There is no doubt that the holiday shopping season has changed a lot over the past decade. Exponential growth of e-commerce sales, more complex and longer holiday shopping seasons, the boom of the experience economy, and the rise of AI have forced retailers to evolve their strategies to meet the needs of modern consumers. While the scale and convenience of online shopping provide immense growth opportunities for retailers, creating an on-brand online shopping experience that drives conversions and lasting connections with customers presents new challenges for retailers. Many are rising to meet these challenges—and seize their opportunities—by combining AI and holiday shopping to enhance and scale the online shopping experience this holiday season and throughout the year.
How AI and holiday shopping reshapes the e-commerce experience
In the 2023 Persado Holiday Marketing Guide we explored the phenomenon known as “holiday creep,” whereby retailers promote end-of-year holiday products or sales well before Halloween. Maintaining momentum through a longer and more competitive holiday shopping season requires a different playbook from the traditional five-week sprint beginning the day after Thanksgiving. Since ChatGPT brought GenAI into the mainstream just over a year ago, retailers have been looking to use it and other related solutions to create personalized online shopping experiences at scale. During the ever-expanding holiday shopping season, GenAI will be an essential resource. Let’s explore how online shoppers will encounter GenAI during the 2023 holiday shopping season.
1. AI chatbots as personal shoppers
Retailers see huge spikes in traffic during the holiday shopping season, especially throughout the Black Friday and Cyber Monday timeframe. While this surge in traffic gives retailers the opportunity to maximize sales, more traffic also means more customer inquiries, more abandoned carts, more returns, and so on. On top of that, online shopping isn’t limited to business hours, so it’s impossible to staff customer service teams to handle the scale of questions that e-commerce customers expect immediate responses to around the clock. In order to provide instant responses at scale 24/7 and convert more browsers into buyers, retailers look to AI-powered chatbots to improve the customer experience, enable product discovery, provide discount codes, recover abandoned carts, give gift suggestions, assist in shipping updates, facilitate returns, and more.
For some years, chatbots have provided speedy answers to basic customer service questions. Today’s AI-powered chatbots are smarter and more conversational. Recently, chatbots have stepped up from handling simple customer service queries to serving as AI-enabled personal shopping assistants, providing product recommendations and other guidance. In doing so, chatbots have gone from a basic customer service tool to a central aspect of conversational marketing.
During the holiday shopping season, chatbots can help uncertain shoppers find the perfect gift by asking questions like “What are you shopping for?” or “What is your budget?” Forward-thinking brands use a combination of chatbots and live agents to make their online experience more conversational.
2. Virtual fitting rooms
Self-gifting is on the rise and many retailers are running digital marketing campaigns around self-gifting or offering “buy one, get one” deals to encourage self-gifting. Not to mention, gift cards rank as the most popular gift to receive, more so than physical gifts or experiences. In 2023, 29% of consumers that celebrate end-of-year holidays say they would prefer gift cards as gifts. That is up from 26% in 2022. While tapping into self-gifting and promoting gift cards are great opportunities for retailers, if customers don’t find the perfect fit, retailers will be stuck with an influx of returns and unsatisfied customers. Not to mention customers may not even complete their purchases if they aren’t sure how items will fit them.
Since clothing is among the most popular self-gifting items and holiday outfits are a must-have, it’s important for consumers to find the perfect fit the first time like they would in-store. Size guides, user-generated reviews, and detailed product images and videos can give online shoppers a better idea of how different items might fit them. But, GenAI takes the virtual try on experience even further. This holiday shopping season customers can expect to see more virtual fitting rooms across their favorite e-commerce stores, as large retailers such as Amazon and Nike invest in this technology in order to increase conversions and combat returns.
Virtual fitting rooms can offer various experiences. They include:
- Virtual wardrobe assistants: Wardrobe and outfit assistants that allow users to take photos of the clothes they already have and style them. Retailers can add built-in shops to sell customers items that complement the pieces currently in their wardrobe.
- Virtual try-ons: Many online fitting room solutions, such as Google’s virtual try-on (VTO) feature, act as virtual mannequins. They use GenAI to show different clothing items on various body types and skin tones so potential buyers can see how clothes drape, stretch, and cling to a virtual model that looks like them.
- Virtual body sizing: Virtual body sizing solutions analyze each customer’s unique body and fit preferences to provide tailored guidance on sizing. Photo-based size recommendation solutions like YourFit by 3DLOOK provide a photorealistic try-on experience tailored to each customer. Unlike other solutions, which provide avatars with physical similarities to that specific shopper, YourFit instantly generates a unique 3D avatar and over 86 points of measure from a simple scan on a shopper’s mobile device.
Virtual dressing rooms are another way retailers are bridging the gap between the in-store shopping experience and the online shopping world. They give online shoppers a much better idea of what styles and sizes are most likely to work best for them.
3. AI-generated content
Large retailers have more digital channels and audience segments than ever before. In order to generate copy, images, video, and other content at scale to keep all channels and campaigns fresh and engaging, retailers look to GenAI to increase efficiency. However, retailers looking to drive results can’t just make creative decisions based on instinct or what “sounds good.” They need more than efficiency gains; they need the AI generated content to also be effective. Persado Motivation AI not only generates digital marketing messaging quickly and at scale to drive engagement and conversions, but by also leveraging a knowledge base built on 10+ years of campaign performance data from real Fortune 500 companies, Persado is able to easily provide brands with the highest-performing, on-brand campaign language.
What language performs best across holiday campaigns?
According to Persado holiday campaign data from 2018 to 2022, three emotions that are consistently top performers include ACHIEVEMENT, ATTENTION, and GRATITUDE. Some examples of this language in end-of-year holiday campaigns include “Jingle all the way! You’re winning big with UP TO 65% OFF special deals” (ACHIEVEMENT), “Attention, secret Santas! We’ve got your gift list covered with holiday DIYs” (ATTENTION), and “A New Year’s Gift: You Deserve Up To 60% Off Sale Styles And An Extra 30% Off” (GRATITUDE). The Persado Content Intelligence Team also found that during gifting holidays using language such as “Something for them, something for you… (you deserve it!)” (GRATITUDE) that promotes self-gifting or gives customers permission to buy something for themselves too, tends to perform well.
Using GenAI, particularly Motivation AI, is common among enterprise retailers. With enterprise self-service options such as Essential Motivation, and automated solutions like Dynamic Motivation that serve each customer the highest-performing on-brand messaging in the online cart, more retailers will be using GenAI capable of driving results to create digital marketing messaging this holiday shopping season.
This is good news for both retailers and customers. As retailers cut through the noise of endless Cyber Monday promotions using personalized language, customers will see Cyber Monday and holiday deals that stand out to them and speak to their interests and preferences. They also could be in for a more personalized online cart experience.
4. AI-powered gift ideas
Holiday shoppers have a shared goal – finding gifts everyone on their list will love. With all of the products, price points, and e-commerce websites out there, gift giving can be more overwhelming than ever. Endless options can cause confusion and make buyers feel less satisfied with their purchases. Retailers want customers to feel inspired and confident when picking out gifts for loved ones. Unfortunately, AI-enabled product recommendation engines or Recommendations AI need data based on past customer behavior and preferences in order to deliver the most valuable product recommendations.
While AI product recommendations may have a positive impact on self-gifting or help online shoppers find the right holiday decor or holiday party dress, they fall short when it comes to recommending holiday gifts due to the lack of data on the person receiving the gift. Experts on an MIT SMR Strategy Forum debated if AI-driven product recommendations will reduce wasteful holiday giving by providing better gift ideas for the recipient. While the opinions were mixed, 48% of the responding panelists disagreed or strongly disagreed that AI helps to reduce wasteful holiday giving.
However, consumers can use AI to assist in finding the perfect holiday gifts using tools like Gift Genie AI. Gift Genie AI is an AI-powered tool that helps users find gifts for everyone on their list. It generates personalized gift recommendations based on a brief description (35 – 2080 characters) of the person and their interests. AI-powered recommendation tools can help gift givers brainstorm ideas and narrow down their options which can result in less wasteful gift giving and higher consumer satisfaction. The majority of these AI gift finder tools are independent of retailers. But, retailers may want to adopt similar AI technology in the future in order to inspire shoppers and guide them toward more thoughtful gifts.
5. Dynamic pricing
Say goodbye to fixed pricing. As the holiday shopping season grows longer, dynamic pricing powered by AI is essential for retailers to optimize earnings, keep up with demand, and discount items so as not to end up with a surplus of unsold merchandise. AI-enabled dynamic pricing—also known as pricing optimization—is already widespread across travel and retail. Enterprise leaders such as Amazon have seen success using dynamic pricing models, which use AI-powered predictive analytics to adjust prices in real time based on market demand, inventory levels, competitors’ pricing, and other factors.
In order to implement an effective dynamic pricing strategy, retailers must use AI to identify prices based on real time patterns in large amounts of internal and external data. Using these models, brands can offer discounts in times of low demand and maximize profits when demand is at its highest.
6. Voice and image search
51% of product searches start on Amazon and 31% begin on Google. As online shoppers search for gift ideas or specific items, retailers look to optimize their e-commerce stores and listings to increase product discovery via SEO. Like the e-commerce landscape, SEO is constantly changing. Holiday shoppers can save time doing online searches for holiday items using voice search and image search, both of which are powered by AI. Google Image Search is particularly useful to online shoppers looking for sold out or hard-to-find items. Instead of trying to describe the item in hopes of finding it, shoppers can upload an image of it and see what other retailers have it or something similar.
The growth of GenAI in e-commerce
GenAI brings value to both online retailers and customers as they navigate the ever-changing e-commerce landscape. Like the in-store shopping experience, online shopping isn’t just about the transaction. It’s a brand experience and an opportunity to drive value and connection. GenAI in e-commerce is still in its infancy. Consumers can expect not only to see it across the online shopping experience more, but also to evolve.
For more on how retailers capitalize on a longer, more dynamic holiday shopping season, watch our Beyond Black Friday: Optimizing Holiday Campaigns During an Extended Shopping Season webinar on-demand. To start delivering the highest-performing language across your digital marketing campaigns, request a risk-free trial of Persado Motivation AI.
The post AI and Holiday Shopping: 6 Ways Online Shoppers Will Encounter AI This Cyber Monday appeared first on Persado.