More than 2-in-5 Australian businesses are already using AI for e-commerce: New research from PayPal reveals

The 2023 PayPal eCommerce Index research released by PayPal Australia today reveals that 42% of Australian businesses are already using artificial intelligence (AI) to boost their e-commerce operations and that more than 2-in-5 Australian consumers (43%) would use AI to help them shop online.

Andrew Toon (pictured), General Manager of PayPal Australia said, “AI has captured the world’s attention and imagination but for many of us it’s already a normal part of our day-to-day lives. From hailing a ride share to the facial recognition on your phone, receiving weather predictions or using a chatbot to tell your supermarket the milk didn’t arrive – AI has become so ubiquitous that we may not even realise its presence.”

Business using AI for e-commerce

The research found that Australian businesses are ahead of consumers in their adoption of AI. Although more than 2-in-5 Australian businesses (42%) are already using AI to power at least one aspect of their e-commerce activities, only about 1-in-5 Australian consumers (18%) have used a generative AI tool (such as ChatGPT, MidJourney or Dall-E). However, this figure rises to close to 1-in-3 for Australians under 40 years old (32% of whom have used a generative AI tool).

The top 6 uses of AI in e-commerce by Australian businesses today are:

• Writing web content (e.g. website copy, social media, product descriptions etc) (15%)
• Providing personalised product recommendations to customers (15%)
• Creating visual design elements (e.g. graphics, web design etc) (14%)
• Managing returns, exchanges or updates to consumers on delivery status (14%)
• Responding to social media comments or messages (13%)
• Detecting fake or auto-generated comments and reviews (12%)

Another 43% of Australian businesses who are not currently using AI for e-commerce say that they would like to, showing the appetite for adopting these emerging technologies to drive efficiencies and deliver improved customer experiences.

Australian consumer use of AI

Many Australian consumers also see the benefits of using AI for e-commerce. The 2023 PayPal eCommerce Index found that more than 2-in-5 Australians (43%) say they would use AI to help them shop online, with this rising to more than half of Australians (56%) under the age of 40. Pointing to potential future adoption, a much larger portion, two-thirds (63%), of Australia’s Gen Z shoppers (aged 18-26), would use AI for online shopping assistance.

“AI will give consumers powerful tools to help them shop smarter. This includes sophisticated product discovery to find the best price, order the perfect size, and optimise and track shipping and delivery across multiple stores. But more than that, AI can deliver personalised product recommendations that suit our individual tastes and budgets. This tailored approach will help us find the ideal items while creating a more engaging and enjoyable shopping experience,” said Andrew Toon.

Beyond online shopping, half of Australians (50%) would use AI to help them in their day-to-day lives, with this rising to two-thirds for Australians under 40 years old. Top use cases for AI in daily life include meal planning (30%), drafting work-related documents such as emails and CVs (25%), creating workout plans (22%), online tutoring (22%) and to draft personal documents such as greeting cards or wedding speeches (18%). One-in-fourteen Australians (7%) would even use AI for a conversation partner.

The 2023 PayPal eCommerce Index also reveals that 43% of Australian businesses are already using AI across their broader business operations. The most prevalent uses being to design advertising and marketing materials (18%), bookkeeping or accounting tasks (18%), analysing market competition (16%), drafting business-related documents such as plans and emails, and creating staff rosters (12%).

Concerns around AI

The research shows that while Australian businesses and consumers at a macro level see the benefits of AI for e-commerce, broader life, and business operations, they also recognise that AI may pose risks. While a third of businesses (34%) believe AI will enable greater efficiency and save time, both consumers (42%) and businesses (29%) worry that biased programming could lead AI to make inaccurate recommendations.

“At PayPal, we believe in responsible AI innovation. Like all new technologies, companies should be guided by ethical principles for the design and use of AI. The firms that design and deploy these powerful tools, like ourselves, need to think ahead and anticipate outcomes to appropriately mitigate any potential risks. It’s why we have adopted a Responsible AI framework and established a Responsible AI Steering Committee consisting of cross-functional representatives who meet on a regular basis to oversee AI-related developments,” said Andrew Toon.

In relation to online security, a third of businesses (34%) are concerned AI will lead to more sophisticated cybercrime and half of consumers (47%) are concerned that deepfakes will be used for fraud.

The need for advanced fraud protection in the age of AI

“AI-powered cyberattacks are unfortunately not relegated to the realm of science fiction, but a current reality. Using artificial intelligence, hackers can create programs that mimic known human behaviours. Those hackers can then use these programs to trick people into giving up their personal or financial information and potentially bypass traditional, rule-based fraud checks that businesses might have in place. The best way businesses can hope to counter AI cybercrime is with an AI- enabled risk prevention solution,” said Andrew Toon.

PayPal processes approximately 58 million transactions a day. When a customer completes a transaction on PayPal’s platform, hundreds of different measures are employed, including powerful AI models, to assess the risk or potential for fraud. This allows PayPal to conduct hundreds or even thousands of risk checks within a two-second window on a transaction.

PayPal has leveraged AI for over a decade to protect consumers, manage risks, and complete advanced fraud detection which has led to tremendous impact. From 2019 to 2022, at a time when PayPal’s global payment volumes nearly doubled from $712 billion to $1.36 trillion US dollars, the company cut its loss rate by nearly half, thanks to technology advances including AI algorithms.

Businesses using PayPal benefit from the company’s 20+ years of experience in e-commerce, and from sophisticated applicative AI that helps reduce fraud and provide richer, safer customer experiences so online retailers can focus on growing their business and doing what they do best.