This article originally appeared on NDTV Profit.

Global retail eCommerce sales are set to surpass the $6 trillion mark this year, a milestone that reflects the sector's rapid growth and its increasing importance in the global economy. This growth is fuelled by consumer demand and further accelerated by advancements in artificial intelligence and data analytics. These technologies are allowing businesses to enhance customer experiences, optimise operations, and achieve sustainable growth in ways that were previously unimaginable.

By using AI and data analytics, eCommerce companies can now gain deeper insights into consumer behaviour, predict market trends with greater accuracy, and make data-driven decisions that drive profitability and efficiency.

Today, if you look at the eCommerce ecosystem, you’ll find that AI is being integrated into every aspect, completely changing how businesses operate and interact with customers.

In the past, product recommendations were often based on simple algorithms that offered limited personalisation. Today, AI and data analytics have transformed these recommendations into highly personalised suggestions that consider a myriad of factors, including individual browsing history, purchase patterns, and even real-time behaviour. This level of personalisation significantly enhances the customer experience, driving higher engagement and conversion rates.

Similarly, the evolution of chatbots shows the profound impact of AI on customer engagement. Early chatbots often struggled to handle basic queries, leading to frustration and dissatisfaction. However, with the arrival of generative AI and retrieval-augmented generation models, chatbots can now provide accurate and prompt responses to complex inquiries, significantly improving customer satisfaction and operational efficiency. These advanced chatbots are capable of understanding context, learning from interactions, and providing solutions that are both relevant and timely.

Another area where AI plays an important role is inventory management and demand forecasting. By analysing vast amounts of data, AI can predict future demand with remarkable precision, helping businesses maintain optimal inventory levels and reduce costs associated with overstocking or stockouts. This not only ensures that products are available when customers want them but also enhances overall supply chain efficiency.

In contrast, businesses that rely on manual analysis to make eCommerce decisions are at a significant disadvantage. The future belongs to those who harness the power of big data to identify trends and opportunities in the market. As the eCommerce industry becomes increasingly complex, the ability to leverage data will be critical for survival and success.

For eCommerce business owners today, preparing for the future with scalable and adaptable AI-driven tools should be a top priority. These tools not only boost conversion rates and increase average cart values but also help businesses stay ahead of the competition. The eCommerce industry generates data at an unprecedented rate, providing a wealth of information that can be used to precisely target audiences and tailor marketing efforts. Businesses that fail to utilise this data risk falling behind and losing customers to more data-savvy competitors.

AI's potential extends beyond decision-making. It can automate many tasks, from generating creatives and copy for marketing campaigns to updating inventory and reminding users about abandoned carts. This automation frees up valuable time and resources, allowing businesses to focus on strategic initiatives that drive growth.

However, implementing AI is not a magic bullet. For AI solutions to be effective and in sync with business objectives, it requires time, effort, and meticulous planning.

Moreover, the integration of AI and data analytics comes with its own set of challenges. Ensuring the ethical use of AI and data analytics, while protecting customer privacy, is a major concern. Consumers are increasingly aware of how their data is being used and are less likely to buy from brands that cannot guarantee the safe handling of their information.

In addition to ethical challenges, there are technical hurdles to overcome. Integrating AI into existing systems and processes can be both costly and complex. There is also a growing demand for skilled professionals who can develop, implement, and manage AI and data analytics solutions. Finding the right talent is not easy, as it requires a deep understanding of both technology and the specific nuances of the eCommerce industry.

Notwithstanding personal beliefs about how important AI and data analytics are, these technologies will undoubtedly shape the future of eCommerce. It’s very likely that what works today will not be sufficient for tomorrow. To stay competitive, businesses must implement data analytics and predictive decision-making.

AI has already transformed the industry significantly, and the changes on the horizon promise to be even more profound. As we move forward, the ability to use AI and data analytics will be essential for driving growth and enhancing the customer experience in the eCommerce industry.

Authored By Prem Bhatia, Co-Founder and CEO, of Graas.