Artificial Intelligence (AI) in e-commerce market is anticipated to grow at a significant CAGR of 14.8% during the forecast period (2024-2031). Artificial intelligence (AI) can help e-commerce businesses improve the customer experience, increase sales, and stay competitive. According to the Asian Development Bank, in November 2023, E-commerce will continue to grow in the global economy, with a share of global gross domestic product (GDP) of 3.8% in 2019 and 5.6% in 2022 and is forecast to reach 6.4% in 2025. The global retail e-commerce market sale was valued at $5.2 trillion in 2021 and is forecast to reach $7.5 trillion by 2025. The growing e-commerce sector with the rising integration of AI in it is driving the global market growth.
Market Dynamics
Increasing Adoption of Personalized Product Recommendations
Businesses can benefit from AI in e-commerce by offering more individualized product recommendations. Businesses can provide customized offers and product recommendations that have a higher conversion rate by utilizing client data. Giving clients pertinent recommendations help businesses grow their revenue and profits. AI-powered solutions can also enhance user experience by analyzing client comments. This makes it a greater probability that customers will return in the future by assisting businesses in ensuring a seamless and delightful buying experience. Businesses can increase profitability and success by using AI to boost customer satisfaction and streamline procedures. AI is rapidly forming a standard in e-commerce, those that do not adopt this technology risk falling behind.
Growing Demand for AI Warehouse Management Systems (WMS) Software
The AI warehouse management system (WMS) software provides a platform for better visibility into a business's entire inventory. It can also automate the monitoring and management of supply chain fulfillment operations from the depot to the distribution center to the store shelf. These software solutions are designed to support the entire global supply chain needs of international businesses, including their needs for distribution, manufacturing, and service businesses. This allows organizations to control, monitor, and manage warehouse operations from the time goods or materials enter a warehouse to when they are shipped out. Another important feature is that an AI WMS helps a company maximize its labor and space usage and equipment investments by coordinating, delegating, and optimizing resource usage and material flows. The latest innovation in the software is the application of a cloud-based WMS designed to connect to consumers using the Internet of Things and digital technology for a fulfillment solution that provides real-time visibility, scalability, and market reactivity.
Market Segmentation
- Based on the component, the market is segmented into software and services.
- Based on the deployment mode, the market is segmented into cloud, and on-premise.
- Based on the application, the market is segmented into warehouse automation, supply chain analysis, customer relationship management, product recommendation, merchandizing, fake review analysis, and customer service.
Software is Projected to Hold the Largest Segment
The software segment is expected to hold the largest share of the market. The primary factors supporting the growth include increasing demand for AI in e-commerce software for better customer experience, customer service, improved efficiency, and reduced expenses. Amazon Web Services, Inc. offers Commerce.AI to activate unstructured customer experience data. The technology extracts attributes, intents, marketing opportunities, and other insights from voice, text & video data. The pre-built integrations and machine learning models pull such data from public and internal sources such as e-commerce product reviews, call centers, chat, videos, and others.
Regional Outlook
Global AI in the E-commerce market is further segmented based on geography including North America (the US, and Canada), Europe (the UK, Italy, Spain, Germany, France, and the Rest of Europe), Asia-Pacific (India, China, Japan, South Korea, and Rest of Asia-Pacific), and the Rest of the World (the Middle East & Africa, and Latin America).
Growing Demand for AI in E-Commerce in Asia-Pacific
- The regional growth is attributed to pivotal factors such as increased smartphone usage, the convenience and safety of purchasing daily essentials and luxury products from home, the availability and variety of products and sellers, and rapidly evolving technology that includes voice recognition, and augmented reality. According to the Asian Development Bank, in November 2023, Asia-Pacific holds the largest share of the global business-to-consumer (B2C) and retail e-commerce market and is expected to account for 61.0% of the global total by 2025.
Global AI in E-Commerce Market Growth by Region 2024-2031
North America Holds Major Market Share
The market growth is attributed to the integration of innovative technology that enhances user experiences, streamlines processes, and opens up new creative opportunities. Market players in the region offering effective solutions for AI in commerce, brands can create seamless, personalized buying experiences that increase customer loyalty, customer engagement, retention, and share of wallet across B2B and B2C channels. With personalization, marketers use Data Cloud to have a unified customer data profile to automatically determine a customer's next best engagement based on their past interactions with the brand and their behavior. For instance, in May 2024, Salesforce, Inc. introduced New Einstein 1 marketing and Commerce innovations to power the complete customer journey with unified data and trusted AI. The Data Cloud for Commerce unifies business and customer data to deliver smart insights and help merchandisers launch personalized promotions, offers, and shopping experiences for customers, enhancing loyalty and boosting sales.
Market Players Outlook
*Note: Major Players Sorted in No Particular Order.
The major companies serving the AI in e-commerce market include Alibaba Cloud, Amazon Web Services, Inc., IBM Corp., Microsoft Corp., and Salesforce Inc., among others. The market players are increasingly focusing on business expansion and product development by applying strategies such as collaborations, mergers and acquisitions to stay competitive in the market.
Recent Development
- In March 2023, KLaunch and BlueSky Commerce announced FoodBridge, an AI-powered e-commerce solution created for the financial stability of food banks. The power of KLaunch’s KBot Lightning, an AI platform that provides the opportunity to easily build conversational flows for operational and marketing purposes.
The Report Covers
- Market value data analysis of 2023 and forecast to 2031.
- Annualized market revenues ($ million) for each market segment.
- Country-wise analysis of major geographical regions.
- Key companies operating in the AI in e-commerce market. Based on the availability of data, information related to new product launches, and relevant news is also available in the report.
- Analysis of business strategies by identifying the key market segments positioned for strong growth in the future.
- Analysis of market-entry and market expansion strategies.
- Competitive strategies by identifying ‘who-stands-where’ in the market.
