2018 holiday shopping predictions: AI-powered recommendations will generate 35 percent of retail revenues

What can retailers expect from the 2018 holiday shopping season? To answer this question, I sat down with a retail and ecommerce expert who regularly analyzes retail data of over 500 million global shoppers.

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Rick Kenney is the head of consumer insights and a thought leader on data-driven digital retail trends. Kenney spearheaded the Salesforce Shopping Index and pioneered Commerce Cloud's benchmarking practice, which identifies growth opportunities for clients while working within the Retail Practice team as Director of Strategic Initiatives and Regional Director of Customer Success. Kenney has nearly 20 years of experience working in digital marketing and commerce, focused on retail.

Kenney and I outlined the five biggest trends that will dominate headlines this holiday season -- and what they mean for retailers. I provided my predictions regarding the long-term view of retail and the growing adoption of voice enabled digital assistants and chatbots and a growing shift towards co-existence of machines and humans in the retail space. I referenced several retails that have demonstrated successful use of machines and humans working together including Amazon's growing their army of robots from 1,000 to over 100,000 in the last five years, Alibaba increasing warehouse productivity by 300 percent with less than 70 robots, Walmart's ability to train 25,000 employees as personal shoppers, reaching 40 percent of U.S. households, and Lowe's use of robots to improve employee efficiencies.

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Here are five 2018 holiday shopping predictions that Kenney and I shared based on 500 million global shopper data points:

1. Holiday shoppers will buy more on mobile than on any other device

We will see more orders placed on a smartphone than any other device - this is the first time ever for mobile to win the holidays. Here are few jaw dropping statistics:

• 46 percent of all orders will be placed on smartphones
• 68 percent of all the traffic for the holiday shopping season will be sourced by the phone
• In 2018, the traffic originated from smartphones will be greater than all of the traffic in 2015 across all device types - PCs, tablets, laptops and phones
• 83 percent of 18-44 year-old users will use their mobile phone inside a retail store - note by 2019, 33 percent of human population will be 18 years-old or younger

"Mobile is undoubtedly the most disruptive force in retail since the onset of e-commerce. Retailers will need to account for a number of mobile-friendly touch points in their overall strategy, including marketing engagement, checkout, and in-store shopping journeys. Expect to see even more shoppers using mobile wallets, especially as brands begin to encourage more in-store mobile engagement through push notifications and SMS messaging," said Rick Kenney. Mobile is the most important compass to guide your customers during the holiday shopping season.

2. AI-based product recommendations will account for 35 percent of all retail revenues

During the 2018 shopping holiday season, 35 percent of all revenues will be driven by shoppers (only 6 percent of holiday shoppers) that tap or click on an AI-based product recommendation -- a 25 percent increase over last season.

Product personalization will have a material impact on retail. This is more than provided guided selling on your website. The personalized experience must include the mobile app experience and how you service your customers. Retailers must leverage machine learning and natural language processing to deliver proactive customer service based on tone, sentiment and buying behavior experience.

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"AI doesn't end with product recommendations. We will see even more AI use cases emerge across the shopping journey, particularly with chatbots to support shoppers with order status questions or to provide a more personalized, guided shopping experience overall," said Kenney.

3. Social Networks will drive 5 percent of retail shopping traffic - Instagram will emerge as a significant traffic-driver to retail sites

For the first time, traffic from social networks will exceed 5 percent of all traffic. Instagram is up 51 percent from 2017 in terms of retail shopping traffic. The visual telling of your brand's story is very effective on Instagram. The human mind processes images 60X more than text, so it is no surprise that visual social content influences the buying behavior.

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4. Black Friday will again be the number one digital holiday shopping day

Black Friday will represent 25 percent of all shopping in the first shopping week (Tuesday before Thanksgiving and through Cyber Monday), and 10 percent of the entire shopping holiday season. This is the 3rd year that Black Friday is the #1 shopping day, followed by Cyber Monday (8 percent of all shopping revenues).

5. Cyber week will account for 40 percent of the season's sales, leading to 13 percent YoY growth in 2018

Starting the Tuesday before U.S. Thanksgiving and through Cyber Monday will represent the bulk of the retail shopping revenues.

Kenney and I completed our predictions with a "Buzz" vs. "Bust" lightning round focusing on 1. Use of voice for e-commerce, 2. Impact of AI on retail, and 3. Social media's influence on the retail holiday shopping season. Watch our video to see what Kenney and I think about these emerging technologies.

Expect to see mobile, social and AI related milestones during the 2018 holiday season. You can learn more about how retailers are reading themselves for the 2018 holiday shopping season here.

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