PROJECT REPORT ON

“THE COLLOSSAL IMPACT OF

ARTIFICIAL INTELLIGENCE ON
THE E-COMMERCE INDUSTRY”

SUBMITTED TO: SUBMITTED BY:

MS. SHAFALI NANDINI GUPTA

172/17

B.COM. LL.B.(H)

SECTION C

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 ACKNOWLEDGEMENT

The success and final outcome of this presentation required a lot of guidance
and assistance and I am extremely privileged to have got this all along the
completion of my project. All that I have done is only due to such supervision
and assistance.

I respect and thank Ms. Shafali for providing me with an opportunity to do the
assignment and giving me all the support and guidance, which made me
complete it duly. I am extremely thankful to her for providing such a nice
support and guidance till the completion of our assignment by providing all the
necessary information.

I am thankful to and fortunate enough to get constant encouragement, support

and direction.

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 INDEX

PARTICULARS PAGE NUMBER

1. ABSTRACT 4
2. INTRODUCTION 5
3. OBJECTIVES 7
4. RESEARCH METHODOLOGY 7
5. APPLICATION OF AI IN E-COMMERCE 8
INDUSTRY
6. BENEFITS OF AI IN E-COMMERCE 13
7. USE CASE OF ARTIFICIAL INTELLIGENCE 17
IN E-COMMERCE BY ‘MYNTRA’
8. CONCLUSION 18
9. REFERENCES 19

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THE COLOSSAL IMPACT OF ARTIFICIAL INTELLIGENCE ON THE

E-COMMERCE INDUSTRY

 ABSTRACT

The 21st century has seen the advent of globalisation which has paved way for Artificial
Intelligence and Machine Learning, including others. Machine Learning has become very
monumental as we are surrounded by technology. With the rapid development of science and
technology and economic society, the application of artificial intelligence (AI) is more and
more common, its development has a profound impact on our work and lifestyle. There is
absolutely no sector which is not touched by Artificial Intelligence, today. Artificial
Intelligence is also breaking through in the E-Commerce Industry and is making an impression.
All the E-Commerce giants from Amazon to Flipkart to E-Bay and many more stands on the
bleeding edge of Artificial Intelligence. Google and Microsoft are investing and discovering
new AI initiatives. In the field of e-commerce, AI technology has also been well applied and
achieved good results. AI has become a backbone for the E-Commerce Industry.

This paper highlights the role of Artificial Intelligence in the Electronic Commerce Industry
and the benefits that E-Commerce derives from AI.

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 INTRODUCTION

Artificial Intelligence is the field of study that describe the capability of machine learning just
like humans and the ability to respond to certain behaviours also known as (A.I.). It was
invented to support humans. With time, it has developed into a technology that delivers results.
We have already seen Sofia robot having her own intelligence and thoughts. The artificial
intelligence is evolving day-by-day and it is likely to take over human intelligence someday.
Although expensive initially, AI has now become affordable to small business as well. The
need of Artificial Intelligence is increasing every day. Since AI was first introduced to the
market, it has been the reason of the quick change in technology and business fields. Computer
scientists (Gartner) have predicted that by this year 85% of customer interactions will be
managed without a human. This means that humans’ simple requests will depend on computers
and artificial intelligence just like when we use Siri or Galaxy to ask about the weather
temperature or make a call to someone. Artificial intelligence has been developed for more
than 60 years, and its research results have penetrated into every aspect of our economy and
society, and many outstanding achievements have been made. In 1997, for example, IBM's
dark blue computer beat the human world chess champion, marking the official arrival of the
AI era. In 2016, Google Alpha G beat the top human professional go player Lee se-dol, making
artificial intelligence almost synonymous with the future. In 2017, the state council issued the
development plan for the new generation of artificial intelligence, formally establishing the
national strategic goal for the development of the new generation of AI in China. AI which has
already shown its value in industries such as marketing, healthcare, finance and education, is
now making its presence in e-commerce.

E-commerce involves buying and selling goods on the internet platform. Besides transaction
of money, the movement of goods has to happen in timely fashion. Nowadays, e-commerce
firms are fighting for increased market share by developing and identifying unique delivery
and selling strategies. In recent years, e-commerce has made remarkable achievements. While
enjoying the convenience brought by e-commerce, people also put forward higher and higher
requirements for it. The emergence of artificial intelligence technology opens up new ideas and
patterns for the development of ecommerce. With the rapid development of science and
technology and economic society, the application of artificial intelligence (AI) is more and
more common, its development has a profound impact on our work and lifestyle. In the field
of e-commerce, AI technology has also been well applied and achieved good results. AI has
become an important driving force for the development of e-commerce. E-Commerce industry

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also started getting better sales using AI. AI is used in recommending relevant products to the
users and that’s how the users started purchasing relevant products and that helped the
eCommerce get more sales.

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 OBJECTIVES OF THIS PAPER

This paper mainly focusses on the following aspects –

1. The application of Artificial Intelligence in E-Commerce Industry

2. The benefits derived by E-Commerce due to AI.
3. The stance of Indian Courts on Artificial Intelligence

 RESEARCH METHODOLOGY

Research methodology is the way by which data is collected for the purposes of
a study. Secondary data has been used to make this project. When the data has
been collected by someone else for a purpose other than the researcher’s current
project, that is termed as secondary data.

The data has been collected from research papers, articles and company reports.

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 APPLICATION OF ARTIFICIAL INTELLIGENCE IN E-COMMERCE
INDUSTRY

Along with the development of science and technology, Artificial intelligence technology is
becoming more and more mature and is dramatically changing the way people work and live,
especially in the field of electronic commerce, artificial intelligence technology has gradually
developed into a powerful tool to boost sales growth and optimize e-commerce operations. It
helps in bringing businesses closer to their customers. With the facilities of AI, e-commerce
platforms today are able to utilize large datasets regarding customer behaviour and usage
patterns. Artificial intelligence self-learning algorithms can create personalized shopping
experiences for online buyers.

At present, the application of artificial intelligence in the field of e-commerce is mainly

reflected in the following aspects –

[A] Visual and voice search:

Image recognition platforms can help e-commerce websites visitors search by image, instead
of text, and match relevant products to specific images. One example of the visual search is
Pinterest’s visual search which enables users to select an item in any photograph online, and
then ask Pinterest to display similar items using image recognition software. The searching and
sorting of data pattern keeps on changing day by day. A survey has been conducted by Slyce,
a visual search company that has spent years crafting image recognition technology that solves
real-world problems for the some of the world’s largest retail businesses. A survey has been
conducted by Comscore, an American media measurement and analytics company providing
marketing data and analytics to enterprises. They claim that image and voice search may make
up 50% of all searches by 2020. It is predicted that by 2021, due to the popularity Voice search
e-commerce revenue will increase by 30 percent.

[B] AI assistants and chatbots:

An artificial intelligence assistant (chatbot) whose primary function is to automatically respond

to customer questions, respond to simple voice commands, and provide product
recommendations using a natural language processing system. Chat dialogs on e-commerce

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sites and mobile pages are based on machine learning algorithms programmed to communicate
with customers in a personalized manner. Chatbots can help consumers find suitable products,
check the supply situation of products, compare various products, and finally help consumers
to pay. Chatbots are one of the most basic ways AI can directly help your business. Whether
it’s on Facebook Messenger or WhatsApp, you can now launch a chatbot with minimal
programming skills. Chatbots are already being used to facilitate online transactions for the big
brands, with TacoBot (Slack) and H&M (Kik). Famous brands like Tommy Hilfiger launched
a Facebook Messenger Fashion Chatbot during the New York Fashion Week 2016. It was the
first brand to sell their collection through Facebook Messenger. Instead of focusing on the tech,
you simply need to consider what kind of things a user is most likely going to ask about and
then develop a comprehensive script that can assist them. It helps in responding to customer as
per their inquiries. Virtual assistant is also popular in this segment. It also provides good
suggestion to the referred problems. It is also used in product recommendations systems.
Alibaba and eBay are the good examples. In March 2017, Alibaba launched Shop Xiaomi, an
artificial intelligence service robot, a chatbot for taobao merchants. After authorization and
debugging by merchants, chatbots can replace some customer services, effectively reduce
labour costs, optimize user experience, improve service quality, and Maximize night traffic
recovery, as well as help customer service to solve repeated consultation problems.

[C] Smart logistics:

Intelligent logistics refers to a logistics development mode in which equipment and control are
made intelligent by using information technology, so as to replace people with technical
equipment. Compared with traditional logistics mode, intelligent logistics can greatly improve
service quality and operation efficiency. The concept of Intelligent logistics was first proposed
by IBM in 2009. Initially, IBM proposed a smart supply chain that would generate real-time
information through sensors, RFID tag, brakes, GPS and other devices and systems. AI helps
to manage online warehouse operations and delivery process. The most immediate impact of
AI is on the rear-end supply chain and logistics links. Forecasting inventory is not simple in
the face of rapidly changing demand and competitive markets; However, artificial intelligence
and deep learning algorithm can determine the key factors of order cycle and calculate the
influence of these factors on turnover and inventory through the model. The advantage of
machine learning systems is that they can become smarter over time, making it more accurate

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for businesses to predict inventory demand. At present, in the field of intelligent logistics and
warehousing, Alibaba, Amazon and JD have released unattended automated intelligent storage
systems.

[D] Recommendation engines:

Recommendation engine is a complete recommendation system based on machine learning

algorithm framework. Using AI algorithm can realize deep learning, statistical programming,
prediction and analysis of customer behaviour, of massive data sets, and predict which products
are likely to attract customers. First, based on recent searches by potential customers, the
machine learning algorithm in the recommendation engine is able to record key details of the
searched product based on the calculation results, The recommendation engine then generates
appropriate Suggestions for the browser and lists them on a personal page, ultimately helping
consumers find the product quickly. The application of dimensionality reduction algorithm
opens the transformation of recommendation system by artificial intelligence, the most
profound change of the recommendation system by artificial intelligence is that the
recommendation system is no longer regarded as an independent combination of
recommendation results, but the whole human-computer interaction behaviour. The dynamic
dimension of the system and the user can be realized by introducing the time dimension, many
ecommerce companies, such as amazon, Alibaba, taobao and jd.com, use recommendation
engines to identify the target audience for their products.

[E] Real-time product targeting:

E-Commerce Companies aim to offer their customers a best offline shopping experience to the
online space, by offering the consumers a hassle-free way to discover the products they are
looking for. Machine learning can help to present online shoppers with personalized product
recommendations, discounts and offers.

[F] AI based hiring processes:

AI is providing new opportunities to recruiters by freeing up time to hire more efficiently. By

using large datasets and machine learning to perform tasks and gather insights, Ai solutions

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can provide support through many different stages of the recruitment process. HR departments
can use AI technology in many ways. For example, the task of screening applications, reaching
out, scheduling face-to-face interviews, and finding matches can be automated through Restless
Bandit software as a service product. This reduces the work of HR by providing the potential
candidate for the job.

[G] Voice Powered Search:

Voice is slowly replacing text-based search in online shopping. Voice recognition accuracy is
improved than before. Almost 70% of requests are natural or made in a conversational language
with Google assistant. Some smart devices with voice-controlled personal assistants are
Apple’s Home Pod powered by Siri. Another example is Amazon’s Echo powered by Alexa.
Alexa voice-based search can be used to place an order to be shipped from Amazon. According
to study by ComScore, 50% of the searches will be based on voice searches by 2020

[H] Assortment Intelligence Tool:

Assortment planning allows the retailer to provide a pleasant shopping experience and most
profitable product mix to the consumer. Customer changes their buying taste frequently.
Retailers should focus on their pricing strategies and which product to advertise more or drop
the product. Retailers have to upgrade their pricing strategies in order to retain their customer
and to keep them coming back to their online website. Assortment Intelligence tool can assist
retailers to have 24/7 visibility and insights into their market competitor and change their
pricing accordingly to compete in the market. Retailers can analyse their competitor’s product
mix and prices by the tool. Some examples of assortment tools are Market Track, Competitive
Intelligence Services, Aqute intelligence and wiser. Another example is Upstream Commerce.
It is based on artificial intelligence, data mining, semantic analysis and image recognition. Data
from retail websites is gathered and analysed using product-data extractor and site-crawler. The
data is then analysed by matching engine and analytics engine.

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[I] AI fake reviews detection:

Customer reviews have become important for consumer trust in the online shopping. According
to Dimensional Research’s recent study, 90 percent of respondents said that positive online
reviews influenced their buying decisions. But fake reviews can affect the buying decision. AI
can be used to manage this problem. Amazon also uses AI to combat fake product reviews.
Amazon’s AI machine-learning system ensures that only verified customer purchase reviews
are boosted. It also gives preference to those reviews that are marked as helpful by other users.

[J] AI based sales process:

Integration of AI with the customer relationship management system is an effective solution to

manage sales. This AI enabled allows a CRM system to answer customer queries, solve their
problems and even identify new opportunities for the sales team. The customers will no longer
be offered products and services that are inappropriate for their online shopping.

[K] Customer-Centric Advertisements:

Artificial intelligence programs can be created to deliver customer-centric advertisements.

Now-a days, social media platforms are connected in such a way that whenever you search for
an item on Amazon, all your social media handles start showing advertisements related to that
product.

[L] Optimal Pricing:

The current e-commerce industry is booming, even for small inventory online retailers, this
kind of long-term continuous price adjustment is a big challenge. Artificial intelligence
technology, which can process big data quickly, has basically solved the problem of automatic
pricing of a large number of products. Product rating, logistics price and service quality will
affect the final comprehensive ranking results. For merchants, optimal pricing is very difficult,
and this kind of pricing problem needs to be studied in depth is what artificial intelligence is
good at. With advanced deep machine learning algorithms, AI technology can continuously
evaluate market dynamics and change the competitive environment to solve the problem of
optimal pricing.

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  BENEFITS OF ARTIFICIAL INTELLIGENCE IN E-COMMERCE

1.Customer-Centric Visual Search

Consumers are often disappointed with eCommerce experience because the product results
showed 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 to have
visual search capabilities, finding and matching products. Also, AI enables shoppers to
discover complementary products and enhance customer experience. Now, consumers may
take a picture of a friend’s new shoes or new gym clothes, upload it and then AI enables
consumers to easily find similar items through eCommerce stores. For example, Amazon has
this option, which allows you to point at product that you like and Amazon will identify it and
give you the results you will most probably like because it will be exactly what you were
searching for.

2. Retarget Potential Customers and Improve the Sales Process

According to Conversa, at least 33% of marketing leads are not followed up by the sales team.
This means that pre-qualified potential buyers interested in a product are just left behind. Also,
many teams are overloaded with unmanageable customer data that they do little or nothing
with. And that’s when AI is a real necessity. Artificial Intelligence could help with enhancing
the sales cycle, by tailoring your problem-solving solutions and creating a strong sales message
that reaches consumers at the right time on the right platform. Nowadays, there are many AI
systems that enable NLP and voice input, for example, Siri, Alexa, etc. This allows a CRM
system to answer customer queries, solve their problems and even identify new opportunities
for the sales team. Let’s look at a very good example — The North Face, a large eCommerce
retailer. They use IBM's AI solution, Watson, to better understand their consumers. They can
help their users find their perfect clothes, by asking the customer questions, such as, “Where
and when will you be using your running clothes?" and customers can answer by saying it or
writing it. IBM’s software then scans hundreds of products to find perfect matches based on
real-time customer input and does additional research to find out the weather conditions in that
area, etc.

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3.Creating an Efficient Sales Process

With developing technology, sales methods have transformed and become quick. Integrating
AI in the marketing campaign will help a lot in customizing the sales message and having a
lasting impact on the customers. An efficient AI-driven campaign will surely benefit your
ecommerce with its functions of multitasking and more.

4. Personalization

Personalization in a vital aspect of the ecommerce business however with the development of
AI technologies, it will be possible for ecommerce businesses will possess have fast methods
that can help in personalization. The majority of the businesses have the options of filters that
can be set according to the requirements of the customer such as sizes, price, viewed history,
best sellers, popularity and other parameters. But with the help of AI, businesses will be able
to provide a flawless customer experience. Artificial Intelligence is transforming the methods
of sales for customers by providing myriad shopping solutions and bringing immense reforms
in the way ecommerce businesses interact with the customers.

4. Offline to Online Worlds Merge

With the help of visual search capabilities, businesses are able to develop ties from online to
offline more efficiently than previously. With increasing transformation in the customer
engagement with a brand, businesses in the coming time will possess detailed information
regarding the customers. This information will help immensely in enhancing the customer
service, experience and most of all, assist in developing the chances to sell more products.

5. Cyber-Security

Artificial intelligence has also improved the cyber-security of the E-commerce websites. It can
prevent or detect any fraudulent activities. E-Commerce has to deal with a lot of transactions
on daily basis. Cyber-criminals and hackers can hack the user account to gain unauthenticated

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access. This can lead to the exposure of private data and online fraud. The reputation of the
business also gets a big blow. To prevent this, Artificial intelligence and machine learning
algorithms are developed that can mitigate the chances of fraud activities over the website.

6. Stronger Search Algorithm

By implementing AI in one’s E-Commerce store, one can get the advantage of a stronger search
algorithm. AI can predict what you are looking for and hence, help in saving time.

For example, if a person has recently searched for lipsticks, then if you again visit the site and
type just li, then the AI mechanism present in your E-Commerce store will guess that the person
is looking for lipsticks and also show some related products. Hence, this way the user will
quickly find what he/she was looking for and can also explore the additional options presented.
This will ultimately result in an improved user experience.

7. Better Inventory Management

Inventory management is a tedious task when it has to be done manually. You have to keep
checking the sales and the stock and keep updating the inventory. But artificial intelligence is
designed to do the most tedious tasks. With its predictive data science, it can predict the
upcoming sales and keep the stock updated with its predictive algorithm. So, one doesn’t need
to keep checking on inventory every day. Artificial Intelligence in eCommerce will do
everything for you while you are making plans to expand your eCommerce store reach. So,
you just have to plan the strategy while AI is taking care of your eCommerce store.

8. Better After Sales Services

Now-a-days, mere selling of the product is not where the job finishes in any market, let alone
E-Commerce. One has to provide after sale services as well in order to retain the customers,
listen to their grievances and maintain the quality of products you are selling in your E-
Commerce store. If any customer has queries related to the delivered items, or wants to return
or exchange it, then all these tasks can be performed by Artificial Intelligence in a very efficient
manner.

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Artificial Intelligence automatically detects product delivery and sends customer feedback
forms, asks the customer to rate the product and their service or send the survey form.

For example, Myntra sends the customer a form as soon as delivery is completed asking you
to rate the product and the delivery process.

So, this is how Artificial Intelligence helps in maintaining productivity and give out better
results. By incorporating Artificial Intelligence in E-Commerce stores, one can get greater
outputs and can also increase the business revenue manifolds. According to an article published
by the Forbes magazine, 53% of marketers are willing to incorporate AI mechanism in their
businesses in the next couple of years.

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  USE CASE OF ARTIFICIAL INTELLIGENCE IN E-COMMERCE BY
‘MYNTRA’

Myntra was established in February, 2007 by Mukesh Bansal, Ashutosh Lawania and Vineet
Saxena. Headquartered in Bengaluru, it also has its regional offices in New Delhi, Mumbai and
Chennai. In its initial years, its operations began in the Business to Business segment which
dealt in personalized gifts such as Mugs, Caps, etc. Gradually, it shifted from B2B to B2C
strategy i.e., Business to Customer oriented firm, expanding its operations into fashion and
lifestyle products.

Now, Myntra is among the top 10 e-commerce companies in India.

Online fashion retailer Myntra is using futuristic technologies like data mining and artificial
intelligence (AI) to help designers come up with patterns and styles that can boost sales for
designers. Artificial Intelligence-based software used by Myntra’s in-house Rapid team,
Ratatouille tells these folks just what designs are sure to be top-sellers. More professionally
known as Vorta, it’s also a software that’s helped the team cut down design time from six
months to just one. The Rapid tech platform analyses sales data from Myntra and Flipkart
websites (Myntra merged with Flipkart in 2014), as well as the latest fashion trends collected
by trawling Instagram, Pinterest, fashion magazines and similar sources. Rapid’s technology
comes up with a list of attributes: types of collars, sleeves, cuts, colours and other features
currently popular with customers. This is fashion via engineering. The Flipkart-owned
company has already tested this internally with its two in-house brands Moda Rapido and Here
and Now which are powered by AI. The software uses data like designs and styles that are
popular, cuts that are preferred by the customers and then comes up with designs on its own
using AI that have been used by the in-house brands.
Myntra also has an excellent after-sale service where the customers can place return or
exchange requests on their application or website in a very easy manner. The customers are
also asked to fill feedback forms where they are asked to rate the product and delivery
procedure. Customers can also send in any queries via e-mail and phone, both.

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  CONCLUSION

Coming up with innovations isn’t rocket science anymore. AI has become the single biggest
driver of massive technological advancements in every tangible domain – and will continue to
do so for the foreseeable future. AI is on the rise in the e-commerce industry; however, it is
still far from being perfect. E-commerce firms continue to improve their AI tools to better
match market demand. They also partner up with other companies to merge their competencies
in AI and create more sophisticated solutions. Artificial Intelligence in eCommerce will impact
transactions, customer retention, satisfaction, efficiency and many more. AI is changing the
way we buy and sell online. It has made shopping more accessible to customers and is also
providing the customers with an arena of options. AI is highly expertise in handling the
customer data and forecasting the purchase behaviour of customers. This has brought out the
biggest level of automation in the e-commerce industry.
Artificial intelligence techniques have stepped into the fast lane, with mature technology and
is becoming more and more widely applied. It is having a growing impact on aspects such as
customer retention and customer satisfaction in e-commerce transactions. As time goes on,
Artificial intelligence will become an important driving force for the transformation of e-
commerce. With the support of artificial intelligence technology, e-commerce will have a
broader development prospect, which is conducive to the establishment of better customer
relationship management and the promotion of sales to bridge the gap between personalization
and privacy.

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  REFERENCES

I. Xia Song, “The Application of Artificial Intelligence in Electronic

Commerce”, Journal of Physics (2019).
II. Alsedrah Mariam, “Artificial Intelligence”, The American University of
the Middle East (2017).
III. Shyna K and Vishal M (2017), “A Study on Artificial Intelligence in
ECommerce”, International Journal of Advances in Engineering &
Scientific Research, Volume 4, (Issue 4, Jun-2017), pp 62,
IV. AI in eCommerce: Benefits, Statistics, Facts, Use Cases, and Case Studies,
https://dzone.com/articles/artificial-intelligence-in-e-commerce-benefits-
sta.
V. How Myntra’s Rapid Team is using AI to disrupt and democratize fashion,
https://stories.flipkart.com/myntra-rapid-ai-fashion-industry/.
VI. Sunil Srivastava, “Artificial Intelligence: Way forward for India”, Journal
of Information Systems and Technology Management, Vol. 15 (2018).

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