As the Winter Holiday Season has a shorter time frame in 2024, e-commerce companies must make the most of it in every aspect possible. This is how the use of AI solutions can help them.
If anything captured most of businesses’ attention in the digital commerce niche in 2024 so far, it’s definitely AI. However, even though a big share of analysts’ discussions in terms of AI-related industry trends has been centered around content creation and chatbot tools, the scope of potentially beneficial tech, specifically during the busy Holiday Season, is much wider.
Enhancing Gift Recommendations with AI
One of the obvious ways e-commerce companies can take advantage of using complex AI algorithms, particularly during the Winter Holidays is to enhance the quality of personalized gift recommendations, e.g. by launching virtual shopping assistants (e.g. Rufus by Amazon) to help customers pick out the best option for their loved ones instead of the commonly presented gift certificates.
In this respect, one of the strong points, fueling the quality of such recommendations is e-retailers’ direct access to customers’ browsing behavior data and shopping history, utilized in tandem with carefully curated questionnaires to compose an extensive list of recommended gifts for each.
When combined with MR/AR and visual search features, which improve the interactivity aspect of gift browsing/selection, the use of AI algorithms can really boost sales rates in many categories, like clothing, travel and tech.
Improving Demand Predictions & Inventory Management with AI
Since the sophisticated AI algorithms have huge data processing powers, it gets easier to better analyze historical shopping information and combine it with present-day economic factors, consumers’ behavior on social media and seasonal trend data to make precise predictions for the upcoming Holiday Season sales rates in each product category, hence substantially reducing overstocking risks.
More importantly, using the robust real-time capabilities it’s also possible to adjust the e-retailers’ selling strategies fast, in case of sudden spikes and fluctuations in what their customers are buying during the Winter Holiday Season.
Battling Chargeback Fraud with AI
While the use of AI to fight cyberfraud has already become common in many digital sectors, in e-commerce it happens to be especially effective in battling the so-called “chargeback fraud.”
What is Chargeback Fraud?
This type of fraudulent activity implies a customer disputes their past transaction, claiming that either the purchased product never arrived, or that they didn’t even buy anything at all.
In most cases, chargeback fraud affects online marketplaces, rather than direct retailers, which need to handle [tens/hundreds of] thousands multiple transactions to different vendors daily, acting as a so-to-speak “merchant of record”, hence responsible for managing third-party vendor refunds, if any, too, while having less control over the actual shipping/delivery process.
In particular, the use of AI-powered algorithms simplifies and streamlines the analysis of buying patterns, making it easier to identify potential fraud and reveal systemic problems/improvement areas with transaction management, if any.
More importantly, AI tech solutions increase the efficiency of the overall dispute resolution rates, by continuously adapting their algorithms, based on the ongoing demand trend changes, chargeback issuer types, product specifics, etc.