Photo by Kira auf der Heide on Unsplash
October 25, 2024
Will GenAI Influence the 2024 Holiday Shopping Season?
Online holiday shopping could break records this year. According to Adobe, from Nov. 1 to Dec. 31, consumers are predicted to spend $240.8 billion online, an 8.4% jump compared to 2023’s $221.8 billion. Professional services network Deloitte published a similar forecast, predicting online sales of between $289 billion and $294 billion for the 2024 holiday season, a 7% to 9% jump from its estimated $270 billion in online sales last year.
One key driver will be the increasing role of generative artificial intelligence (GenAI). Per Adobe’s report, traffic to retail sites via a GenAI tool has doubled in the first eight months of 2024. Consumers who clicked on a specific site based on the chatbot’s suggestion increased eightfold compared to 2023.
It’s becoming apparent that AI plays a pivotal role in shaping how consumers make buying decisions. This suggests an unprecedented opportunity for retailers to cash in during the 2024 holiday season.
Consumers Are Embracing GenAI
As consumers welcome the ease and convenience of the technology, AI is on track to revolutionize how people shop. Armed with AI-powered tools, shoppers can sort through the overwhelming flood of products, deals, and choices available online.
The survey conducted by Adobe found that 20% of respondents use GenAI to shop and “find the best deals,” with two out of five planning to utilize the technology during the holidays. Additionally, 19% said they use AI to find specific items quickly online, and 15% said they take advantage of it for brand recommendations.
Increased shopping comes with more customer service inquiries. With GenAI, shoppers won’t have to wait for a human to get online and answer basic questions. A customer can get real-time responses from a chatbot working 24 hours a day, which could also eliminate long wait times during the busy holiday season. Simple product order issues can also be cleared up rather quickly.
AI can potentially help find items even if the customer does not know exactly what they are searching for. Using natural language, a consumer can describe approximately what they need, even if they don’t know the name. The tech could then try to match the query and piece together some close options, possibly avoiding the frustration a consumer experiences when presented with irrelevant search results.
While using AI for shopping online certainly has some benefits, there is one significant drawback. An AI chatbot is not a human capable of truly understanding the needs and issues that can potentially crop up during a shopping experience. A customer with a more complicated question may end up going in circles with a bot that can’t provide the answer, essentially failing to comprehend and adjust to the inquiry.
As sophisticated as they are, AI algorithms cannot feel what a human feels, which can alienate a shopper looking for a more personal touch. Additionally, people like to buy, but they don’t want to be sold. An AI bot pushing its recommendations may seem cold and uncaring, leading to a consumer going elsewhere.
How Retailers Benefit From GenAI
Retailers have recognized the trend and are rushing to embrace generative AI. As ready-to-buy consumers flock to retail sites, AI can analyze and track customer behavior and patterns. The feedback will give retailers an advantage when creating and optimizing marketing strategies.
GenAI can also help retailers manage inventory by looking at past trends and predicting demand. Retailers can adjust inventory based on AI suggestions to prevent overstock of some items and shortages of others, a significant advantage during a potentially record-breaking 2024 holiday season.
It’s not just small or medium-sized businesses that can benefit, as the world’s biggest online retailer recently introduced the technology on its website and app. Earlier this year, Amazon brought out Rufus, a chatbot that offers shoppers product recommendations and comparisons. Using conversational phrases, Rufus can narrow down and find exactly what a consumer is looking for in real time.
In September, Amazon announced Project Amelia. The upcoming AI tools will help sellers improve customer service, write product descriptions, generate review summaries, and estimate needed inventory.
While chatbots can handle tasks that enhance the shopping experience, they still fall short of building the trust-based relationships often required to close sales. Many consumers express a mistrust of technology, particularly when it’s not fully understood, leading to hesitation when it’s time to make a purchase. This creates a challenge for retailers who aim to improve the shopping experience with these tools.
As both businesses and consumers adopt GenAI, the 2024 holiday shopping season will be unlike any before it. Retailers will have access to data and insight that can help streamline operations. At the same time, consumers will be able to get a more personalized, enjoyable shopping experience.
Discussion Questions
How will generative AI change the way consumers approach holiday shopping in 2024 compared to previous years?
In what ways could AI-powered customer service tools, like chatbots, enhance the shopping experience during peak holiday periods?
What ethical considerations should retailers keep in mind as they increasingly rely on AI to track consumer behavior and optimize marketing strategies?
Poll
Loading …BrainTrust
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
Brian Delp
CEO, New Sega Home
Gary Sankary
Retail Industry Strategy, Esri
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Yes, in some ways it will. More people are using Gen AI for gift ideas and suggestions. However, in the broader scheme of things, this still remains niche and is focused mostly on younger shoppers. It is also not a replacement for inspiration and ideas within stores through compelling displays, or digital gift catalogues in online stores. Human curation still plays a really key role in these areas.
While it doesn’t replace the inspiration and ideas for stores or other vehicles at this point (although I’d be curious how many retailers are using it unbeknownst to anyone) it certainly will be used by shoppers to get ideas and do research. I’ve replaced Google Search with Perplexity for the most part now, and it is, day-by-day, continually getting better for finding ideas, doing research, and evaluating purchasing options. And I’m not a younger shopper!
You & the article is spot on – GenAI is already influencing consumer shopping experiences, largely through product descriptions and review summaries. Beyond gaps in AI algorithms not feeling what a human does, another element of trust creation is around the corner. I don’t think we are too far away from easy-to-use conversational interfaces that allow consumers to dynamically filter and analyze reviews based on specific criteria like recency or relevance. This type of targeted, interactive engagement with AI-processed content could develop further legitimacy to the technology’s output. Add that to the (eventual) empathy bridge that is being created and we are all in for a very different shopping experience in the not-too-distant future.
Yes, GenAI will change how some consumers approach their holiday shopping, but The technology is still young. I don’t believe we are even close to the tipping point where the average customer will be using the technology. That said, it needs to start somewhere, and we will see adoption and usage grow in the next year plus.
I’m not sure how many customers will be using GenAI outside of the sites it’s already integrated into, rather than lead generation. Features like Amazon’s Rufus will likely help customers with their decision making. I see that as likely the biggest use case this upcoming season.
In order to boost holiday productivity and engagement, companies are integrating generative AI throughout the value chain. It is a gradual trend, but it will become more evident during the 2024 holiday season than ever before.
As GenAI interacts with consumers in more areas of their lives, retailers will be able to engage them in new ways this holiday season.
In order to deliver enterprise-wide scale, companies delivering consumer-facing products need to manage risk. AI will therefore be used by a variety of retailers and channels to provide accelerated holiday solutions for consumers.
Retailers can make physical store displays more effective this year by combining smart display devices, conventional AI analysis of holiday sales data, and GenAI’s conversational capabilities to produce more compelling promotional copy and design elements.
Since GenAI will generate offers and marketing communications quickly and in any quantity, retailers can tailor them to each holiday shopper rather than to a demographic group. Furthermore, GenAI will create highly personalized holiday shopping experiences by analyzing recent browsing histories.
This holiday season, retailers can increase customer satisfaction by tailoring product recommendations, promotions, and marketing campaigns to individual customers’ holiday preferences and behaviors.
It will be easier for consumers to return products, and feedback will be available, which will stimulate interest in other holiday purchases.
This year at least, I think consumers, who are comfortable with Generative AI or who use Amazon’s AI will use these tools the same way they use Google- to find product information and reviews. The question in my mind is will consumers find AI-generated results to be somehow more credible than Google because the answers are more conversational? I think many consumers have developed a certain amount of skepticism around their Google or Bing shopping queries and the paid results they’re served up.
More holiday shoppers will turn to generative AI as their helpful shopping assistant. GenAI cuts through the chaos of abundant product choices by simplifying and personalizing recommendations for relevant results and time savings. GenAI also elevates the customer experience by summarizing the highlights of product reviews, which saves shoppers the hassle of examining plenty of feedback.
For all of the excitement about the brave new world we are ready to enter with AI, this technology will continue to be mostly promise as opposed to delivering real value. Customer service with a chatbot? Please, spare me. Personalized shopping experience? With Alexa? Seriously?
Maybe better search. Maybe. But it never fails to amaze me how often you search for something and the results are….no where near what you are looking for.
This revolution is five years out with a lot of trial and error in between. Trust me on this one.
Given its rich semantic understanding, generative AI enables retailers to easily deliver the hyper-personalized shopping experiences consumers seek at scale across every touchpoint. This will help retailers maximize revenue, boost customer loyalty, and improve efficiency and productivity for merchandising teams.
As AI becomes more integrated into retail, it’s essential to consider the ethical implications. First and foremost, data privacy is crucial. Retailers need to be transparent about how they collect and use customer data, and they must implement strong security measures to protect sensitive information. Second, we need to be wary of algorithmic bias. AI algorithms can perpetuate biases if they’re trained on biased data. It’s important to ensure that AI systems are fair and unbiased. Third, transparency is key. Retailers should be open about how they use AI and how it impacts the customer experience. Finally, let’s not forget the human touch. While AI can automate many tasks, human interaction is still essential. Retailers should use AI to enhance human capabilities, not replace them. By carefully considering these factors, retailers can harness the power of AI to create positive and ethical shopping experiences.