A Complete Guide On AI-based Ecommerce Marketplace Development 

Updated on Jan 5th, 2024


AI or Artificial Intelligence is the most happening technology of the era that is creating unprecedented opportunities in every sector. In the eCommerce industry as well, AI has presented retailers with multiple opportunities to increase their customer base, conversion rates, and average order value. In this post, we’ll guide you through the entire process of embedding a digital store with AI functionalities or beginning AI-based eCommerce marketplace development from scratch.   

  • AI is the most happening technology of the era that is transforming the eCommerce industry. 
  • An eCommerce marketplace is a large online store where many vendors hold and sell stock to a large customer base. 
  • The AI eCommerce solution market is forecasted to become worth 16.8 billion USD by 2030. 
  • Visual search, chatbots, recommender systems, and advanced search functionalities are among the most popular use case of AI in eCommerce marketplace. 

What is an eCommerce Marketplace?  

An eCommerce marketplace is a large online store where many vendors hold and sell stock to a large customer base. Usually, these eCommerce marketplaces are of B2C types like eBay, Alibaba Express, and Amazon that sell products directly to the end consumers. More commonly, these present a digital supermarket-like interface where users can find various products at the same time.   

Market Statistics on AI and eCommerce Marketplace 

Earlier, businesses were reluctant to use AI in their eCommerce marketplaces, considering the technology too expensive for their budget. But with the availability of scalable cloud services and AI open-source libraries, AI-based eCommerce platform development has become much cheaper. Today even small retailers are using the technology to attract and convert more customers through offerings like personalization and round-the-clock human-like support services. As a result, today, the AI eCommerce solution market is forecasted to become worth 16.8 billion USD by 2030.   

Not only that, as much as 86% of decision-makers in eCommerce marketplace companies are working to make AI the mainstream technology in all the processes of their business. As such, implementing AI in eCommerce marketplace is no longer an option to gain a competitive advantage. It is increasingly becoming a necessity to stay relevant in the competitive market.    

Use Cases of AI in eCommerce Marketplace 

The whopping growth of AI in eCommerce marketplace has very effective use cases in its background. In this section, we’ll discuss the major AI applications in eCommerce and understand why they are so beneficial for the retail companies.  


Recommender Systems

One of the trendiest use cases of AI in eCommerce marketplace is recommendation engines. Marketplaces are unknown for the variety of products they offer. As such, they have a huge opportunity to become the sole retail services provider for every visitor. This opportunity largely goes unutilized since not many people are looking for a variety of stuff. They could be looking for some product when they land on your product page through web search engines. Now, if they want to purchase any other product, they may switch back again to search engines and repeat the same step. Your website may have this second product as well, but it might not rank as high among the search engine results. This is a huge loss of opportunity, which recommender systems are attempting to make use of.  

So when the person lands on a particular product page, the system can evaluate previous historical journeys of other users who looked for the same or similar product. They can then suggest to the user various other products that those other customers are interested in. This way, users will not have to even look for the next product but have it already suggested to them to simply place it in the cart.    


Chatbots are among the most popular applications of AI in retail industry. Since online retail is all about volume, it becomes extremely important for retailers to entertain all their customers proactively. Presently there are over 2.4 billion users on the internet that regularly make purchases from eCommerce marketplaces. As such, if a marketplace wants to cater to a substantial percentage of this user base, they have to strengthen its support services either with resources or technology. Chatbot technology being the most cost-effective and efficient solution to the problem has become the most used application for an eCommerce store.  

These are available 24/7 to answer frequently asked queries by users. Today, with the help of integrated CRM and order management systems, AI-based chatbots are even able to answer more specific questions about the delivery timeline, product return policy, and even specific offers for a user profile. By implementing such a powerful tool in the arsenal of the support department, eCommerce marketplace companies will not only reduce the workload of their staff but also improve customer experience through more accurate and timely responses to their queries.    

Also Read: Top 10 AI-Based Chatbots For Your Business

Customer-centric Search

Today, AI is being increasingly used to simplify many processes by simply emulating human cognitive capabilities. eCommerce marketplace too can use the tech to make their search engines perform in a way that imitates the way humans look for things in real life. Often, eCommerce search engines simply take input from users and compare it against the tags and product description strings of their product database. This can sometimes lead to irrelevant search results only by using a simple variation in the spelling. Instead, if search engines can understand the intent behind the search and then generate the results, it would be much easier for customers to find what they want.  

To implement this feature, the companies will have to invest in artificial intelligence consulting services to build custom solutions with NLP or Natural Language Processing. This will help search engines gather the intent of the user search and thus present more relevant results. By adding this with behavioral analytics and insights, they can even improve their personalized suggestions and offering to their customers.    

Visual Search 

One major drawback of eCommerce marketplaces against traditional brick-and-mortar stores is product discovery. People may not always know the exact name of the product they are looking for. As such, they would not have any means to buy it from an online store. However, with the advent of image recognition technologies, this problem has majorly been solved.  

Today, eCommerce marketplaces are implementing their platforms with the visual search feature, powered with image recognition capabilities of AI. This enables the customers to simply upload the image of the product they are looking for, and the platform will generate a list of the products that look like it.  

The feature was first developed by Pinterest that allowed users to find similar images on the web app; an ecommerce marketplace can simply take that functionality and apply it to the images’ database of their inventory. Already companies like ASOS, Target, Forever 21, etc. are using this functionality to aid product discovery on their mobile and web platform. But soon, with the increasing availability of cheaper tools and solutions, it will become as ubiquitous as the eCommerce solutions themselves.  

Business Intelligence 

Through Business Intelligence (BI), eCommerce stores and AI-driven marketplace companies can understand the performance of their various products and categories effectiveness of their marketing campaigns. By seeing how a particular product is performing and comparing it with market trends, they can modulate their business strategies and work on the products that actually bring them measurable profits. They can also find out the products that are not getting discovered on their platform despite having high demand in the market. This way, they can simply put the details in PIM systems to improve product performance gaps and misinformation.   

BI also helps in improving customer experience by smoothening their buying journey. The BI tools can help in the segmentation of customers to see which of them are regulars, sporadic, or mere visitors. They can then plan their personalized offerings as per their average order value. BI can also proactively find obstacles in customers’ buying journeys and resolve them to reduce churn rates. 

Sentiment Analysis  

Sentiment analytics is another sub-domain of AI and deep learning that makes machines capable of understanding human emotions and sentiments. It uses NLP, an interdisciplinary field of AI and linguistics that performs text analysis and biometrics to systematically identify emotions attached to a certain text. The most basic sentiment analysis algorithms are used to recognize whether the underlying sentiment is positive, negative, or neutral. More advanced programs can even identify emotions with more specificity, like whether the negative emotion is anger, anxiety, or depression and the positive emotion is excitement, gratitude, or joy.   

Such specific emotions help eCommerce marketplaces understand their customers and their choices better. They can evaluate people’s expectations about products through pre-launch marketing campaigns. They can also understand customers’ sentiments about support services to evaluate their feedback.    

Also Read: AI-driven Sentiment Analysis- Benefits, Use cases and Implementation

Product Discovery with Auto-tagging

Today, there is no dearth of eCommerce marketplaces on the internet. From drop shipping benefits to retail stores globalization, eCommerce has long ago been set as one of the most profitable businesses, and hence today, many retailers are striving to find the ideal eCommerce development company that can help them digitalize their services. As such, there remain only a few ways for eCommerce marketplaces to distinguish themselves and their products from the competition; one of these is generating unique and converting product descriptions and tagging.    

While many companies are happy to keep this operation manual, they are missing out on a huge opportunity. AI has been proven to generate content with greater efficiency and tagging with unparalleled accuracy. With the image recognition sub-domain of AI, the eCommerce marketplace can easily identify different products and accurately tag them with the right category. Similarly, by analyzing truly converting and search-engine optimized content, it can easily create product descriptions for multiple products in an incredibly short span of time.   


Benefits of Using Artificial Intelligence in eCommerce Marketplaces

The retail industry is among the first ones to realize the true potential of the latest technological advancements, and AI is not an exception to this precept. Many eCommerce marketplaces have been investing in artificial intelligence to improve product discovery, optimize supply chains, and enhance user experience. Below we have mentioned some of the major benefits that the technology has bestowed upon the online retail industry.   


Targeted Marketing

AI has been proven to be the most effective tool for creating and identifying a consumer persona. It can quickly help analyze behavioral patterns in a user and then offer them personalized choices. For example, if a person has shown interest in maternity clothes, AI-driven marketplaces would efficiently understand that the person would also be interested in buying baby clothes and can display ads related to baby clothes offers. This kind of targeted marketing, on a large scale, can improve the ROI of their marketing campaigns rapidly.   

Supply Chain Automation 

With AI-based predictive analytics, eCommerce marketplaces can automate their inventory management and supply chain operations. They can easily predict the demand for a particular merchandise and ensure that they have sufficient stock to meet the same. They would also have an easier time auditing the quality of the product and estimated delivery timeline with greater accuracy, helping them achieve the best utilization of the resources.  

Improved Customer Loyalty 

By automating various functions of the supply chain and personalizing their offerings to customers, an eCommerce marketplace company can quickly create a huge customer base that would have no reason to switch to any other competitor. Satisfied with the given services, they would easily stay with the brand improving overall customer loyalty.     

Enhanced Brand Image

With improved customer loyalty, you get the added benefit of word-of-mouth marketing and brand awareness. As you acquire more customers and convert them into loyal brand ambassadors, you will generate interest in all their acquaintances, who, again, after interacting with your AI-based eCommerce marketplace.    



With AI, you can bring more efficiency to your entire workflow of an online retail store. The technology can be used to automate inventory management, build an omnichannel experience, create consumer personas, and streamline the sales funnel. With automation on every level, AI facilitates cost savings and operational efficiency, which ultimately strengthens the sales volume and net revenue for eCommerce companies. This is why eCommerce development companies with expertise in AI have become so popular today. Matellio is also one such company that is also offering free consultation services. All you need to do is fill up this form with your requirements and then expect a response from our experts right away. After discussing the details provided by you, they will offer you a free quote and project plan to get your project started right away. 

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