With consumers feeling squeezed by rising prices and coping with too many decisions when shopping online, brands are turning to artificial intelligence to assist consumers make higher decisions.
Rising prices and the paradox of alternative
As people attempt to be smarter with their money, they’re running into one other problem: too many decisions when shopping online. This is referred to as the “paradox of alternative,” an idea introduced by psychologist Barry Schwartz. While having many options might sound reasonable, it can actually make shopping harder for consumers and less satisfying.
In 2000, psychologists Sheena Iyengar and Mark Lepper conducted a groundbreaking experiment on the paradox of alternative. They arrange two display tables at an upscale food market: one with an in depth selection of 24 jam varieties and one other with only six jam varieties.
The key findings revealed a counterintuitive consumer behavior pattern. The 24-jam display attracted more initial customer interest. However, the six-jam display resulted in significantly higher actual purchases.
Customers were roughly 10 times less prone to buy jam when presented with the 24-flavor selection. This phenomenon, referred to as alternative overload, shows that while more options might sound appealing, they can paralyze decision-making. People are overwhelmed when confronted with too many decisions, resulting in decision fatigue and ultimately reduced purchasing behavior.
The study challenged the concept that “more decisions are at all times higher,” revealing how excess options can demotivate and hinder decisions.
Fast forward to the present, and we face an identical challenge. When consumers seek for products online, they may find tons of and even hundreds of options. This can lead to the consumer:
- Taking longer to make a choice.
- Giving up on buying since it’s too overwhelming.
- Feeling less joyful with purchases.
- Regretting the purchase later.
Dig deeper: 7 marketing strategies to overcome decision paralysis
How AI helps to narrow decisions
AI helps ecommerce brands simplify and personalize shopping. With the rise of generative AI, businesses are using modern strategies to draw and retain customers. Key techniques to streamline decision-making and boost purchase rates include:
1. Smarter search results
Companies like Etsy are using AI to indicate a smaller, higher list of products that match the search more accurately. These solutions typically mix semantic search with traditional keyword matching to interpret user queries more effectively. The system constantly learns from user behavior (i.e., clicks, purchases and browsing patterns) to refine and improve search results over time.
2. Image searches
Some AI allows consumers to upload a picture and then find that exact item or something similar. eBay uses visual search capabilities to assist customers find products. They’ve also included a scan-barcode option on mobile, catering to shoppers on the lookout for exact versions of items at discounted prices or rare, vintage or luxury goods. Brands must use this feature rigorously, as AI can sometimes miss the mark with irrelevant and varied search results.
3. Personal recommendations
By taking a look at what a consumer bought or checked out on previous visits, AI can suggest products that buyers might like. This is a feature Amazon built upon over the past twenty years.
Amazon states:
“[I]nstead of providing generic product recommendations to customers akin to ‘More like this,’ Amazon provides more specific, personalized recommendations akin to ‘Gift boxes in time for Mother’s Day’ or ‘Cool deals to improve your curling game’ based on a customer’s shopping activity.”
The future of shopping
AI has the potential to remodel shopping by simplifying decisions and improving decision-making, but finding the right balance is crucial. Retailers must use brands as filters to narrow down overwhelming options while offering consumers enough meaningful decisions.
Addressing the challenge of alternative overload with thoughtful AI solutions lets shoppers make confident decisions and enjoy a more streamlined shopping experience. Retailers and consumers must stay flexible and open to recent approaches, ensuring that shopping in the digital age stays efficient, personalized and enjoyable.
Dig deeper: How to balance customer experience and returns in ecommerce
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