Personalization —entailing the customization of the shopping experience to each user's preferences, needs, and interests— has emerged as a vital practice for e-commerce businesses across the globe. Its primary objectives? Elevate user satisfaction, amplify engagement, improve conversion rates, and ultimately stimulate increased sales and foster customer loyalty.
However, companies have to gather and analyze user information to deliver personalized search results and recommendations, occasionally giving rise to privacy concerns related to personal information. As a result, obtaining accurate data for personalization remained a challenge for about half of the companies surveyed that year. Just as there are types of personal data that online shoppers are hesitant to share with retailers, there are also categories of information that consumers would prefer retailers to already possess when they shop, such as their sizes, styles, and budgets, to name a few.
For some business leaders, the success of artificial intelligence lies predominantly in data accuracy, while others emphasize real-time data collection speed, customer retention, and operational time savings. Although AI-driven personalization can enhance the online shopping experience, it concurrently sparks concerns regarding the magnitude of personal data amassed and utilized by companies. Older generations of consumers, notably Baby Boomers and Gen Xers, expressed a particular discomfort towards AI-based personalization—a sentiment that tends to diminish with younger shoppers.
Personalization vs. privacy
In recent years, both global retail sites and marketing teams have made personalization their top priority. While expanding the use of personalization ranked as the leading email marketing objective in 2023, almost seven out of ten surveyed businesses expressed their intent to boost investment in personalization, even amid looming economic challenges.However, companies have to gather and analyze user information to deliver personalized search results and recommendations, occasionally giving rise to privacy concerns related to personal information. As a result, obtaining accurate data for personalization remained a challenge for about half of the companies surveyed that year. Just as there are types of personal data that online shoppers are hesitant to share with retailers, there are also categories of information that consumers would prefer retailers to already possess when they shop, such as their sizes, styles, and budgets, to name a few.
Here too, AI is changing the game
Through algorithms, artificial intelligence can predict a customer's probable product choices based on personal data, like browsing history and past purchases. During a 2023 study, more than 50 percent of companies declared already integrating generative AI into various commercial applications, with nearly four in ten contemplating its adoption to improve and optimize user experiences on online commerce platforms.For some business leaders, the success of artificial intelligence lies predominantly in data accuracy, while others emphasize real-time data collection speed, customer retention, and operational time savings. Although AI-driven personalization can enhance the online shopping experience, it concurrently sparks concerns regarding the magnitude of personal data amassed and utilized by companies. Older generations of consumers, notably Baby Boomers and Gen Xers, expressed a particular discomfort towards AI-based personalization—a sentiment that tends to diminish with younger shoppers.
