AI Can’t Exist in E-Commerce Without the Help of Humans. Here’s Why

The artificial intelligence-enabled e-commerce solutions market size is projected to reach $16.8 billion by 2030, growing at a rate of 15.7 percent CAGR in the next eight years. AI is an asset to companies, providing relevant data and insights that can help retailers improve financial performance and customer satisfaction. However, it's crucial that companies couple AI with human analysis to truly capitalize on customer insights, especially when it comes to understanding consumer preferences around gifting.

AI in e-commerce has positively shaped the customer experience, providing consumers with tailored shopping experiences that are suited to their needs. According to a recent study, 80 percent of customers are interested in making purchases when offered personalization from retailers, highlighting the importance of customization throughout the customer journey. By leveraging AI, companies can offer product recommendations and tailor-made solutions that increase customer engagement and lifetime value. This is a boon when the customer is shopping for themselves, but when shopping for others, as in the case of the $1 trillion Q4 holiday retail market, the story is more nuanced.

For gifting platforms in particular, access to predictive data based on the behavior of current customers (e.g., what categories of gifts they gravitate towards) allows companies to identify and build off of trends that can help businesses better understand their customers and the overall cultural landscape. Human activity provides the essential dataset for AI data training. However, instead of relying exclusively on AI, gifting platforms can use AI-generated insights as their copilot in data analysis — surfacing the trending information that merchandisers further analyze and use to personalize product recommendations.

The Importance of Human Analysis

While the benefits of AI are manifold, human analysis is the key to safely unlocking a world of insights for retail personalization and wish list item product recommendations. Human analysis plays a crucial role in AI for retailers for several reasons:

• Data Quality Assurance: Human analysis allows for the assessment of the quality of data used to train and operate AI systems, identifying and correcting errors, anomalies and biases in the data, which is essential for ensuring the AI models make accurate predictions and recommendations. This expertise is essential for fine-tuning AI models and interpreting their results in a retail context.
• Adaptation to Market Changes: Retail is subject to rapid changes in trends, customer preferences and market conditions. Human analysis can provide the adaptability needed to respond to these changes by reviewing recommendations and adjusting AI algorithms and strategies accordingly.
• Strategic Planning: While AI can assist in generating insights, human analysis is essential for high-level strategic planning. Retailers can use AI-derived insights to develop long-term retail strategies, set goals, and make critical decisions about the direction of the business.
• Ethical Considerations: AI systems in retail can impact consumers' privacy, and there can be ethical concerns related to data usage and customer profiling. Human analysis can help in making ethical decisions, ensuring compliance with regulations and addressing any ethical issues that may arise.
• Complex Decision Making: Retail operations involve complex decisions, such as inventory management, pricing, and supply chain optimization. Human analysis can leverage AI-generated insights as inputs for decision making, but apply their judgment and experience to make final decisions.
• Customer Experience Enhancement: AI can be used to personalize customer experiences, but human analysis can add a layer of understanding that AI alone cannot achieve. Humans can refine personalization strategies and identify opportunities to create better customer interactions.

Human analysis is indispensable in the AI-driven retail industry because it complements the capabilities of AI systems. It ensures the accuracy, ethical considerations, and adaptability of AI applications, ultimately leading to better decision making and enhanced customer experiences in the retail sector.

Based in Oakland, CA, Peter Imburg is the founder and CEO of Elfster, a gift exchange platform serving 21 million people worldwide.