AI in E-Commerce: How Small Businesses Can Compete with Giants

Artificial intelligence (AI): a new word that every e-commerce company in the world is leveraging to impress its investors.

Basically, the market size of this industry has skyrocketed; it has reached more than $6 trillion in 2024.

The industry experts believe that the implementation of AI in e-commerce will take it to more than $8 trillion in 2028.

E-commerce giants (Amazon and Walmart) are already favouring AI, but small businesses need to speed up.

The trend shows that 97% of retailers have a plan in mind to leverage the AI ecosystem in 2026.

However, according to a McKinsey report, 77% of companies have deployed AI in their e-commerce operations and are reaping the benefits.

Let’s find out more in this blog about how small businesses can take the throne from the industry giants.

AI Tools & Platforms: A Blessing for Small Businesses

Earlier, only industry leaders were able to leverage cloud computing and SaaS technologies.

Now, the story is different as new tools exist in the market, such as Shopify Magic, Flow, and Inbox, which are integrated as third-party apps and can be explored by retail businesses.

One of the best examples is of Doe Beauty. This company implemented AI in its global supply chain and saved around $30,000 per week.  

Similarly, there is no requirement for heavy infrastructure, such as AI chatbots, recommendation plugins, and marketing platforms. 

The main reason is that Google, AWS, and Microsoft are providing cloud services at an affordable price.

No Boundaries for Customers

Customers feel more open towards a brand when they can customize it according to their requirements.

AI engines accumulate all the personalized data from various sources (browsing and purchase history) and build a recommendation list to show to the customer when they enter the website.

For example, Gymshark is a UK activewear brand that followed this strategy. It suggested complementary items, such as bags and belts, to people when they try to check out or log out of the website. This cross-selling took its business to a new height.

If there is another example to be discussed, it is Netflix. This OTT platform earns $1 billion per year by providing recommendations to its subscribers.

AI Assistants that Help

In order to save costs, small businesses are looking for ways to implement those AI tools that can act as humans when responding to a shopping query.

They want to implement powerful chatbots that have the potential to leverage natural language processing (NLP). Through this technology, they can answer their customers around the clock.

Furthermore, these AI bots can cater to customers by recommending their favorite product.

According to a report, small retailers have noticed a straight 50% reduction in their costs after using AI in their e-commerce operations.

In another report, it is stated that these non-human agents can manage 14% more tickets per hour as compared to a human.

A Close Watch on Inventory

Small businesses need to fill their inventories on time because when customers see that a certain product is unavailable on the website, they jump to a competitor’s website.

Implementing AI by small merchants shows that they can cut inventory levels by 30%. This is because AI automatically predicts those items that will get out of stock soon or that will have more demand in the future based on past interactions.

For example, a small retailer (Incu) in Australia leveraged AI in its workflows, and after some time, it witnessed a 300% year-over-year increase in sales.

Examples like these are the real motivation for small businesses to use the new technology.

AI Knows Whom to Target

No War on AI was the game of big corporations in the past. Nowadays, every small business is getting closer to it day by day.

This technology can act as a marketing team for a company that doesn’t have a high budget. 

It helps in building campaigns, plans, and strategies to attract new customers. This activity generally increases the customer base.

The capabilities of AI are more than this, as you can leverage it to have customer segmentation and ad targeting.

If utilized properly, it can perform email automation that pushes campaigns to reach every new customer.

For example, ActivDev noticed a 15% lower churn rate and a 10% sharp increase in customer lifetime value when it used AI in its tasks.

Product Pricing

The best aspect of AI is that it will show the best price to the customer on its website; however, at the same time, it will be less than that of the competitor’s website.

Nowadays, small retailers have started using dynamic pricing engines that perform this task of lowering the price when customers enter the website or application.

During the Black Friday Sale, multiple companies follow this trend to win new customers. 

Additionally, there is no error conducted from the AI side as everything is performed inside the system at the backend.

Build Powerful Content

AI tools, like ChatGPT, Gemini, Claude, and others, have the power to generate creative content that engages customers more.

Small businesses can use any of these tools to write a powerful product description or generate a professional image.

In one of the recent examples, many small businesses that have a ChatGPT premium account were selling Ghalibhi art images to those people who don’t have a premium account.

Ghalibhi’s art form requires years to learn; however, with AI, people are getting their images in a few seconds.

Briefly Discussing Global Case Studies for Better Understanding

1. A small footwear company in Australia, known as Peter Sheppard Footwear, is using AI in its manufacturing operations. Due to it, they have noticed a 30% increase in revenue. 
2. Antonioli is a fashion brand in Italy that has opened its doors for innovation with AI. The company is using this technology to maintain its inventory and keep a close watch on the new trends in the fashion industry.
3. A small travel gear brand in the USA, known as BÉIS, is using AI in one of its products (Nosto AI). Due to this implementation, the company has witnessed a double growth in its business and is more in favour of implementing the new technology.

These case studies can be a role model for those small companies that require motivation to use artificial intelligence for their operations.

What are the final words?

Everything is running quickly due to AI. Recently, ChatGPT launched a new model (4.5) that provides answers at a higher level than a PhD-level person. Now, the company has committed to working on new developments that will take human intelligence to a new level.

On the other hand, Mark Zuckerberg is hiring people from OpenAI, Microsoft, and Google to build a super-intelligent lab.

Take advantage of the AI consulting services to implement the best strategies and transform your e-commerce business to the next level.  All these developments will benefit the small business as the prices for these AI models will be sharply lower.

But the main thing is that every business, whether small or large, should implement AI and generate higher profits.