INTELLIGENT

(SMART) E-
COMMERCE
CHAPTER 7
Learning Objectives
1. Understand the reasons for intelligent e-commerce systems
2. Become familiar with the essentials of artificial intelligence
3. Cite the major AI applications in e-commerce
4. Understand knowledge systems and their management
5. Understand intelligent computerized personal assistants and their
availability
6. Gain knowledge about IoT
7. Describe self-driving cars, smart homes and appliances, and smart cities
7.1 An Overview of Intelligent E-Commerce
 There is an increasing trend to make e-commerce “smarter”
 This means that we can see more automation in e-commerce
 Several applications are already based on artificial intelligence (AI).
 For example, the area of machine translation of languages is already helping
people buy online products that are advertised in languages they do not speak.
Another area is that of knowledge-based systems (also known as expert
systems).
These systems can provide advice, assist people to make decisions, and even
make decisions on their own.
For example, such systems can approve or reject buyers’ requests to purchase
online (if they are not preapproved or do not have a line of credit).
7.2 THE ESSENTIALS OF ARTIFICIAL INTELLIGENCE
 The major building technology in intelligent e-commerce is artificial
intelligence (AI).
Artificial Intelligence (AI): Definitions and Characteristics
 many experts agree that AI is concerned with two basic ideas:
(1) the study of human thought processes
(2) the representation and duplication of those thought processes in machines
(e.g., computers, robots).
 One well-publicized definition of AI is “behavior by a machine that, if
performed by a human being, would be called intelligent.”
 Artificial intelligence attempts to provide certain capabilities, but in
general, it still does not match human intelligence.
The Content of the AI Field
Here we present only some major AI derivatives used in e-commerce.
Intelligent Agents
 is an autonomous, relatively small, computer program that observes and acts
upon a changing environment and directs its activities toward achieving
specific goals, related to the above changes, by running specific tasks,
autonomously.
 Example : Amazon’s Alexa, Apple’s Siri
 Intelligent agents are applied in
 personal digital assistants
 e-mail servers
 news filtering and distribution
 appointment handling
 automated information gathering
Machine Learning
 AI systems do not have the same learning capabilities that humans have;
 rather, they have simplistic (but improving) learning capabilities
(modeled after human learning methods) called machine learning.
 The machine learning scientists try to teach computers to identify patterns
and make connections by showing it a large volume of examples and related
data.
 Example : Product recommendations
Robotics Systems
 A classical definition is that a robot is an electromechanical device that can
be programmed to perform manual and/or mental tasks.
 Robots can be fully autonomous, programmed to do tasks completely on their
own, or they can be remotely controlled by a human
 A new generation of robots is designed to work
as advisors
 they are planned for use in areas such as
investments, travel, medicine, and academic
advising.
 Robots can help in online shopping by
collecting shopping information (search) and
conduct price and capability comparisons.
These are known as shopbots
Natural Language Processing
 gives computer users the ability to communicate with a computer in their
native language.
 This technology allows for a conversational type of interface, in contrast to
using a programming language
 NLP is how voice assistants, such as Siri and Alexa, can understand and
respond to human speech and perform tasks based on voice commands .
Speech (Voice) Understanding
 A speech (voice) understanding is the recognition and understanding of
spoken languages by a computer.
Language Translation
 Machine translation uses
computer programs to translate
words and sentences from one
language to another.
 you can use Google’s free
Translate to translate dozens of
different languages
(translate.google.com).
Chatbots
 Short for chat robot
 is a computerized service that enables
conversations between human and
computers, usually over the Internet.
 The conversations are frequently done by
short questions and answers.
 The service is also available at messaging
services such as Facebook’s Messenger and
on Twitter.
Chatbots in E-Commerce
 For example, Taco Bell is experimenting with a food ordering chatbot on
Slack (a messaging service).
 Example: Nordstrom Uses Chatbots
 Instead of browsing a website, you will have a conversation with the
Nordstrom bot, mirroring the type of experience you would get when you go
into the retail store.”
Knowledge Systems
 These systems, which are presented in section “Knowledge (Expert)
Systems”, are computer programs that store knowledge, which the
applications use to generate expert advice and/or solve problems.
 It also helps people verify communications and can make certain types
of routine decisions
7.3 RECENT AI APPLICATIONS IN E-COMMERCE
Here is what the major technology companies do with AI:
• Apple.
 Apple is continuously improving Siri (its personal assistant robot)
• Google.
 One major effort is Google Brain, a secretive project that includes machine
learning.
• Facebook.
Facebook’s CEO is developing a personal assistant robot for his own use
Facebook says that its new AI can understand text with near-human accuracy
• IBM.
 IBM pioneered the concept of smart commerce in 2013/2014
 At that time, they concentrated on big data and analytics
 A major part was the use of data mining technologies (an AI product) for
discovering hidden correlations
 This enables a better predictive analysis, which is used in EC strategy and
decision-making
• Amazon.com.
This company pioneered the use of AI in the 1990s.
The most well known are their book recommendation engines.
The company is also using predictive analysis and machine learning to assess
demand for its products.
AI in E-Commerce:
 Here are examples of recent applications:
 Marketing and Advertising
Predictive analytics and AI are used to customize and automate e-mail
marketing campaigns
 Customer Service and Advice
Chatbots are used extensively to answer customers’ questions.
Example: Chatbots Advising in Healthcare
Baidu’s Melody is an intelligent chatbot that can help patients to determine
whether or not they should go to see a doctor.
Melody gains her wisdom by pulling data from digitized material, including
research papers and online forums
 AI in B2B
AI applications in B2B are mostly in e-procurement, supply chain management,
and Smart Robotics
7.4 KNOWLEDGE (EXPERT) SYSTEMS
An Overview of Knowledge Management
knowledge management (KM) refers to the process of capturing or
creating knowledge, storing and protecting it, updating it constantly,
disseminating it, and using it whenever necessary.
It can also be created by AI systems.
It is then examined, interpreted, refined, and stored in what is called an
organizational knowledge base, or it can immediately be used in different
applications.
A major purpose of an organizational knowledge base is to allow for
knowledge sharing.
Knowledge Management Types and Activities
Organizational knowledge is embedded in the following key resources:
(1)human capital
 employee knowledge, competencies, intelligence, and creativity;
(2) organizational capital
 organizational experiences (best practices, patents, manuals);
(3) knowledge generated by AI systems;
(4) customer and partner knowledge
experience of working with customers and business partners.
This organizational knowledge must be managed properly and leveraged
through sharing and dissemination.
This is the major purpose of KM, which has the following major tasks:
• Create knowledge.
Knowledge is created as people gain more experience
• Capture knowledge.
Existing knowledge must be identified and assembled.
• Refine knowledge.
New knowledge must be placed in context so that it is actionable.
• Store knowledge.
must be stored into an easily retrievable format in a secured knowledge
repository.
• Update knowledge.
The knowledge must be kept current.
It must be reviewed to verify that it is relevant and accurate;
if not, it must be updated.
• Disseminate knowledge
Knowledge must be made available in a useful format to anyone in the
organization who needs it
 The objective of e-commerce is to automate KM activities as well as help
in using the stored knowledge.
How Is Knowledge Management Related to E-Commerce?
Organizations need knowledge, which is provided by KM, in order to better
perform their tasks.
Examples
•Indeeli Inc. uses KM analytics to identify the needs of frequent visitors. As a
result, the company modified its e-commerce strategies.
KM and Social Networks
 A major venue of knowledge creation is in online communities, including
social networks.
 This is done by crowdsourcing and customer and employee discussions and
feedbacks.
 Example: IBM Jam Events - Since 2001, IBM has been using communities
for online brainstorming sessions, idea generation, and problem solving.
Expert Systems
An expert system, also referred to as knowledge-based system
is a computer system that uses knowledge to solve problems that require
expertise and provide advice to nonexperts, usually in specific domains.
Thus, it emulates the decision making of human experts.
It is considered a derivative of artificial intelligence.
Knowledge required for this capability is stored in a knowledge base and
organized there such that it can be disseminated to nonexpert users upon
request.
Expert systems (ES) are used extensively in many AI applications in EC
(e.g., in product recommenders and in advisory systems).
The Process and Capabilities of Expert Systems
 Knowledge of specific domain, or expertise, resides with human experts
and/or in documented sources.
 This knowledge is collected by a knowledge acquirer, who uses it to
program the system (or she/he asks a system builder to do it).
 The knowledge is stored in a knowledge base where it is organized.
 This knowledge can be in the “cloud,” namely, it can be shared by many
users.
 When a user interacts with the system, a dialog between the user and the
inference engine takes place.
 The inference engine then selects the appropriate knowledge and, at the
end of a Q&A dialog, provides a solution or advice.
Knowledge-Based System
Expert systems are often used synonymously with the knowledge-based
system.
However, some distinguish between the two.
Expert system refers to the type of task the system is trying to solve, to replace
or aid a human expert in a complete task.
Knowledge-based system refers to the architecture of the system, that it
represents knowledge explicitly rather than as procedural code.
That is, virtually all expert systems are knowledge-based systems, but many
knowledge-based systems are not expert systems.
There are a large number of applications of knowledge-based and expert
systems.
7.5 INTELLIGENT PERSONAL ASSISTANTS AND ROBOT ADVISERS
Amazon’s Alexa
 Amazon Alexa is a cloud-based intelligent personal voice assistant product
that can do many things such as:
• Answer questions in several domains
• Control your smartphone operations by voice commands
• Provide real-time weather and traffic updates
• Make to-do lists
• Arrange music Playbox
• Set your alarms
• Play audio books for you
• Control home automation devices
• Analyze shopping lists
Apple’s Siri
 Siri (short for Speech Interpretation and Recognition Interface)
 is an intelligent virtual personal assistant and knowledge navigator.
 Siri can :
• answer questions
• make recommendations
• perform action by delegating requests to a set of Web services.
Other Personal Assistants
Several other companies have virtual personal assistants.
For example:
• Google Home
• Microsoft Cortana
IBM Watson
Probably the smartest virtual personal assistant is IBM Watson.
The machine can:
 understand and speak eight different languages.
 It can read close to a billion (1000 million) pages each second.
 It can learn, understand, reason, and interact.
 It is built with 50 different AI technologies ranging from NLP to machine
vision.
Personal Robots
Built on the capabilities of chatbots and personal assistants
Some of these robots can also do physical tasks.
For example, while chatbots are used to provide information as
receptionists and in airports as guides, personal robots can improve the
service.
7.6 THE INTERNET OF THINGS AND E-COMMERCE
The Essentials of IoT
 In general, the IoT refers to a situation where many objects (people, animals,
items) with embedded microprocessors are connected mostly wirelessly to
the Internet.
 That is, it uses ubiquitous computing.
Embedding computers and other devices into items everywhere and
connecting all devices to the Internet permits extensive communication
and collaboration between users and items
This kind of interaction opens the door to many applications
Definitions and Characteristics
“The Internet of Things (IoT)
 is the network of physical objects-devices, vehicles, buildings, and other
items embedded with electronics, software, sensors, and network
connectivity- -that enables these objects to collect and exchange data.
The Internet of things allows objects to be sensed and controlled remotely
across existing network infrastructure, creating opportunities for more direct
integration of the physical world into computer-based systems, and resulting
in improved efficiency, accuracy, and economic benefit;
 IoT is a connected ecosystem in which: :
• Large numbers of objects (things) can be connected.
• Each thing has a unique definition (IP address).
• Ability to receive, send, and store data, automatically.
• Delivered mostly over the wireless Internet.
• Built upon machine to machine (M2M) communication .
The Major Benefits of IoT
 The major objective of IoT systems is to improve productivity, quality, speed,
and the quality of life.
 the major benefits of IoT are:
• Creates new revenue stream.
• Optimizes asset utilization.
• Improves sustainability.
• Improves workers’ productivity.
• The Internet of things is changing and improving everything
• Systems will anticipate our needs.
• People will make smarter decisions/purchases.
• Greater accuracy
• Identifies problems quickly (even before they occur)
• Reduces cost by automating processes.
• Instant information availability.
• Quick and inexpensive tracking.
• Expedites problem resolution and recovery.
• Supports facility integration
The Drivers of IoT The following are the major drivers of IoT:
• 50 to75 billion “things” may be connected (by 2020–2025).
• Connected autonomous “things”(e.g., cars) are all over the IoT.
• Broadband Internet is more widely available and increasing
• Cost of connecting devices is decreasing.
• More devices are created (via innovation) and they are interconnected
• More sensors are built into devices.
• Smartphones’ penetration is skyrocketing.
• Wearable devices are all over.
• Speed of moving data is increasing, to 60HTz.
• Protocols are developing for IoT (e.g., WiGig).
• Customer expectations are on the rise
7.7 SELECTIVE DEMONSTRATIONS OF IOT IN ACTION
 We start with a well-known example:
Your refrigerator can sense the quantity of food and texts you when inventory
is low (sensor-to-insight).
One day the fridge will be able to place an order for items that need
replenishment, pay for them, and arrange delivery (sensor-to-action).
Smart Homes and Appliances
In a smart home, the appliances such as computers, refrigerators, washers,
dryers, lights, air conditioners, heaters, televisions, and security systems
are interconnected and can be controlled remotely by smartphones via the
Internet.
• Lighting.
Users can manage their home lighting from wherever they are.
• Energy management.
Home heating and cooling systems can be controlled via remote to adjust the
thermostat in the house
• Water control.
WaterCop (watercop.com) is a system that reduces water damage by
monitoring leaking water via a sensor, which sends a signal to the valve,
causing the valve to close.
• Home entertainment.
Audio and video equipment can be programmed to respond to a remote control
device.
• Home security and safety.
Home security can also be supported by cameras, so you can remotely view your
property in real time. Sensors can be used at home to detect intruders, keep an
eye on working appliances, and much more.
Smart City
 A smart city uses information and communication technology (ICT) to improve
operational efficiency, share information with the public and provide a better
quality of government service and citizen welfare.
 The main goal of a smart city is to optimize city functions and promote
economic growth while also improving the quality of life for citizens by using
smart technologies and data analysis.
 The value lies in how this technology is used rather than simply how much
technology is available.
 Often considered the gold standard of smart cities, the city-state of
Singapore uses sensors and IoT-enabled cameras to monitor the cleanliness
of public spaces, crowd density and the movement of locally registered
vehicles. Its smart technologies help companies and residents monitor
energy use, waste production and water use in real time. Singapore is also
testing autonomous vehicles, including full-size robotic buses, as well as
an elderly monitoring system to ensure the health and well-being of its
senior citizens.
Smart Cars (Self-Driven)
also known as driverless cars, robot-driven cars, self-driving cars, and
autonomous cars, are already on the roads in several places.
These cars are electric, and they can create a revolution by their ability to
reduce emissions, accidents, and traffic jams
The cars have sensor systems that may prevent collisions, and the cars can be
completely autonomous.