Global Artificial Intelligence (AI) in E-Commerce Market 2022-2028

Global Artificial Intelligence (AI) in E-Commerce Market 2022-2028

Artificial Intelligence (AI) technology is the culmination of machine learning and deep learning technology. This AI technology is being embedded in various sectors including healthcare, IT, retail & e-commerce, banking, financial services and insurance (BFSI), automobile, and education. E-commerce is one industry that has been greatly affected by the AI boom. E-commerce companies have incorporated AI technology into their marketing strategies. Subsequently, marketing efforts have become more focused and efficient and offering reduced expenditures and generating more profits for shareholders. AI technology is supporting the e-commerce industry in several ways by offering a personalized user experience, virtual shopping assistant, and assortment planning, among others. In the e-commerce industry, AI assists most of the e-commerce giants including Amazon, Alibaba, and Walmart in marketing, supply chain management, pricing, predicting trends, and automating the tagging of products.

The global AI in e-commerce market is anticipated to grow at a tremendous CAGR of 25.8% during the forecast period (2022-2028). The global AI in e-commerce industry is driven by the significant rise in the global e-commerce industry. Major economies, including the US, China, Germany, UK, and India are expected to show double-digit growth in the e-commerce market. Considering the boost in the global e-commerce industry, the associated companies are integrating AI technologies to increase their market share. With AI, an e-commerce company can anticipate service issues and highlights the customers’ preference from the type of post-experience feedback that they provide at every step of the purchasing. Further, by integrating AI, a company can make its business more customer-centric. For instance, Costco Wholesale Corp., Walmart, Inc., and eBay, Inc. are using big data analytics to track the record of customers’ purchasing history.

GLOBAL SCENARIO OF E-COMMERCE INDUSTRY

The global e-commerce industry was growing significantly in the pre-COVID-19 scenario, owing to the rising disposable income, cohesive government policies, and growing internet penetration. Amazon, Inc., Alibaba Group Holding Ltd., and eBay Inc., among other players, contribute significantly to the growth of the global e-commerce industry. These companies are significantly focusing on the development of their marketing strategies and warehousing capabilities across the globe to cater to a wide range of opportunities. Pre COVID-19 pandemic, the e-commerce industry was expected to grow at a CAGR of 16.6% during the forecast period (2022-2028) and was expected to reach around $7.9 trillion in 2028. Post COVID-19 pandemic, the overall e-commerce industry generated a revenue of around $3.7 trillion in 2021 as compared to nearly $3.1 trillion in 2021. The overall CAGR of the e-commerce industry is expected to be 18.2% (post-pandemic scenario) as compared to 16.6% before the pandemic. The implications of the COVID-19 pandemic may last for a long time, and the e-commerce industry will need to continue to adapt to the new environment. A similar spike in the use of e-commerce by consumers was also reported during the SARS (Severe Acute Respiratory Syndrome) epidemic in 2002-2003 when e-commerce firms such as Alibaba and Taobao observed significant rise in demand. Similarly, COVID-19 could trigger further digitalization in society and the reform of policies and rules to regulate online trade. The COVID-19 pandemic has made it clear that e-commerce can be a significant tool or solution for consumers in times of crisis, which can act as an economic driver, including for small businesses.

MARKET SEGMENTATION

The global AI in e-commerce industry is segmented based on the application that includes pricing and promotion, supply chain management, marketing, and others (demand prediction and optimization). The marketing segment held the highest market share. The marketing segment is growing at a CAGR of 26.0% during the forecast period due to the growing convergence of analytics in marketing to encourage operational efficiency while improving the customer experience. Growth in the adoption of customer-centric marketing strategies, increase in the demand for virtual assistants, and an increased use of social media for advertising are the major factors driving the demand for AI-based marketing in the e-commerce industry. AI in marketing enables data analysis, natural language processing, automated decision making, content generation, and real-time personalization. Integration of AI in marketing has allowed better lead generation, lead scoring (for B2B), automating back-office tasks such as report creation, and identifying prospective customers.

GEOGRAPHICAL OUTLOOK

The AI in e-commerce market is analyzed based on geography, including North America (the US and Canada), Europe (UK, Germany, Italy, Spain, France, and Rest of Europe), Asia-Pacific (China, Japan, India, and the Rest of Asia-Pacific), and Rest of the World (Latin America and the Middle East & Africa). North America contributed the highest market share. The presence of developed economies focusing on enhancing the existing solutions in e-commerce industry and government support in advanced technology is contributing to the market share. For instance, in February 2021, the US president signed an executive order for the American AI initiative. The federal government will play a crucial role to facilitate AI R&D and encourage the people in the deployment of AI-associated technologies and training a workforce capable of using AI in their occupations. Further, the presence of e-commerce giants such as Amazon and Walmart along with AI giants such as AWS, Microsoft, IBM, and Google is contributing to the market growth. The e-commerce players in the region are making efforts to expand their global reach. For instance, in June 2021, Walmart, Inc. expanded its marketplace in the e-commerce industry by partnering with Shopify, Inc., a Canadian multinational e-commerce company.