The trends driving the evolution of e-commerce and AI

E-commerce has evolved to an almost unrecognisable degree from its humble beginnings, which developed from teleshopping in the 1970s. Of course, e-commerce as we know it now was born from the arrival of the World Wide Web for public use in the 90s, and, since then, virtual retail platforms have rapidly progressed into the online storefronts we know and use today.

E-commerce had seen steady progression until COVID-19 hit, and when it did, the world of online retail accelerated at a pace previously unheard of. With everyone now having a larger online presence, coinciding with a significant global cultural shift towards social media, e-commerce has become bigger and more relevant to the retail sector than ever before.

RSM's retail specialists discuss the trends driving the evolution of e-commerce in recent years and how AI is influencing the future of the sector.

The key trends driving change in e-commerce

E-commerce has experienced a profound progression in recent years, fuelled by several core factors.

Access to smartphones and internet connectivity

As Robyn Duffy, Senior Analyst - Consumer Markets at RSM UK, says, "The proliferation of smartphones and internet connectivity has made online shopping more accessible than ever and has expanded the customer base for e-commerce exponentially."

Consumers can now shop 24/7 from anywhere, leading to exponential growth in the customer base. Mobile-optimised platforms, simplified checkout processes, and secure payment options have made online shopping accessible to a broader demographic, including younger generations and previously untapped markets.

Advancements in AI and machine learning

The introduction of AI has radically changed the capabilities of the e-commerce landscape. By analysing vast datasets on consumer behaviour, preferences, and market trends, these technologies power personalised product recommendations, optimise inventory management, and predict sales patterns. Additionally, AI-driven chatbots and virtual assistants enhance customer service, creating more efficient and satisfying shopping experiences.

“Personalisation through AI and varied payment options have enriched the shopping experience,” says Edgardo Rondó, Partner at RSM Argentina. “Advanced logistical capabilities have enabled faster and tracked deliveries, meeting consumer demand for immediacy and certainty. This landscape has been shaped by changes in consumer behaviour and the globalisation of commerce, forcing companies to constantly innovate to remain competitive and meet growing expectations, thus marking the continuous evolution of electronic commerce.”

The rise of social media

Social media has been a critical outlet for brands and retailers to advertise and sell their products in recent years. We have seen entire businesses built from the ground up through social media and influencer marketing, with a dedicated following and consumer base.

As put by Jacqui Baker, Head of Retail at RSM UK, “The rise of social media platforms, particularly during the COVID-19 pandemic when many consumers were locked down, has played a significant role in facilitating direct-to-consumer marketing, thus increasing brand engagement online.” Many brands have also engaged in online trends and adopted a less formal online presence in order to connect to new potential demographics and build trust through relatability.

Harmonising digital and in-store experiences

“In the past few years,” says Nick Stuart, Consumer Products Senior Analyst & Director at RSM US, “the lines between digital and in-store experiences have blurred. The COVID-19 era accelerated the pace of digital retail solutions due to the need to shop remotely and efficiently use retail stores for distribution. Buy-Online-Pick-Up-In-Store (BOPIS) and Buy-Online-Return-In-Store (BORIS) have become popular models that illustrate the blurred lines of e-commerce. These services focus on consumer convenience, combining the advantages of online sales with the benefits of brick-and-mortar stores. As retailers continue to invest in digital strategies, they will focus on consumer convenience as a key initiative.”

AI and the future of retail

As we mentioned in the first part of this series, AI is currently reshaping the online retail landscape as we know it, introducing customers to new levels of personalisation and efficiency. But with AI currently in its early stages, what does the future hold? According to Duffy, "AI is already powering personalised content generation, including product descriptions, reviews, and marketing materials. But in the future, we're likely to see a wider adoption where brands will increasingly employ the technology to facilitate the creation of virtual try-on experiences, allowing customers to visualise how products will fit or look on you before making a purchase, thereby reducing returns and increasing customer satisfaction. More broadly, AI's ubiquitous role in e-commerce will only become more sophisticated, refining its capacity to accurately predict trends, sales patterns and customer preferences."

“Furthermore,” Baker adds, “AI-driven augmented reality and virtual reality technologies will revolutionise the way consumers shop online, providing immersive and interactive experiences that bridge the gap between online and offline retail.”

For retailers, "AI will continue to empower companies with data to understand their consumers better, only getting more advanced with time," according to Stuart. "This includes product development, supply chain efficiencies, personalised shopping and mixed digital with in-store experiences. AI personalised shopping will dramatically improve the convenience of shopping aided by digital assistance that automates the shopper experience. With digital twin technology, the visualisation of products on the shopper can cut down on returns, and inconvenience is often seen as the downside of shopping remotely."

“Moreover,” adds Nahuel Beccaria, Partner at RSM Argentina, “AI will continue to optimise the supply chain, from inventory management to delivery logistics, reducing costs and delivery times.” He continues, “Finally, enhanced security, backed by machine learning algorithms, will help to protect client data and prevent fraud, increasing consumer and retailer trust in e-commerce. In short, AI will continue to redefine e-commerce, offering more personalised, efficient and secure experiences for all users.”

The takeaway

The convergence of e-commerce and AI is propelling the retail industry into an unprecedented era of innovation and personalisation. From its humble origins, e-commerce has rapidly evolved into a cornerstone of modern consumerism, driven by technological advancements and shifting consumer behaviours. The seamless integration of AI into this landscape is set to revolutionise how businesses operate, and consumers interact with brands.

As AI continues to mature, its potential to enhance every facet of the shopping experience is immense. From hyper-personalised recommendations to predictive analytics, AI empowers retailers to deliver tailored offerings that resonate with individual customers. The future of retail lies in creating seamless, omnichannel experiences that blend the physical and digital worlds. By harnessing the power of AI, businesses can stay ahead of the curve, build lasting customer loyalty, and drive sustained growth in the constantly evolving e-commerce ecosystem.

Ultimately, the success of e-commerce hinges on adaptability and a customer-centric approach. Those who embrace these trends and leverage AI's capabilities will be best positioned to thrive in the digital marketplace.