It is easy to discount the serious change ecommerce has brought in not just retail, but society as well.
Online retail has broken the age-old tradition of in-person shopping. Even back in the days of the barter system when currency was non-existent, people still used to step out of their home to buy products.
It’s only been a decade or two since people have really gotten used to having products delivered to their doorsteps.
And only a few years into this radical change in human purchase behaviour, we are already priming for the future of ecommerce. From those using an app creator online to others developing one from scratch, the future of ecommerce interests many parties.
Algorithmic commerce appears to be the next big change in the online retail space.
What is algorithmic commerce?
What happens when you open YouTube on your smartphone? You see a personalized feed catered to your taste and preferences. The same thing happens when you open Facebook or Twitter.
You don’t just see content from the accounts you’re following. The platform is recommending content that might interest you with the help of its algorithm.
Two people never have the same social media feed. This is thanks to the high level of personalization social media algorithms have managed to reach.
This is the future of ecommerce as well. Product discovery is not nearly as powerful today as content discovery. It is much easier to find new videos on YouTube than discovering products. Algorithms for now are much more capable of predicting content taste than
This is where algorithmic commerce comes in. It involves the use of artificial intelligence and machine learning to predict buyer behaviour on a very deep level. Ecommerce apps in the future will be able to offer a highly optimized experience to shoppers thanks to the same.
Algorithmic commerce will basically institute a radically smarter and intuitive product discovery mechanism. This will ensure greater conversions and a far more relevant user experience than ever before.
How is algorithmic commerce different from current systems used by big online retailers?
Short answer: A far superior artificial intelligence.
Long answer?
Content discovery is very powerful because the cost to the user is negligible. People are much more likely to act on video or content recommendations in general because there’s no financial risk in doing so. Furthermore, user data on content preferences is so immense that existing algorithms are much more accurate.
Product discovery is another matter. Big online retailers invest a lot of money in perfecting their recommendation algorithms. However, the problem is the associated risk. People are less likely to act on product recommendations because there is an inherent financial undertone in the process. Choosing the wrong product means is akin to wasting money.
The need of the hour is creating more powerful algorithms for ecommerce. Current algorithms are too predictable and binary. Truly optimizing product discovery means accounting for a ton of different variables.
AI as a technology can help usher in the era of algorithmic commerce. It’s not as if AI is not already used. However, it has not still reached the point where true algorithm-driven online retail is possible.
How will my ecommerce app be affected by algorithmic commerce?
Let’s assume you’re creating an ecommerce app by trying to convert WordPress website to Android app. Why should you care about algorithmic ecommerce?
It is important to bring the discussion back to how everyday ecommerce apps will be affected. The following sections help in understanding the same.
Better marketing
The most obvious benefit of algorithmic ecommerce is getting better insights into user behaviour.
Marketers have been demanding better insights on their target audience for ages. Knowing the audience naturally helps in creating more personalized and impactful marketing campaigns.
Currently, professionals use marketing funnels to drive prospects towards conversions.
The same funnel could change drastically with even a little help from algorithmic commerce. This is because such a technology would ensure marketers reach highly motivated people with the ideal marketing message.
The current definitions and norms marketers follow for awareness, consideration, and conversion will radically change and become more potent.
Your small ecommerce app will be able to reach the Justify people thanks to the inherent power of algorithmic commerce.
Eliminating decision fatigue
The biggest myth perpetrated in business is that customers like a lot of choices.
Customers like choices, but not a lot of them. They don’t want to go through fifty different types of sneakers before buying a single pair.
The beauty of algorithmic commerce lies in its ability to eliminate decision fatigue. With truly tailored product recommendations and discovery, users no longer need to sieve through endless product pages and platforms. The algorithm will be ready to show them the product they need when they wish to make a purchase (or even before that).
Small ecommerce apps can benefit a lot from such a development. They can offer a much more personalized user experience without overwhelming their customers with choices.
Creating a recurring monetization model
You don’t always consider switching to a recurring payment model while running a small ecommerce app. This is because you cannot provide any add-on services besides the products you’re selling.
Companies like Amazon can and do use recurring payment models because they can offer something extra.
With algorithmic commerce, you can deploy a recurring payment model because you can offer something extra.
At the end of the day, people pay extra because of their experience with a particular product or service. If your ecommerce store is able to provide sound recommendations and give users a highly personalized experience, you can charge them a fixed price for the service.
Recurring payments are the future of all online businesses. Algorithmic commerce can help shopping apps reach that point.
Also read: Mobile app monetization: The ultimate guide to monetizing mobile apps
In conclusion
This piece provides a cursory overview of algorithmic commerce. The aforementioned sections discuss its basic essentials and the technology powering this change.
The final few sections discuss how your ecommerce app can change forever with algorithmic ecommerce. Keep an eye out for this game changing technology as you grow your business.
