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Small Online Retailers Are Taking on Amazon with AI as Their Weapon of Choice

Just as big box stores have largely put an end to mom-and-pop shops, the online retail giant Amazon is crushing its smaller competition. Although the U.S. Department of Commerce reported a 15.6 percent increase in online sales between 2015 and 2016, virtually all of those gains went to Amazon. Consequently, both e-commerce platforms and brick-and-mortar stores are shutting their doors in 2017. How can small retailers remain relevant in the age of Amazon? The answer may be AI, or artificial intelligence.

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Artificially Intelligent Marketing

One of Amazon’s key performance drivers is personalization. Online shoppers have come to expect reliable recommendations and special offers tailored to their shopping habits.
Such personalization builds trust, which is essential to establishing brand loyalty, and it’s only possible through AI technology.

AI programs differ from simple algorithms in that they can “learn” from the data they receive to build assumptions, test hypotheses and deliver highly personalized consumer experiences. Several smaller brands are leveraging new AI technologies to enhance customer engagement. For example, online lingerie retailer Adore Me has partnered with Optimove to streamline their direct marketing. Optimove is a platform that uses AI to segment customers into groups according to their behaviors and preferences.

Before the collaboration, Adore Me would periodically send the same newsletter to their entire customer database. Unfortunately, few people ever read it. Now, they send daily emails that are tailored to distinct customer personas identified by Optimove. Thanks to the platform’s predictive customer modeling tools, Adore Me directs highly targeted campaigns at 60 different customer personas every month. After a year of implementation, Adore Me had increased monthly revenues by 15 percent, increased their average order amount by 22 percent and increased their overall customer base by 230 percent.

Predictive Personalization

AI is helping us perfect the customer-centric approach to business through a process called predictive personalization. Computers can analyze data much faster than humans, so AI can make better predictions about customers than a human customer service rep ever could. Imagine walking into a store and having all of the aisles organized exactly to your liking. That’s the principle behind predictive personalization.

As soon as a visitor arrives on a website, AI can immediately identify where the user is from and load personalized ads and other content accordingly. For every action the user takes, the AI learns more about how to improve their shopping experience. Such personalization reduces bounce rates since customers quickly see information that is relevant to them.

Dynamic homepage content is just one example of AI assisted marketing strategies. For instance, Sentient Technologies offers an AI marketing platform that not only builds a typical customer profile; it also observes user behavior to gauge levels of buyer-intent, which allows for more focused direct marketing.

The Time to Take Advantage of AI is Now

In the past, only major retailers had access to automated marketing tools. Although it may seem like small businesses are at a greater disadvantage today due to online retail giants, those smaller companies now have access to many of the same technologies that Amazon uses. Therefore, businesses that can take advantage of such tools in innovative ways still stand a fighting chance against the e-commerce giants.

About Sentient Technologies

Headquartered in San Francisco, Sentient Technologies is a leading developer and provider of artificial intelligence platforms for e-commerce and other web content marketing purposes. Since the company’s creation in 2007, Sentient has attracted more than $143 million from investors, which has made it the best funded AI company on the planet. Sentient also operates the world’s largest compute resource dedicated solely to artificial intelligence distribution.

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