Artificial intelligence (AI) is no longer a futuristic idea for retailers and online merchants. It's a growing industry that already generates billions of dollars in revenue and is transforming nearly every aspect of commerce. Analysts estimate that the global AI in retail market was worth about USD 11.6 billion in 2024 and is projected to exceed USD 40 billion by 2030, expanding at an annual rate of roughly 23%. For e‑commerce, the numbers are just as striking: the AI‑enabled e‑commerce market is valued at USD 8.65 billion in 2025 and expected to reach USD 22.6 billion by 2032, while a broader measure of AI in e‑commerce projects growth from USD 7.25 billion in 2024 to USD 64 billion by 2034. This surge is fueled by rising internet penetration, vast data sets and the need to deliver personalized experiences at scale.

Adoption is also accelerating. Surveys show that 80% of online retailers have implemented AI either fully or on an experimental basis, and only 3% have no plans to use it. In the United States, about 33% of B2B e‑commerce companies already rely on AI in their operations, and 47% say they are evaluating it. The volume of businesses adopting AI has grown 270% since 2019, and 93% of e‑commerce companies view agentic AI (autonomous shopping bots) as a competitive advantage. In short, AI is becoming a core capability rather than an experimental add‑on.

Key trends shaping AI in commerce

Personalized recommendations and generative AI

Generative AI exploded into mainstream use in 2024, and it's now a cornerstone of digital storefront strategies. Over 92% of businesses already use generative AI to personalize shopping experiences. These models analyze browsing behavior, purchase history and contextual data to generate product recommendations, targeted emails, tailored search results and even dynamic webpage content. Personalization drives sales: suggestive selling supported by AI accounts for 10–30% of revenue for some retailers, and nearly 45% of Millennials and Gen Z say they want personalized product recommendations.

Conversational AI and chatbots

Chatbots are no longer simple Q&A bots; they're sophisticated AI agents that handle customer inquiries, process orders and suggest products. About 31% of e‑commerce companies use virtual agents or chatbots, while nearly 49% of AI use cases in retail revolve around marketing automation. Consumers embrace them: 74% say they prefer to direct simple queries to chatbots rather than human agents, and positive interactions with AI can increase customer retention by 10–15%. Advanced conversational AI can reduce average response times from minutes to seconds and cut support costs, all while collecting data that feeds back into personalization engines.

Agentic commerce

Beyond chatbots, the next wave of commerce is agentic: autonomous AI systems that can search for products, negotiate prices and complete purchases on behalf of consumers. Research shows that 33% of e‑commerce enterprises will incorporate agentic AI by 2028. About 70% of consumers say they would use AI agents to book flights, and 65% would use them to book hotels. Companies believe agentic commerce will be a key differentiator: 93% of e‑commerce businesses see AI agents as a competitive advantage. These systems operate continuously, optimizing for price, timing and inventory without human intervention.

Demand forecasting, inventory and pricing

AI excels at analyzing historical sales, market trends and real‑time data to forecast demand and optimize inventory levels. In grocery retail, 22% of senior executives believe AI's biggest impact will be on supply‑chain processes, while 19% see inventory management as the main beneficiary. Accurate forecasting reduces stockouts and overstocking, minimizing waste and freeing up capital. AI‑driven dynamic pricing platforms adjust prices based on demand, competitor actions and seasonality, helping retailers maintain margins while remaining competitive.

Social commerce and influencers

Social media platforms like Instagram, TikTok and Pinterest are morphing into shopping channels, and AI powers their recommendation engines and ad placements. Experts predict that social commerce revenue will reach USD 6.2 trillion by 2030. Influencer marketing and user‑generated content amplify trust, while AI tools track engagement, identify trends and match products with micro‑communities. As social shopping grows, AI will continue to match consumers with products in real time based on their activity and network.

Voice commerce and conversational shopping

Voice assistants such as Amazon Alexa and Google Assistant are evolving from novelty to mainstream. By 2028, the number of voice assistant users in the U.S. is expected to reach 170 million, up from 145 million in 2023. The conversational commerce industry—shopping via chat or voice—is projected to be worth USD 34 billion by 2034. Advances in natural language understanding allow shoppers to search for products, place orders, track deliveries and even initiate returns using simple voice commands. As AI models become more accurate and context‑aware, voice commerce will offer hands‑free convenience that seamlessly integrates into daily life.

Augmented reality and immersive experiences

AI‑powered augmented reality (AR) brings products to life by allowing customers to visualize items in their own space. Consumers can try on clothes virtually, see how furniture fits in a room or test makeup shades using their smartphone cameras. AR reduces uncertainty, increases confidence and shortens the path to purchase. As 5G and improved camera hardware become widespread, immersive shopping experiences will shift from novelty to necessity.

Data privacy and trust

With personalization comes data collection, and that raises legitimate concerns. Surveys show that over 81% of consumers are concerned about how businesses use their data, and 67% admit they don't understand how companies handle personal information. Data security tops the list of obstacles: 44% of CEOs and 53% of managers cite privacy and security as major hurdles for AI adoption. Retailers must adopt transparent policies, comply with regulations like GDPR and communicate clearly about data usage to maintain trust.

Benefits and business impact

AI delivers measurable returns for retailers and online merchants. Companies leveraging AI report 10–12% increases in revenue on average, and profitability could rise by 59% by 2035. More than half of retail executives say product performance improves after AI adoption, and 35% believe AI enables better decision‑making. Chatbots and personalization engines boost customer satisfaction and retention, while advanced forecasting reduces operational costs and waste. Adoption also correlates with higher productivity: automating routine tasks allows employees to focus on creative and strategic work. For consumers, AI helps them discover products more easily, enjoy faster service and benefit from tailored promotions.

Challenges and considerations

Despite the advantages, retailers must address several challenges to fully realize AI's potential:

Privacy and security: Data breaches and misuse can erode trust. Strong encryption, rigorous compliance and transparent communication are essential.

Skill and knowledge gaps: Almost 43% of employees cite a lack of understanding or expertise in using AI tools as a barrier to adoption. Investments in training and change management are critical.

Return on investment: 39% of CEOs worry about the costs of AI and whether the ROI can be justified. Starting with pilot projects and measuring outcomes can demonstrate value.

Ethical and workforce impacts: AI automation can reduce headcount; about 23% of companies use AI to cut jobs. Businesses must balance efficiency with social responsibility and upskilling programs.

Conclusion

AI has moved from the periphery of retail and e‑commerce to its core. Market valuations show explosive growth, and adoption rates demonstrate that companies are moving beyond experimentation. The winning formula for retailers is to blend AI‑driven personalization, conversational interfaces, intelligent supply chains and immersive experiences—while maintaining data privacy and clear communication. Organizations that invest strategically in AI, train their workforces and prioritize ethical use will delight customers, improve margins and stay ahead in an increasingly competitive digital marketplace.