Recently, in conjunction with the push for digital transformation (DX) in Japan's retail industry, the adoption of AI on e-commerce sites has expanded rapidly. Businesses use AI to analyse vast amounts of data – such as product information and customer behaviour – and use those insights to improve operational efficiency and enhance the customer experience. Therefore, AI has become an important element of the e-commerce industry.

In addition, it is necessary for businesses to limit data to only what is required for specific use cases in AI-enabled workflows. They must establish appropriate operational frameworks regarding privacy protection, access rights, data retention, and individual consent.

In this article, we explain the benefits of adopting AI on e-commerce sites, including how to use and implement it, as well as some important considerations for businesses.

Key takeaways

• Using AI on e-commerce sites offers a range of benefits, including improved operational efficiency and higher customer satisfaction.
  
• Examples of how AI can be used on e-commerce sites include automation of customer support and personalisation of product recommendations.
  
• To fully use AI on an e-commerce site, it is necessary to proceed according to a structured implementation plan.
  
• When operating an e-commerce site that incorporates AI, it is necessary to verify the AI's output and handle customer data with caution.
  
• Stripe Checkout helps businesses automatically present payment methods that meet customer needs, which can enhance the payment experience on e-commerce sites.
  

Use of AI on e-commerce sites

The use of AI in the operation of shopping sites – such as e-commerce malls – involves implementing AI across all aspects of operations. This includes inventory management, product recommendations, customer support, and marketing. The goal is to use AI's capabilities to manage the site more efficiently.

By using AI, it is possible to process data at speeds that are difficult for humans to achieve. AI can also detect anomalies, which can further enhance the quality of the e-commerce site. This can help improve the site's usability and maximise revenue.

AI adoption in Japanese businesses: The future of the e-commerce industry

According to data from the Ministry of Internal Affairs and Communications (MIC), the market size of AI systems in Japan reached ¥1.34 trillion in 2024, which is a 56.5% increase from the previous year. The AI market is projected to grow to ¥4.19 trillion by 2029.

In addition, the adoption rate of generative AI in business operations at Japanese businesses stands at 55.2%, according to the MIC. Businesses were asked about their views on the impacts AI has had on their operations. The most frequently selected answer was: "It will lead to improved operational efficiency and alleviate labour shortages."

The adoption of AI is steadily becoming standard for Japanese e-commerce businesses. The value of AI for these businesses depends on selecting clear use cases, protecting customer data, and measuring how the tool improves defined business outcomes. Therefore, every e-commerce business must have a thorough understanding of the basics of AI and how to implement it.

Advantages of using AI on e-commerce sites

Here are some of the advantages for businesses that use AI on their e-commerce sites.

Operational efficiency and cost reductions

By assisting with or taking over routine tasks and content creation, AI can significantly reduce the time required for manual work. This means that even a small staff can maintain proper inventory management and provide excellent customer service. This can enable high-quality website operations and keep labour expenses and other costs under control.

Improve conversion rate (CVR)

Highly accurate AI recommendations and search results can boost customers’ willingness to purchase. This can lead to an increase in the site’s overall CVR. By presenting information that has been personalised for each customer, businesses can improve the customer experience, which can lead to an increase in repeat business.

Enhance inventory management and marketing

By using demand forecasting that is powered by AI, businesses can analyse complex causal relationships, such as seasonal factors, customer purchase histories, and details of past promotional campaigns. This data can be difficult for humans to fully understand and interpret. By using AI for these tasks, businesses can create incredibly accurate monthly and seasonal demand forecasts.

Furthermore, businesses can minimise lost opportunities due to stockouts and the risk of losses from excess inventory. They can also use AI to conduct efficient marketing campaigns, such as sending emails at optimal times.

How to use AI to simplify operations on e-commerce sites

It is important for businesses to know how to use AI's capabilities. This can help improve operational efficiency, enhance the customer experience, and grow e-commerce business. Below, we introduce some specific examples that show how businesses can use AI to achieve these goals.

Automatic generation of product descriptions and other content

Generative AI can help draft product descriptions from approved catalogue attributes. This way, businesses can dramatically increase work speed, even when registering a large volume of products into their systems.

One point to keep in mind is that businesses need to validate factual specifications against verified product data before publishing. This includes a product's volume, weight, size, and ingredients.

Automation of customer support

Fast and high-quality customer support is directly linked to customer satisfaction. By creating and deploying AI chatbots, businesses can automate responses to common questions from customers and provide continuous support.

By establishing a system where staff handle only complex issues, businesses can both improve the quality of customer support and reduce staff workload.

Translation for multilingual support and cross-border e-commerce

Making a multilingual e-commerce site is important for attracting new customers and expanding sales channels. This is particularly important in cross-border e-commerce, where e-commerce sites target both international customers and customers in Japan. This ensures a pleasant shopping experience for customers who do not speak Japanese.

By using AI translation tools, businesses can build multilingual websites and offer services in multiple languages. In addition, a multilingual AI chatbot allows for smooth handling of enquiries from international customers, which can support global business expansion.

However, it is important to remember that AI alone is often insufficient for accurately conveying cultural and religious contexts and nuances. It is still important for humans to review and adjust content.

Demand forecasting and inventory management

AI-based forecasting tools can analyse historical sales, seasonal trends, and other relevant signals to help businesses estimate demand. Furthermore, because data can be used to calculate the optimal quantity of products to order, businesses can make more efficient use of their warehouse space and improve cash flow.　

However, teams need to evaluate forecast accuracy against actual results before using predictions to make inventory decisions.

How to use AI to increase sales and improve the customer experience

Personalise product recommendations

Where permitted and appropriate, businesses can use relevant customer-interaction data to make AI product recommendations more useful. Businesses need to define what data is used, minimise collection, and provide necessary privacy disclosures and controls. Then, the AI system can make customised suggestions about products.

Relevant recommendations can help customers discover products that better match their stated preferences or needs, which can improve the shopping experience and increase basket size.

Improve site search accuracy

Natural language processing is technology that enables AI to understand, analyse, and generate everyday language. AI systems can interpret the intent behind ambiguous expressions, such as a product search for "a lightweight, black outerwear jacket." Natural language processing can also decipher search queries with erroneous or variant spellings. Then, the AI can accurately display the most suitable products.

This makes it easier for the right products to appear in the search results. This can help alleviate the frustration of being unable to find desired products even after thorough searches, which can contribute to preventing cart abandonment.

Detect fraud

Ensuring the security of cashless payments is an important priority for any operator of an e-commerce business. Therefore, it is important to strengthen the security of e-commerce sites and establish systems capable of addressing all types of payment fraud.

To help prevent fraudulent activities – such as identity theft – fraud detection AI uses machine learning to analyse past transaction data and customer behaviour patterns from multiple perspectives. Then, it automatically scores risks.

Using AI to detect increasingly sophisticated fraud schemes in real time makes it possible to provide customers with a secure transaction environment. This can help enhance the credibility of an e-commerce site.

Stripe Radar uses machine learning and network-level signals to assess payment risk in real time and help businesses prevent fraudulent transactions. Businesses can combine Radar with their own controls and review processes to manage fraud risk.

Automatically display the best payment method for each customer

One way to provide customers with the most suitable payment methods is to use tools offered by payment processors.

For example, Stripe Checkout can dynamically show eligible payment methods based on factors such as customer location, currency, transaction details, and device eligibility. This helps businesses present relevant payment options without building and maintaining that logic in house.

How to incorporate AI into an e-commerce site

To successfully implement AI in an e-commerce business, it is necessary to have a structured implementation plan, which we outline below.

Set key performance indicators (KPIs) and clarify the purpose of AI

Businesses can start by identifying the issues that need to be addressed and then setting KPIs.

By clearly defining objectives and ensuring quantitative measurement of effectiveness, businesses can more easily evaluate the results after implementation. Here are some examples of KPIs businesses can set:

• Reduce enquiry response time by 50% and increase automated response rate by 30%
  
• Increase sales through product recommendations by 50%
  
• Reduce the time required to create product pages by 70%
  

Select AI tools that match objectives

To use AI effectively, businesses need to select tools that are suited to achieving objectives. Specifically, it is important to make selections while considering the following:

• Compatibility with the business's existing data and intended applications (i.e., ease of integration)
  
• Implementation and operating costs
  
• Expandability and ease of use
  
• Quality of Japanese support
  
• Safety, such as fraud detection and privacy protection
  

Start small to validate effectiveness

Rather than applying AI to all business operations at once, it's important to develop a prototype focused on specific product categories or certain tasks and measure its effectiveness.

In this step, the newly developed prototype is deployed to the e-commerce site and provided with customer purchase history and sales data to conduct a pilot test. This is to verify whether the AI has met the KPIs established at the outset (e.g., the quality of generated content, user experience, and site security).

Before a pilot uses customer data, it is important to confirm that the data is necessary for the use case and that access, retention, and privacy controls are in place.

Make improvements using verification results and expand the scope of AI use

Based on the insights gained from the small-scale pilot, the business can make improvements. Then, it can deploy the AI to the production server where it will be used in the live environment.

After implementation, it is still important to conduct regular performance evaluations of the AI and add new features to expand the scope of AI use. The goal is to continuously update the system to ensure it remains in optimal condition at all times.

Key considerations for using AI on e-commerce sites

In this section, we explore some of the key points to consider before using AI on an e-commerce site.

Create a system for human review of AI output

When using AI in software development, one issue that requires particular attention is "hallucinations," which involve AI generating incorrect content or answers that do not correspond to reality.

When hallucinations occur, generated content contains factual errors or uses inappropriate expressions. This could undermine the credibility of the e-commerce site and lead to negative customer experiences.

When using AI, it is important to be cautious about its output. Businesses must conduct human reviews and tests before deployment and establish systems where humans make final decisions and bear ultimate responsibility.

Manage customer data and strengthen security

E-commerce sites handle personal information, such as purchase histories and payment details. Therefore, extreme caution is required when using the machine learning capabilities of AI to ensure that data is not leaked to outside parties.

Specifically, to ensure the safe use of AI tools, businesses need to take the following measures:

• Review the AI tool's security policies
  
• Use filtering settings to ensure that personal information is not included
  

Review and adjust cost effectiveness

In addition to the initial implementation costs, AI tools also incur ongoing management and operational costs to ensure they can be used correctly and safely.

Therefore, it's important to regularly evaluate whether the investment is yielding a return, continuously adjust features, and review unnecessary ones.

How Stripe Checkout can help

Stripe Checkout is a fully customisable prebuilt payment form that makes it easy for you to accept payments on your website or application.

Checkout can help you:

• Increase conversion: Checkout's mobile-optimised design and one-click checkout flow make it simple for customers to input and reuse their payment information.

• Reduce development time: Embed Checkout directly into your site, or direct customers to a Stripe-hosted page, with just a few lines of code.

• Improve security: Checkout handles sensitive card data, simplifying PCI compliance.

• Expand globally: Localise pricing in 100+ currencies with Adaptive Pricing, which supports 30+ languages and dynamically displays the payment methods most likely to improve conversion.

• Use advanced features: Integrate Checkout with other Stripe products, such as Billing for subscriptions, Radar for fraud prevention and more.

• Maintain control: Fully customise the checkout experience, including saving payment methods and setting up post-purchase actions.

Learn more about how Checkout can optimise your payment flow, or get started today.

FAQs about the use of AI on e-commerce sites