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Article AI Automation Popular 8 min read

How AI-Powered Personalisation is Transforming eCommerce

eCommerce luminary Norman Nielsen has a reality check for any cynics out there: AI-powered hyper-personalised shopping is right around the corner

Top learnings from this article

  • Today’s eCommerce stores use thousands of internal and external data points to recommend products that complete an outfit based on a user’s purchase.
  • The better an AI hits the personal style, fit, trend, the more likely it is that the shop will get a higher share of the customer’s wallet.
  • Conversational commerce is now entering the stage of truth after years of hype, and will soon prove which of its functions improve the shopping experience and which don’t.
  • Virtual fitting rooms will soon benefit from social functions like meeting and chatting with friends.
  • Winners in personalised eCommerce will be the ones who take a holistic approach.

Let’s say you’ve been invited to a black-tie soiree, and you need a new tux.

If this were yesteryear (and it’s not), you’d probably hop onto Google and enter a search term like, “men’s tuxedos”. You’d then be hit with a list of websites selling tuxedos -- many of them spammy, some of them relevant. And it would be up to you to sift through the noise to find your perfect tux.

If this were tomorrow, though (and it nearly is), you could simply ask your personal concierge from your favourite brand to find your perfect tux for you. This AI-powered concierge would already know your size, measurements, and style preferences, as well as your location and purchasing history -- allowing it to tailor its recommendations specifically to you.

It would ask you questions like when the event is if you want to rent or purchase your tux, and how much you want to spend, to make its recommendations even better.

You could then enter a virtual fitting room, where your personalised 3D avatar would “try on” the tux, so you could see how it would look on you.

If it looks good and you make your purchase, the concierge would then suggest complementary items that could complete your outfit, like a trendy tie, cufflinks, or a pair of leather dress shoes.

Are you among those thinking, sure, and then I’ll just hop on my hoverboard and fly away? If so, eCommerce luminary Norman Nielsen has a reality check for you: this form of AI-powered personalised shopping is right around the corner. We sat down with him to get his insight into how AI is pushing eCommerce personalisation into a whole new stratosphere.

Outfit recommendations

According to Norman, outfit recommendations on eCommerce sites are better than ever. Sophisticated AI uses machine learning to pull all internal and external data together, thereby increasing relevance of the content (collections and product matching) in each micro-moment. This, in turn, increases order values as AI predicts the specific needs of the customer at each specific stage of the customer journey.

And it’s come a long way, says Norman.

“Not so long ago, outfit recommendations and sorting were based on your last purchase. But displaying white sneakers after someone purchased white sneaker is…naive.

Nowadays, shops show articles that complete the outfit that is actually earlier or later in the hypothetical user journey. Another big advantage is the pure amount of data about their customer and customer segments these companies have: they can use thousands of data points, bought, clicked or seen articles, to give customers truly personal recommendations.

This contextual content will help serve the new demanding customer. The expectations on personalisations are rising, customers will demand ultra-fast custom-fitted digital experiences very soon.

In turn, better fashion outfit recommendations for customers will increase the basket size. The better an AI hits the personal style, fit, trend, the more likely it is that the shop will get a higher share of the customer’s wallet.

Some companies and formats do a great job in mixing the products up in an interesting way. Fashion companies like Zalando, ASOS, and About You already display products from beyond one specific category, using machine learning and AI to display a huge variety of personalised products.”

Outfit recommendations will appear on more than just websites, though, explains Norman. In fact, conversational commerce will take personalised outfit recommendations one step further.

Conversational commerce

The next level of eCommerce, according to many eCommerce experts, is conversational commerce. This style of hyper-personalised shopping will give customers access to a personalised concierge-type messaging system that learns them inside and out.

>> Learn all about conversational commerce with chatbot expert Yoav Barel here.

Norman believes that the fashion industry will benefit greatly from c-commerce, particularly as it grows in sophistication.

“AI and automation in Conversational Commerce enable a faster and cheaper customer interaction: context-driven, hyper-personalised and 24/7.

Conversational commerce is now entering the stage of truth after years of hype. Now, c-commerce has to prove which commerce functions can be easier, more joyful, efficiently handled with conversational commerce -- and which not.

Especially the combination with visual output looks promising and is also important for a lot of product groups.”

Conversational commerce can be human-powered, but with Natural Language Processing (NLP) now at a stage that it can understand and respond to customers in a natural way, these chats will be increasingly handled by next-generation chatbots.

>> Learn all about how NLP works.

But once they’ve received their hyper-personalised outfit recommendations, whether via the website or their own c-commerce-powered concierge, how can they know if it’s perfect for them?

They’ll have to try it on in the virtual fitting room, of course.

Virtual fitting rooms

The concept of virtual fitting rooms, or VFRs, was a bit like the self-driving car in some ways. It was around for ages (over a decade), but the technology hasn’t really been there to make it work for customers until now. The key to the high-tech behind VFRs, according to Norman, is that they appear as low-tech as possible to the customer.

“In general, a very low tech barrier to use the VFR and high data security standards will support the dissemination.

Social elements like meeting friends and their avatars -- in the form of gamification -- or integrated chat-functions will support the acceptance of VFRs. Additionally, the trend to make shopping possible while chatting in every micro-shopping-moment - can boost VFRs.”

At the moment, it’s possible to consider the entire VFR concept -- which gives the user a detailed visual of how the selected product will look on them (using their size, height and other personal data), presented in a 3D format -- gamification.

Norman’s predictions of additions like the ability to meet up and chat (virtually, of course) with friends will increase the level of gamification in eCommerce, making it more fun and interactive. He sees this becoming a holistic experience full of micro-shopping moments -- which are a buzzword in the eCommerce world defined by Google as an intent-rich moment when a person turns to a device to act on a need – to know, go, do, or buy.

Indeed, eCommerce personalisation is best executed with a holistic approach, as Norman explains.

Holistic hyper-personalisation

According to Norman, the winners in eCommerce are the ones who take a step back and look at their customer journey as a whole and keep this in mind as they zoom in to hyper-personalised each stage.

“The leading brands use a holistic approach in personalisation. From email to retargeting to onsite content (microelements), all elements are running as part of a well-oiled system to personalise the conversation and shopping experience geared toward effective targeting and high conversions.”

But this approach is not without its challenges, Norman points out.

“I’m noticing lots of complaints around private data security topics and how to handle external data. How to handle new customers is another challenge, as well as how personalisation is implemented technically without damaging loading speed, SEO rankings, etc.”

If these challenges can be overcome, though, and they’re certainly not insurmountable, the future of AI-powered personalisation in eCommerce is bright.

“A seamless interaction between the conversational AI, hardware and the specific app/web product will be key to success. Let's think about a future where your AI assistants check via cam if your dog still has food. If not, she will start a conversation with you and order your preferred dog food brand.

The online fashion industry, which was already advancing well enough on its own, benefitted from a huge extra push as the COVID-19 pandemic pushed AI-related shopping technology three to five years into the future (for more, read our interview with customer service expert Shep Hyken).

With this push, fashion brands and consumers alike can benefit massively from technology that enriches the online shopping experience in the most hyper-personalised of ways. From outfit recommendations that cater to users’ personal style and body type, to virtual fitting rooms that give customers a 3D visual of their outfit on their personalised avatar, and a personal concierge who knows customers inside and out -- fashionistas of tomorrow will barely have a reason to leave their house...except to show off their perfect-for-them purchases, that is.

Norman Nielsen is an eCommerce business and marketing leader with a 14-year track record of building awesome digital customer experiences in the fashion, real estate, travel and marketplaces industries in companies like Zalando, Omio, Axel Springer. He is a big fan of conversational commerce and micro-shopping-moments.

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