How generative artificial intelligence will transform online shopping is a hot topic in e-commerce. One year after generative AI started to dominate headlines, what have we learned about its real impact on e-commerce? This article presents findings from iAdvize’s inaugural Barometer of Generative AI in E-Commerce — a report that uses first-party data to share lessons from brands that already use generative AI in the customer experience.
This report is based on data from 350 million customer messages on the iAdvize conversational commerce platform and the experiences of 100 brands that implemented generative AI solutions in 2023, spanning diverse e-commerce sectors including household appliances (23.5 percent), fashion (21.6 percent), and outdoor equipment (10 percent). Discover the three pivotal findings from this exclusive report.
Insights
1. Higher Automation Rates in Customer Service
The data showed that generative AI already has a significant impact on the volume of automated customer interactions. The share of automated conversations increased from 55 percent in December 2022 to 70 percent in December 2023, as a percentage of total conversations on iAdvize’s conversational commerce platform.
The new generation of chatbots powered by generative AI has led some e-commerce sites to reach up to 90 percent of conversations handled either totally by AI or in tandem with customer service agents. The result is a significant advantage for customers who now benefit from around-the-clock purchasing advice.
Generative AI has enabled brands to autonomously handle a larger volume of customer inquiries, enhancing operational efficiency and ensuring hyperpersonalized service at scale. This has opened up new avenues for maximizing sales opportunities. This finding also aligns with major retail events, including Black Friday and the holiday shopping season, underscoring generative AI’s role in boosting customer engagement and sales performance during these critical periods.
Courtesy of iAdvize
2. Generative AI Leads to Happier Customers
The report highlighted the measurable impact that introducing generative AI chatbots has on customer satisfaction (CSAT) levels. While previous-generation chatbots struggle to reach 50 percent, the CSAT rate of new gen-AI bots tends to get closer to that of human agents, reaching 80 percent or more.
In 2023, some brands achieved scores comparable to, or even surpassing, those of human agents. Other brands have reported CSAT scores as high as 94 percent, with 88 percent positive feedback on the quality of AI-generated responses.
Courtesy of iAdvize
3. More Shopping Assistance Means More Revenue
The effect on conversion rates (CVR) is profound, with brands reporting achieving a higher CVR than the e-commerce website average. Some brands reported conversion rates as high as 33 percent after a conversation with a generative AI chatbot, with an average of 14 percent across all brands, including those projects in the earliest phases of implementation. These numbers are a stark contrast to the typical e-commerce site conversion rate of less than 3 percent, as reported by Adobe. This indicates a tenfold increase in conversion efficiency, demonstrating generative AI’s effectiveness in driving top-line revenue.
Sample conversation from customer website; Courtesy of iAdvize
Implications for Retailers: Conversational Commerce is the New Reality
For e-retailers and direct-to-consumer brands, the adoption of generative AI presents significant advantages.
These lessons from 100 brands show that the technology is making an impact now; e-commerce is an early beneficiary of generative AI innovation. It also boosts sales through higher customer satisfaction and engagement, while simultaneously reducing the chance of missed opportunities. The high satisfaction rates facilitated by generative AI contribute to stronger brand loyalty and customer affinity. Ultimately, this technology allows for scalable pre- and post-sales support, offering retailers a unique opportunity to enhance customer relationships and differentiate themselves in a crowded marketplace. And it’s quickly becoming the standard in the e-commerce customer experience.
Mike de la Cruz is president and chief strategy officer at iAdvize, a generative AI-driven customer engagement solutions provider.
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