Analyst: Keith Kirkpatrick
Publication Date: October 1, 2024
Document #: MCNKK202410
Adobe forecasts record-breaking online sales for the 2024 holiday season, with generative AI playing a pivotal role in enhancing the shopping experience. Traffic from AI-powered tools to retail sites has doubled, and direct referrals are up eightfold compared to 2023. With more shoppers turning to AI to find deals and personalized recommendations, this technology is expected to influence consumer behavior and boost e-commerce growth significantly.
What is Covered in this Article:
- Adobe’s forecast for record U.S. holiday e-commerce sales
- The rise of generative AI in driving retail traffic and sales
- Popular holiday product categories and top sellers
- Growth in Buy Now, Pay Later (BNPL) services
- The impact of AI on personalized shopping experiences
The News: Adobe projects U.S. online sales for the 2024 holiday season to reach $240.8 billion, marking an 8.4% year-over-year growth. Notably, traffic to retail websites from generative AI tools has doubled, and direct referrals have surged eightfold since 2023.
Consumers increasingly use AI-powered tools to enhance their shopping experience by finding the best deals, quickly locating specific items, and receiving personalized brand recommendations. Additionally, Buy Now, Pay Later (BNPL) services are expected to set new records, driving $18.5 billion in online spending this season, with Cyber Monday projected to hit $993 million in BNPL transactions.
Adobe’s Holiday E-commerce Forecast: GenAI and Its Impact on Shopping Behavior
Analyst Take: Generative AI is revolutionizing e-commerce, particularly how consumers approach holiday shopping. The technology’s ability to provide tailored product recommendations and quickly identify deals has made it indispensable for consumers and retailers. As traffic from AI-powered tools grows exponentially, retailers integrating AI into their platforms will be well positioned to capitalize on this trend. The rapid adoption of AI in e-commerce also signals a broader shift in consumer behavior, where convenience, personalization, and smart shopping tools will define future retail experiences.
The Rise of Generative AI in E-commerce
One of the most notable findings in Adobe’s holiday shopping forecast is the explosive growth of generative AI tools. Between January 1 and August 31, 2024, traffic to retail websites from generative AI-powered chatbots doubled. Direct referrals to these sites—when consumers click through a link provided by an AI assistant—are now eight times higher than in 2023, signaling the growing importance of AI in influencing shopping behavior.
This surge can be attributed to the increasingly sophisticated AI-driven tools that anticipate consumer preferences, offer product recommendations, and provide personalized shopping experiences. Adobe’s survey indicates that 70% of consumers who have used generative AI for shopping believe it enhances their experience. Furthermore, 40% of respondents plan to utilize AI tools during the holiday season, with many relying on AI to find deals, quickly locate specific items, and receive brand recommendations. This level of adoption suggests that AI will play a pivotal role in shaping shopping habits and behaviors as consumers prepare for the upcoming holiday rush.
Consumer Insights: Why Shoppers Turn to AI
As consumers become more comfortable with generative AI’s capabilities, their reasons for using these tools have expanded. According to Adobe’s survey, 20% of shoppers turn to AI to find the best deals, making it a valuable tool for budget-conscious consumers during the holiday season. The ability to quickly identify discounts and promotions helps consumers navigate the flood of holiday deals and maximize their savings.
Additionally, 19% of respondents use AI to find specific items online quickly. With the sheer volume of products available across e-commerce platforms, AI tools streamline shopping by guiding users to their desired items more efficiently. This is particularly beneficial during the holiday season when time is of the essence, and shoppers are eager to complete their purchases before stock runs out or deals expire.
Another 15% of consumers look to AI for brand recommendations. As AI systems become more adept at understanding consumer preferences and behaviors, they can offer tailored suggestions that align with shoppers’ tastes and needs. This personalized approach improves the shopping experience and fosters brand loyalty by helping consumers discover products they may not have otherwise considered.
AI-Powered Shopping and the Future of E-commerce
The holiday shopping season is a critical time for retailers to capitalize on emerging trends, and generative AI presents a significant opportunity. The widespread adoption of AI-powered shopping tools demonstrates that consumers are increasingly open to leveraging technology to enhance their buying experience. AI will likely play an even more prominent role in future e-commerce strategies as it continues to evolve.
Retailers integrating AI tools into their platforms stand to gain a competitive edge by offering customers a seamless, efficient, personalized shopping experience. With AI handling tasks such as deal-finding, product recommendations, and even customer service, retailers can focus on meeting the heightened demand during the holiday season while providing shoppers a more enjoyable and intuitive experience.
Buy Now, Pay Later (BNPL) and AI’s Role in Payment Decisions
Another key trend highlighted in Adobe’s forecast is the rise of Buy Now, Pay Later (BNPL) services. BNPL is expected to drive $18.5 billion in online spending this holiday season, an 11.4% year-over-year increase. November 2024 is anticipated to be the most significant month on record for BNPL, with Cyber Monday alone projected to generate $993 million in BNPL transactions.
The growing popularity of BNPL aligns with the increasing use of mobile devices for online shopping. Adobe predicts that mobile shopping will account for a staggering 74% to 79% of BNPL transactions, further emphasizing the role of technology in shaping consumer behavior. As AI-powered tools become more integrated with BNPL platforms, they can assist shoppers in making informed payment decisions by providing insights into payment plans, interest rates, and promotional offers.
The Future of AI-Driven Shopping Experiences
The 2024 holiday season is poised to be a transformative period for e-commerce, driven mainly by the rise of generative AI. As more consumers turn to AI-powered tools to enhance their shopping experiences, retailers must adapt by incorporating these technologies into their platforms. AI’s ability to personalize shopping journeys, identify deals, and recommend products will be crucial in shaping the future of online retail.
Perhaps the most transformational nature of generative AI and retail is still yet to come, particularly as AI models improve and product metadata and descriptions continue to evolve. The most frustrating aspects of shopping are either being unable to recall a specific product name, or match certain customer preferences to a specific product. Generative AI-powered tools likely will continue to evolve to allow customers to describe in natural language their ideal product or configuration, and then return product results that closely match their query, even if they do not use specific keywords. This approach will remove much of the friction that occurs with online shopping, due to less-than-exact search returns.
This process can be further enhanced by enabling human staff to further refine the data around customer searches. For example, imprecise or inaccurate terms that are used to describe an object can be added into the product descriptions to ensure a greater range of search terms results in a product being located.
For consumers, the benefits of AI are clear, faster, more efficient shopping; personalized recommendations; and better access to deals. Retailers that embrace this technology stand to gain a significant advantage, providing their customers with a seamless and enjoyable shopping experience that meets their evolving needs and preferences.
What to Watch:
- Tech giants such as Amazon, Google, and Microsoft are advancing their AI-powered shopping tools, potentially influencing consumer preferences and competing directly with Adobe’s AI-driven capabilities. Amazon’s ecosystem of AI shopping assistants could significantly impact market dynamics.
- Advancements in natural language processing (NLP) and AI-powered recommendation engines will likely increase as retailers and enterprises adopt more sophisticated tools to enhance customer experiences and streamline the shopping process.
- The continued rise of Buy Now, Pay Later (BNPL) services may intersect with AI’s predictive capabilities, creating more personalized payment options. However, the BNPL market could face regulatory challenges that may affect its growth potential in the financial sector.
- Companies relying heavily on AI-powered shopping tools may face hurdles with impending regulations on data privacy and AI ethics. Compliance with new legislation could slow the deployment of AI technologies, limiting their effectiveness in personalizing shopping experiences. How enterprises balance innovation with regulatory requirements will be crucial for future growth.
See the complete press release on Adobe’s 2024 Holiday E-commerce Forecast on the Adobe website.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
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Author Information
Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
