In today’s digital age, buying goods online has never been easier. With just a few taps on a smartphone, consumers can browse through a plethora of products and make purchases without ever leaving the comfort of their homes. However, despite the convenience of online shopping, e-commerce sales growth is slowing down. According to research firm eMarketer, global e-commerce sales are expected to rise by only 9 percent in 2024, compared to 10 percent in 2023 and a whopping 17 percent during the e-commerce boom of 2021. This trend is projected to continue, with the growth rate potentially dropping to as low as 7.4 percent by 2027.
One of the reasons for this slowdown is that more consumers are shifting their spending back to physical stores. Additionally, there is a growing sense of fatigue among online shoppers who are tired of sifting through countless websites with similar products presented in a grid-like format. What consumers continue to crave above all else is a personalized shopping experience similar to what they experience on social media platforms, where algorithms tailor the user experience to their individual preferences.
Juan Pellerano-Rendón, chief marketing officer at e-commerce logistics start-up Swap, emphasizes the importance of catering to customers’ needs and making them feel special and connected to the brand. To meet these demands, e-tailers are turning to artificial intelligence (AI) to enhance the online shopping experience. For example, eBay recently introduced a feature called “shop the look,” where users can view AI-generated images of shoppable outfits based on their browsing patterns and purchase history. This personalized approach has led to an increase in conversion rates for fashion items on the site.
However, not all companies have the financial resources to invest in AI-powered personalized shopping feeds or experimental features like ChatGPT-powered shopping assistants. Moreover, consumer receptiveness to these changes can vary. For instance, Levi’s faced backlash when it introduced AI-generated models on its e-commerce site, leading to the termination of the pilot program. Swedish footwear brand Morjas also had to shut down an AI-powered size recommendation tool due to customer dissatisfaction.
In light of these challenges, brands are finding ways to improve their e-commerce businesses without breaking the bank. Lisa Green, co-founder and chief commercial officer at e-commerce software start-up Daydream, emphasizes the importance of understanding customers’ needs before investing in new technologies. By focusing on creating a magical and on-brand experience for customers, brands can make meaningful improvements to their online stores.
For brands with limited budgets, leveraging existing data to enhance critical selling features like product recommendations can be a game-changer. For example, women’s wear brand Vici used Mastercard’s personalization platform Dynamic Yield to target low-intent shoppers and improve conversion rates. By making simple yet effective updates to their website, brands can react quickly to customer feedback and drive sales without making significant investments in new technology.
In conclusion, the key to success in e-commerce lies in listening to customers and adapting to their needs. By implementing personalized features, improving site usability, and responding to consumer feedback, brands can create a more engaging and satisfying online shopping experience. Ultimately, the goal is to make customers feel special and valued, fostering loyalty and driving long-term growth in the competitive e-commerce landscape.
