Photo by Kira auf der Heide on Unsplash
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.