user data remains on the user's personal device throughout the entire experience, virtually eliminating any security issues and concerns. For a small fraction of our solutions that can’t be fully implemented as edge solutions, we ensure the full stack is in compliance / certified with GDPR, ISO27001, HIPPA standards," she concludes.


Image by Tumisu from Pixabay