Product recommendation engines and their importance in e-commerce

Product recommendation engines are reshaping e-commerce. According to Mordor Intelligence, the recommendation engine industry will reach $15.13 billion by 2026. These AI-powered systems reduce add-to-cart time, display accurate product search results, predict purchases, and deliver journey-aware product suggestions for online retailers.

These engines are some of the most effective methods used by online retailers to provide relevant customer experiences and sales. This blog covers the basics and highlights the benefits of implementing intelligent recommendation systems in your e-commerce enterprise. Let’s get started. 

What are product recommendation engines?

A product recommendation engine is a form of data filtering and display technology that uses machine learning and deep learning to recommend relevant items to users or customers. It works by detecting patterns in consumer behavior data, collected from actions on the website. Retail and e-commerce businesses use recommendation systems to guide customers on what to buy based on shopping habits and demographic data. These engines support the goals and KPIs of e-commerce businesses. 

Types of Recommendation Engines

Collaborative filtering engines 

This filtering strategy is based on gathering and evaluating user data such as purchasing habits, activities, and preferences. It involves forecasting what customers would like based on similarities with other users.

Content-based filtering engines 

In this filtering system, an algorithm suggests products based on what similar buyers selected. While effective, this technique requires significant time and data processing resources.

Hybrid filtering engines 

This type of filtering uses attributes of both collaborative and content-based filtering. When a buyer puts a product in their cart that is found to be “similar,” to other products, the algorithm suggests comparable products to the consumer.

Want to know more about which recommendation system best fits your goals? Schedule a free conversation with our experts today. 

Benefits of product recommendation engines for e-commerce

Improves customer experience & satisfaction 

Customers expect simple and straightforward purchasing processes. Recommender systems improve customer experiences and satisfaction. For example, while browsing your e-commerce site, customers may lose patience when they encounter inconveniences such as seeing sold-out products in search results. Such experiences can and should be avoided with a recommendation engine that filters for this.

Helps turn occasional shoppers into regular customers

E-commerce businesses are always looking to broaden their reach and increase sales. Traditional technology not powered by AI may not help your marketing and sales strategies reach these objectives. Intelligent recommendation systems persuade occasional buyers to commit to your products or brand by displaying the best results and guiding them to the cart. 

Increase average order value (AOV)

Product recommendation engines increase the average order value by encouraging consumers to purchase more products. For example, someone planning to buy pet food online might get recommendations for pet toys making them more likely to buy these too. 

Controlling and managing inventory 

We associate product recommendation engines with customers, but they play an equally important role controlling and managing inventory too. These systems provide insights on trends and sales prediction, which identify future demand, i.e., inventory. The recommendation system is constantly optimized based on inventory. It allows an agile solution to traditional inventory management challenges such as visibility, tracking, overstocks, and centralization. 

Prevents customers from leaving for competitors 

Customers want the best deals they can find, and comparing prices online is easy. Customers spend approximately 52 seconds on ecommerce sites. A good recommendation engine shows customers desired products quickly before they leave for another website.

Bottom line

Product recommendation systems enable bulk customization on e-commerce websites and allow businesses to maximize consumer lifetime value by recommending the service and products that’ll generate the most valuable relationships. They’re an essential part of business that will continue gaining relevance in years to come. 

Ready to empower your e-commerce business with top of the line AI-powered recommendation engines? Click here to start the conversation with Fusemachines today.