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The nation’s online retailers, bullish on holiday sales but worried about supply chain disruptions, are increasing their investments in artificial intelligence systems to help manage operations and increase sales. The move will also help them compete with online giants like Amazon.

Eighty-five percent of retailers expect online sales to increase during the 2021 holiday shopping season, continuing an upward trend from the pandemic lockdowns of 2020, according to the 2021 eCommerce Outlook Report from Anodot and Researchscape. However, 42% of retailers remain concerned about the impact supply chain disruptions are likely to have on inventories and the timely delivery of their products.

Supply chain disruptions and labor shortages are affecting retailers around the globe, prompting many to launch their holiday sales early this year amid concerns that inventory won’t hold up for the duration of the season. Factory closings, a shortage of port workers and truck drivers, and a scarcity of key product components such as microchips have raised fears of short supplies and rising prices.

To help them stay competitive, retailers are turning to artificial intelligence, with 81% of the merchants in the survey saying they planned to increase their AI budgets this year. In addition to AI-enhanced protections such as fraud detection, retailers are looking to AI to help drive growth, with a third of respondents predicting that AI can increase revenues by 40%.

“Retailers need AI to create a flawless purchasing experience,” said David Drai, CEO and founder of Anodot, noting the mix of both uncertainty and optimistic holiday expectations. “Otherwise, shoppers will simply turn to the bigger retailing behemoths or the next online retailer to get their gifts.”

AI is becoming an essential tool in ecommerce, for uses such as making real-time recommendations, enabling targeted campaigns, and improving supply chain management. Online retailers said their top priorities this year are inventory, pricing, and website experience.

The survey was conducted during the month of September, and involved 106 respondents, 91% of whom identified themselves as being in the ecommerce industry.

Read the full report by Anodot and Researchscape.

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