This post is part of G2's 2024 technology trends series. Read more about G2’s perspective on digital transformation trends in an introduction from Chris Voce, VP, market research, and additional coverage on trends identified by G2’s analysts.
AI-powered personalization will drive e-commerce growth
In 2024, AI-powered personalization, or hyper-personalization, will outstrip traditional personalization in e-commerce. Software vendors will actively incorporate AI into personalization software to unlock growth potential for brands and retailers.
While personalization has been around for a long time, the competitive e-commerce landscape drives brands to offer new ways to enhance the shopping experience.
In my previous article, I highlighted how traditional browsing is slowly dying out as online customers crave more curated experiences. While it has stayed true as I write this, the advancement of AI in 2024 and the upcoming years will be dominated by hyper-personalization.
Artificial intelligence (AI), machine learning (ML), and natural language processing (NLP) have already started penetrating e-commerce systems.
These models enhance product recommendations and discovery features on e-commerce websites. These predictive models will also be able to track and analyze the customer’s purchase history and browsing behavior in real time and create a unique shopping experience for each customer.
Hyper-personalization can also create personalized ads, content, messages, and emails, set dynamic pricing, and deploy AI-powered chatbots into the e-commerce website. It will deep dive into consumer segmentation and demographic details and improvise models per ever-changing human behavior.
These efforts will delight shoppers, influence sales conversion, and increase customer satisfaction.
G2 data measures the impact of AI on time to ROI
While implementing e-commerce personalization software with AI features can benefit brands, retailers, and customers, it also allows software vendors to consolidate existing systems with AI or build new personalization software based on AI capabilities.
As of August 2023, G2's E-Commerce Personalization Software category, home to 4,749 reviews, had 233 products. The category reviews have grown by 159% in the last three years, signaling active usage of e-commerce personalization software.
Based on the total reviews gathered for the e-commerce personalization category, 18% of the products have been reviewed for an AI-related feature. The remaining 82% of the products either lack such features or the reviews don’t signal any active presence of AI.
We also discovered that buyers of e-commerce personalization software without AI capabilities take longer to realize ROI benefits, whereas its counterpart takes a shorter duration.
Although the difference between both is only a month, with full AI penetration and continuous improvisation of AI-powered products, we expect users will achieve quicker ROI.
AI to influence e-commerce personalization software’s time to ROI
G2’s 2023 Software Buyer Report shows ROI within six months as one of the top three considerations for purchasing software across companies of all sizes. Also, 81% of the 1,700 global software buyers surveyed shared that the software they are buying must have AI capabilities.
E-commerce personalization software, with and without AI capabilities, shows an average ROI of around 9 and 10 months, respectively. Even though the difference between these two isn’t significant now, it hints at a developing trend where AI will become a crucial part of e-commerce personalization.
Going forward, we expect e-commerce personalization software users to achieve an ROI using AI-powered products in six months or less.
A smart investment
With this potential to deliver significant ROI benefits, implementing AI features in e-commerce personalization software offers a compelling opportunity for software vendors and retailers to tap into this evolving industry, gaining a competitive advantage and driving customer satisfaction.
Subhransu is a Market Research Analyst at G2 concentrating on applications technology. Prior to joining G2, Subhransu has spent 2 years working in various domains of marketing like sales and market research. Having worked as a market research analyst at a renowned data analytics and consulting company based in the UK, he holds expertise in deriving market insights from consumer data, preparing insight reports, and client servicing in the consumer and technology domain. He has a deep inclination towards tech innovation and spends most of his time browsing through tech blogs and articles, wiki pages, and popular tech channels on youtube.
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2024 Trends: AI to Revolutionize E-commerce PersonalizationThe increasing demand for hyper-personalization in e-commerce will drive software vendors to consolidate AI with their personalization software actively.https://research.g2.com/insights/ecommerce-trends-2024https://learn.g2.com/hubfs/G2CM_C04_Digital_Trends_2024_19_Subhransu_Sahu_Retail_and_Commerce_F1.png2023-10-11 10:24:29Z
Subhransu SahuSubhransu is a Market Research Analyst at G2 concentrating on applications technology. Prior to joining G2, Subhransu has spent 2 years working in various domains of marketing like sales and market research. Having worked as a market research analyst at a renowned data analytics and consulting company based in the UK, he holds expertise in deriving market insights from consumer data, preparing insight reports, and client servicing in the consumer and technology domain. He has a deep inclination towards tech innovation and spends most of his time browsing through tech blogs and articles, wiki pages, and popular tech channels on youtube.https://research.g2.com/insights/author/subhransu-sahuhttps://learn.g2.com/hubfs/Subhranshu.jpeghttps://www.linkedin.com/in/sahusubhransu/