Salesforce data shows how AI is revolutionizing E-Commerce

The 2024 holiday season broke records for online retail, with global sales reaching $1.2 trillion and $282 billion in the United States, according to Salesforce’s latest data. Key drivers of this growth included the increasing influence of artificial intelligence (AI) and social commerce, alongside heightened consumer spending following months of saving earlier in the year. However, a 28% rise in returns poses new challenges for retailers striving to maintain profitability.

The Role of AI in Holiday Shopping Success

AI played a pivotal role in the holiday shopping season, influencing a staggering $229 billion in global online sales. This accounts for 19% of total online orders, up from 13% in 2023. Retailers used AI to deliver personalized shopping experiences through targeted recommendations, conversational customer support, and real-time offers.

AI’s Key Contributions:

• Product Recommendations: AI-powered recommendation engines helped customers find the right products faster, driving upselling and cross-selling strategies.
• Targeted Promotions: Generative AI tools crafted personalized email campaigns and tailored discounts, increasing customer engagement.
• Conversational Agents: AI chatbots and virtual assistants provided real-time customer service, handling queries 42% more frequently than during the 2023 holiday season.

Retailers also saw a 25% increase in the use of generative AI features, such as chat-based customer support, compared to September and October 2024. This underscores the growing reliance on AI to improve customer interactions and streamline operations during peak shopping periods.

Returns Surge: A New Challenge for Retailers

While holiday sales set records, returns surged to unprecedented levels, with $122 billion worth of purchases already returned, marking a 28% increase from 2023. This trend, fueled by consumer behaviors like “try-on hauls” and bracketing (ordering multiple sizes for later returns), is expected to grow to $133 billion in the coming months.

AI’s Role in Returns Management:

Salesforce survey data revealed that 75% of U.S. shoppers are interested in using AI-powered agents to handle returns, exchanges, and related queries. These tools offer an opportunity to:

• Simplify the returns process by providing tailored solutions for each shopper.
• Minimize losses by encouraging exchanges instead of refunds.
• Reengage customers by offering loyalty rewards or discounts during the return process.

Social Commerce: A Rising Force in Retail

Social commerce emerged as a major driver of holiday sales, with 20% of global sales originating from platforms like TikTok Shop and Instagram. This marks a significant shift in consumer behavior, as shoppers increasingly rely on social media for discovery and purchasing.

Key Insights on Social Commerce:

• Social media traffic referrals grew 8% year-over-year, driving 14% of all traffic to e-commerce sites.
• Retailers leveraging social commerce strategies tapped into a younger demographic, with influencers and curated storefronts playing a critical role.

Mobile Shopping Dominates

Mobile devices accounted for 70% of global orders, up from 67% in 2023, solidifying their role as the primary shopping channel for consumers. Mobile activity peaked on Christmas Day, with 79% of orders placed via smartphones, demonstrating their importance in last-minute holiday shopping.

Key Mobile Trends:

• Global Mobile Sales: $842 billion in global sales were initiated on mobile devices, including $195 billion in the U.S.
• In-Store Integration: 79% of U.S. shoppers reported that store associates used mobile devices to assist them with purchases, blending online and offline shopping experiences.

Discount Trends and Loyalty Programs

Discount rates remained modest compared to previous years, with average discounts of 23% in the U.S. and 22% globally. The highest discounts were seen in:

• Makeup (36%) globally.
• General apparel (33%) in the U.S.

Despite relatively conservative discounts, loyalty programs proved to be a powerful tool for retention. 72% of U.S. shoppers stated that loyalty programs increased their likelihood of continuing business with a brand.

AI’s Future in Online Retail

Salesforce’s report highlights the transformative power of AI in reshaping e-commerce. Key areas of AI adoption in 2025 include:

• Hyper-Personalization: Retailers will use AI to create unique shopping experiences for every customer.
• Enhanced Returns Management: AI tools will streamline returns, reducing costs and increasing customer satisfaction.
• Generative AI in Content Creation: From crafting ad copy to designing personalized promotions, generative AI will remain a cornerstone of retail strategies.

Conclusion: AI as a Growth Catalyst

The 2024 holiday season showcased AI’s ability to drive revenue and improve customer experiences. With $229 billion of online sales influenced by AI, retailers that embrace these tools are poised to thrive in an increasingly competitive market. However, managing rising return rates and leveraging AI to enhance post-purchase experiences will be crucial in maintaining profitability.

As AI continues to evolve, its role in online retail will only deepen, shaping the future of e-commerce and consumer engagement.