How AI transformed Amazon into an eCommerce powerhouse

Amazon is an eCommerce powerhouse. In 2019, the giant retailer is expected to hit a 52% market share in the US and almost 14% worldwide.

Here are 6 relevant statistics which help paint a bigger picture and explain how Amazon dominates the American retail eCommerce:

1. During July 2019, Amazon.com had almost 2.65 billion combined desktop and mobile visits, making the platform the most visited e-commerce property in the US;
2. In 2018, the company reported total net revenue of $232.89 billion;
3. For 2019, the biggest revenue segment were online stores with $31.05 billion in quarterly net sales;
4. AWS, Amazon’s subsidiary that provides on-demand cloud computing platforms to individuals, companies, and governments is the platform’s second source of revenue in the amount of $8.3 billion;
5. Amazon owns more than 90% market share in 5 product categories: Batteries (97%), Kitchen & Dining (94%), Home Improvement Tools (93%), Golf (92%), and Skin Care (91%) (source);
6. Amazon Prime has over 100 million users and has generated $9.7 billion in subscription revenue.

AI is the foundation upon which Amazon grows its online sales and other services

From predicting how many customers might buy a new product to running Amazon Go, the cashier-less grocery store to assessing the quality of fruits and vegetables without smelling them for Amazon Fresh because humans are too slow and inconsistent.

Amazon’s AI capabilities allow the platform to provide customized recommendations. According to the latest reports, Amazon’s recommendation engine drives 35% of total sales.

With more than 100 million Alexa devices having been sold, Amazon’s smart speaker maintains a 70% market share in the US. In a statement on the last quarter of fiscal 2018, Jeff Bezos said Echo Dot was the best-selling item across all products on Amazon globally, and customers purchased millions more devices from the Echo family compared to last year (source).

In 2018, Amazon developers improved Alexa’s ability to understand requests and answer questions by more than 20% through advances in machine learning. Also, the number of research scientists working on Alexa has more than doubled in the past year, Bezos noted.

The giant American e-commerce retailer builds everything on AI because AI solves shoppers’ problems which in turn supports Amazon’s customer-centric approach.

The latest 4 AI-driven company operations and platform features

Aside from the recommendation engine, here are 4 of the latest AI-driven company operations and platform features:

1. AI optimization in the fulfilment centre

There are 1 to 4 million bins per fulfilment centre (warehouse) and on the order of 10 million items. In every fulfilment centre, computer vision systems analyze images to help Amazon staff keep track of everything.

Based on data, AI solves a large combinatorial optimization problem and decides which orders to pick at the same time in order to get them in the same box. This way the system minimizes the distance the transport pods have to travel.

AI optimization makes these decisions in real-time and with information that is constantly changing.

2. Machine learning for Amazon’s product graph

The giant retailer based its product graph on machine learning allowing it to describe every item using product and non-product concepts. The system also forms links between different entities, solving actual customer needs.

People don’t just come to Amazon to buy products. They visit Amazon to see what’s new or interesting, or to discover ways they can simplify and enrich their lives.

Xin Luna Dong – principle scientist on Amazon product graph

3. StyleSnap – AI-powered fashion discovery

StyleSnap is the latest Amazon AI-powered feature which supports fashion-focused shoppers.

How does it work?

The shopper takes a photograph or screenshot of a look that they like, upload it in the app and StyleSnap presents them with recommendations for similar items on Amazon that match the look in the photo. StyleSnap also considers a variety of factors such as brand, price range, and customer reviews.

4. Alexa is helping the blind with its latest feature, Show and Tell

As a customer-centric business, Amazon listens to customer feedback. The blind and visually impaired make up one category of Alexa devices customers. Amazon researchers have provided the smart speaker with a new feature designed to cater to the needs of the blind and visually impaired called Show and Tell.

Show and Tell allows the blind to identify grocery items by holding each item to the Echo Show camera and ask, “Alexa, what am I holding?”. The smart speaker identifies the item through advanced computer vision and machine learning technologies for object recognition.

To learn more about the ways Artificial Intelligence could improve e-commerce businesses, I reached out to Alin Neacsu, AI expert and CTO at Deqod and invited him to answer the following question:

Why should eCommerce sites leverage the power of Artificial Intelligence?

Here is Alin’s answer:

The eCommerce industry is witnessing a redefined form that takes customers to a new level of experience and gratification.

Contributing value to your customers is the only way to sustain, grow, and outshine your business rivals.

Brands now intensively should invest their money in exploring how AI can increase brand competitiveness, various processes, customer loyalty & at last, revenues.

Companies are implementing AI to cut service costs — resolving inbound requests via self-service and quickly answering customer questions through conversational AI and intelligent process automation.

Artificial Intelligence enables a business to understand its customers better and do so more quickly. This capability feeds into an improved overall customer experience using sophisticated email algorithms and automated chatbots.

Another crucial aspect where AI has proven to be of valuable assistance is cart abandonment. It helps expand customer engagement by reducing cart abandonment rates by a substantial extent using Facebook messenger, email, SMS or other channels on the site.

Consumers are often disappointed with eCommerce experience because the product results shown are often irrelevant. To tackle this problem, AI uses natural language processing to narrow, contextualize and improve search results for online shoppers.

Also, it allows having visual search capabilities, finding and matching products. Now, consumers can take a picture of a friend’s new shoes or a new shirt, upload it and then AI enables consumers to easily find similar items through eCommerce stores.

Knowing who your competitors are, and what they are offering can help product owners to make their products, services and marketing really stand out.

The big data tools powered by AI can help shop owners to monitor pricing patterns because frequent analysis of pricing patterns helps them stay competitive. Big data analytics allows them to compare their businesses with those of their competitors’ in just seconds and that can be used to increase the market share. More than 80% of enterprises believe big data analytics will redefine the competitive landscape of their industries within the next few years.

Artificial intelligence marketing is looking to change the game of leveraging customer data with newfound concepts of machine learning. Its purpose is to anticipate the next right move to enhance a customer’s journey which in my opinion is still far from being perfect.

How do you plan to use AI to help your company’s sales?

Let me know in the comments.

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