A recent report revealed that the global AI in retail and ecommerce market is expected to skyrocket over the next few years. It also covers many important insights about market trends, key drivers, regional differences, and more. The report also goes over market dynamics and market share by solution type, to give retail and ecommerce brands a closer look at the industry.
The Applied AI in Retail and Ecommerce Market Size is Expected to Grow
According to the report, the global applied AI in retail and ecommerce market size was calculated at over $60 billion in 2025, and is expected to rise to more than $72 billion in 2026.
Following this short-term growth, the report also projects that the market will grow to over $376 billion by 2035, which is a compound annual growth rate (CAGR) of over 20% between 2026 and 2035.
This market covers platforms and software that use AI to help companies improve pricing, merchandising, post-purchase support, demand sensing, customer engagement, and fraud control.
Dynamics and Trends of the Market
The report breaks down the dynamics of the market, as well as some of the biggest trends in the space.
In terms of market dynamics, the report says that the massive growth in the industry is driven by a rising demand for personalized shopping among customers, and also due to companies wanting to improve supply chain operations.
The report also highlights the increasing demand for AI agents, and that this high demand could create significant growth opportunities for market expansion. While AI agents are likely to become even more common in the future, they’re already quite popular, as 83% of organizations say that most or all of their teams have already adopted AI agents.
However, the report also mentions data security concerns as a major restraint in the industry. Using sensitive consumer data to train AI has led to challenges like data privacy concerns, the need for ethical data sourcing, and ensuring a company’s AI usage aligns with data protection regulations.
As for the market trends in the applied AI in retail and ecommerce industry, the report mentions:
- Hyper-personalization, where AI analyzes things like consumer behavior and browsing history to offer personalized product or service recommendations based on their preferences.
- Increasing use of generative AI among retailers to create content, product descriptions, and personalized product videos.
- Conversational AI is becoming more common as companies use AI-powered chatbots and virtual assistants.
- High adoption of AI to improve ecommerce operations, such as dynamically adjusting product pricing in real-time based on a variety of factors.
- A growing focus on using AI to improve the customer experience.
Market Share by Solution Type
It also breaks down the different solution types in the industry and their market share. Here’s a closer look at a few of the solutions with the highest market shares in 2025, and how large a share the report believes they’ll have at the end of the forecast period in 2035:
- Personalized Recommendations: 18.7% in 2025, 16.4% in 2035
- Search and Discovery: 12.6% in 2025, 11.8% in 2035
- Inventory Optimization: 12.4% in 2025, 11.3% in 2035
- Demand Forecasting: 11.7% in 2025, 10.6% in 2035
- Customer Service Automation: 11.3% in 2025, 14.7% in 2035
- Fraud Detection: 10.6% in 2025, 9.2% in 2035
Other Key Insights
The report goes fairly in-depth on the topic of AI in retail and ecommerce in general, and there are many other key insights that I feel are important for brands to be aware of. This includes:
- By solution type, the visual search segment is expected to grow at the fastest CAGR throughout the forecast period.
- Cloud deployment has a much larger market share (74.8%) than on-premises deployment (25.2%) in 2025. The gap is expected to grow even more by 2035, as cloud deployment will make up 82.1% of the market, compared to only 17.9% for on-premises.
- Some of the most common end-use verticals for AI in retail and ecommerce are Grocery and Food Retail, Fashion and Apparel, Consumer Electronics, General Merchandise, and Home and Furniture.
- While the software segment currently holds the lead over the services segment (71.6% vs. 28.4% in 2025), the gap is expected to narrow in 2035, as services will grow to represent 33.7% of the market compared to 66.3% for software.
Regional Differences
Finally, the report also covers some regional insights and differences between regions throughout the world. North America dominated the market in 2025, with a market share of 38.6%, compared to Asia Pacific’s 28.4% and Europe’s 24.7%.
The North American market is driven by the early adoption of AI in many sectors, advanced digitalization, and the region’s strong digital infrastructure. Also, the presence of many leading tech giants like Google and Microsoft doesn’t hurt either.
However, while North America leads the market today, that may change by the end of the forecast period. In 2035, the report states that the Asia Pacific region will lead with a 41.2% market share in 2035, followed by North America’s 30.4% and Europe’s 20.1%.
Final Thoughts
This report is full of great information for retail and ecommerce brands to be aware of, and gives a great overview of the industry, where it may be heading, and what AI is most commonly used for.
While it’s impossible to know whether these market predictions are accurate or not in the present, I believe there’s certainly a chance the industry could grow as large (and as quickly) as the report suggests. In fact, over three-quarters of ecommerce companies already invest in AI, and I wouldn’t be surprised to see the number climb even higher.
As AI adoption continues to grow and businesses begin using it for a wider variety of tasks and duties, this industry has a good chance to see explosive growth going forward.
