B2C ECOMMERCE SITE SEARCH TRENDS

INTRODUCTION: THE B2C STATE OF SEARCH

As the role of Al in retail and ecommerce continues to grow, Algolia has once again partnered with Coleman Parkes for our annual search trends report to gauge how retail businesses plan to use search and discovery this year alongside the growing role of Al in retail and ecommerce merchandising.

B2C Ecommerce Site Search Trends is produced annually by Algolia. Our aim is to give stakeholders a broad, yet detailed overview of the evolution of search by offering a snapshot of the key developments,trends,technologies,and challenges unfolding in the B2C search and discovery space.

Spanning five key markets, this year's report is based on the input of 1,1OO participants including 55O IT decision makers (ITDMs) and 550 business decision makers (BDMs) working for businesses across the US, UK, France,Germany,and New Zealand/ Australia.

DATA AND INSIGHTS FROM THE REPORT REVEAL THAT BUSINESS TO CONSUMeR (b2C) COMPANIES PREDICT HEALTHY ONGOING INVESTMENT IN SEARCH MOVING INTO 2024.

INTRODUCTION: THE B2C STATE OF SEARCH

New implementations continue to be driven by a need to increase business revenue and respond to competitors.In addition,an integral element of most ecommerce strategies includes improving the user experience through increased personalization.

NOTABLY, RESPONDENTS VIEWED AI AS AN IMPORTANT PART OF THEIR BUSINESS'S SEARCH STRATEGY AND A CRITICAL TECHNOLOGY DRIVING THE ACCURACY AND RELEVANCE OF SEARCH RESULTS.

The use of generative Al was correlated with providing better and more refined tools that could be applied to drive more tailored and meaningful user experiences and interfaces.

EXECUTIVE SUMMARY

For B2C companies, powerful search and discovery tools are a key part of the online experience and have a critical role to play in delivering the outcomes that businesses and consumers expect. For companies, big or small, artificial intelligence (Al) is an increasingly important part of this technological mix-fine-tuning the business offering, helping shape customer demand, and delivering outcomes that translate to better, more powerful tailored user experiences.

Expected consumer trends in the coming year

Moving into 2O24 the data suggests that Al will continue to play a more central role in the search and discovery space. It will have a significant impact in shaping major trends around user experience and interactions. Al will also help improve how we collect and incorporate the rich data and analytics it makes available.

Grenter importance of

The majority of ITDMs and BDMs at 64% are well aware of the importance of Al in their search strategy and how it affects their business. Respondents view Al as an important tool to help drive the accuracy and the relevance of search results, while generative Al is linked to better product comparisons (5l%) and improved buyer's guides (46%)

EXECUTIVE SUMMARY

An increase in Al-driven customer interactions:

46% of respondents believe that Al-driven interactions will see a significant increase in the coming year, followed by an increase in special offers at 35%. Close to 2 out of 10 or 18% expect to see more demand for voiceinitiated searches,a trend that will make online information easier to access

More demand for different payment options:

Over half of respondents indicated that customers were seeking a greater variety of payment options. Linked to the increase in online shopping caused by the pandemic, users are also demanding a seamless

experience through all points of the customer journey

Enabling search capabilities

Search and discovery are an increasingly important part of the user's online journey, shaping the shopping experience at key points along the sales funnel. This makes the power, utility,and adaptability of search tools and technologies, including the integration of Al functionality, increasingly important.

EXECUTIVE SUMMARY

Third-orations for search:

Third-party collaboration continues to lead the development of business search capabilities, with 49% of businesses choosing this approach over in-house development or off-the-shelf packages-a very marginal increase from 47% in 2022. An inability to adapt quickly to market trends, lack of expertise,and shortage of development staff are the biggest challenges associated with in-house search development.

Features driving search:

B2C companies look for functionality to search all content sources, followed by

personalization (53%) and correction of spelling mistakes (typo tolerance) (50%)

Revenue, personalization, and an ecommerce strategy

Bottom-line concerns remain at the core of most important business decisions, and the data from our study confirms this fact. While revenue growth serves as a critical factor driving search upgrade and adoption,so does improving the customer journey through increased personalization and product recommendations.

EXECUTIVE SUMMARY

Revenue growth and search:

49% of businesses believe revenue is a strong driving factor for search implementation and the majority(61%) are satisfied by the revenue achieved via search. Although it has dropped marginally, from 70% in 2O22, satisfaction with searchgenerated revenue continues to remain high

Personalization as an integral part of ecommerce strategy:

Personalizing the online experience is an integral/large part of ecommerce strategy for 70% of survey respondents.The main types of personalization that businesses are offering to consumers are personalized shopping profiles (56%) followed by product recommendations (46%)

The importance of quick delivery:

For respondents, speedy delivery (58%) ranks with product recommendations (52%) as the most important factors in customer service overall and the most relevant areas when it comes to customer experience

The lingering impact of the COVID-19 pandemic continued to cast a shadow over search and discovery investment in 2023.Though 23% of businesses claimed

EXECUTIVE SUMMARY

to have invested 'a lot more this year' on site search, this is down from 33% in 2022. Although these levels of investment have been touched by the overall macroeconomic uncertainties,more moderate investment levels have remained broadly consistent and are expected to continue into 2024.

Al's impact on merchandising

The increasing importance of merchandising in the ecommerce space is clear. With access to more sophisticated tools and technologies, merchandisers can better curate the user's shopping journey, shaping the digital store experience at multiple points along the sales funnel.

Al as a critical tool for merchandising:

The majority (68%) of businesses surveyed have a dedicated merchandising team and slightly more than half (52%) are planning to implement Al tools to help merchandisers. The power of Al technology willbe a game changer for most businesses

. Harnessing the benefits of Al:

64% of respondents plan to hire more merchandisers and 73% plan to invest in a developer team to support digital merchandising strategies

EXECUTIVE SUMMARY

At the time the survey was conducted, over half of the businesses employed a combination of manual and automated merchandising processes. Given that only around a third (32%) of these businesses think that out-of-the-box solutions can fully meet their needs,and over half are already using solutions which allow customizations, we envisage Al-driven merchandising solutions taking an even more important and valuable place among merchandising teams, playing a key role in shaping ecommerce platforms and the customer journey.

THE LINGERING IMPACT OF THe CoVId-19 PANDEMIC CONTINUED TO CAST A SHADOW OVER SEARCH AND DISCOVERY INVESTMENT IN 2023.

BUSINESS PROFILES

We surveyed IT decision makers (ITDMs) and business decision makers (BDMs) with responsibility in ecommerce search functionality to obtain an accurate view of their organizations' business maturity and the state of search in key national and regional markets.

The equal split between ITDMs and BDMs provides a robust indication of the increasing and converging importance of search, discovery, and Al, for those with different responsibilities within most B2C organizations.

ITDM (NET)

50%

CDO /CHIEF DATA OFFICER 18%

CTO/CHIEF TECHNICAL OFFICER 17%

CIO /CHIEF INFORMATION OFFICER 16%

BDM (NET)

50%

HEAD OF PRODUCT 10%

HEAd OF BRAND 9%

CMO /CHIEF MARKETING OFFICER 8%

HEAD OF MERCHANDISING 8%

HEAD OF INNOVATION / DIGITAL TRANSFORMATION 8%

HEAD OF / DIRECTOR OF ECOMMERCE7%

The l,100 senior-level respondents included 300 participants based in the US,and 200 each from the UK, France, Germany, and New Zealand/Australia. For the sake of clarity, retailers were divided into two broad and overlapping categories-brick and mortar and ecommerce - based on the value of each of those revenue streams to their business.

Companies doing more than half of their business through online revenue streams were placed in the ecommerce category while those with more than half of their sales volume in physical stores were placed in the brick and mortar category. The study sample resulted in 4 out of 10 respondents coming primarily from the ecommerce online stream and the

remaining 6 in 1O from brick and mortar locations, where the purchasing component of the sales journey took place in physical stores.

RESPONDENT PROFILE - 'ECOMMERCE VS BRICK AND MORTAR"

Percentage of brick and mortar (60%) vs ecommerce (40%) respondents.

SITE SEARCH INVESTMENT

For B2C companies operating ecommerce or multi-channel retail operations, generating a meaningful customer journey is critical at all points in the sales funnel. Investing in technology that improves the search experience is not just about converting prospects into customers now but getting them to browse, explore, and return as loyal clients into the future.

Given the critical importance of search and discovery for both brick and mortar and ecommerce retailers, it is not surprising that over half (51%) of businesses surveyed said they adequately invested in site search in 2023, with investment touching levels that were slightly higher in 2023 compared to 2022.

Q: HOW WOULD YOU DESCRIBE THE COMPANY'S LEVEL OFINVESTMENT IN ITS ECOMMERCE SEARCH FUNCTION? BASE 2023 (1100), BASE 2022 (900)

6%		7%
51%		46%
32%		29%
11%		18%
TOTAL 2023		TOTAL 2022

Though businesses invested in site search to unlock advantages like better revenue streams and an improved customer experience, there were many that did not take the opportunity to benefit from site search implementation. Forty-three percent of respondents indicated that they have under or not invested in their ecommerce site's search and discovery capabilities.

This may be be attributable in part to budgetary limitations. It may also stem from a partiallack of understanding on how in-site search technology can power product discovery and conversion,and how it serves as an invaluable resource for powerful customer and product analytics.

BASE (1100)

Factors driving implementation

For those retailers that have put into place search and discovery technology to complement their online presence, the top three reported factors driving search implementation include revenue increase, meeting customer demand, and improving customer experience.

Closing the gap/staying ahead of the competition remains in the list of top 8 factors and is an issue of concern for16% of businesses, albeit at a slightly lower level than in 2022. This is a reminder that ongoing competitive pressures continue to affect businesses as we move slowly out of an inflationary economic environment.

Q: WHAT WERE YOUR BUSINESS'S DRIVING FACTORS BEHIND SEARCH IMPLEMENTATION?

INCREASE REVENUE

meet CUSTOMer DEMAND

IMPROVE CUSTOMER EXPERIENCE

IMPROVE DATA INSIGHTS

StaY RELevaNt

DELIVER A MORE PERSONALIZED EXPERIENCE

BOOST SLOW MOVING STOCK

CLOSE GAP/STAY AHEAD OF COMPETITION

Satisfaction with search-driven revenue levels

Sixty percent of retailers implementing search selected “very or quite satisfied" when asked about the overall revenue levels they have been able to achieve using the technology. More than half (6O%) were satisfied with the revenue their business achieved directly via search. As more businesses start to implement Al-based search features and insight-based optimizations, satisfaction with revenue levels is likely to trend positively.

Q:TO WHATEXTENT ARE YOU SATISFIED OR DISSATISFIED BY THE REVENUE WHICH YOU DIRECTLY ACHIEVEVIA SEARCH?

SATISFACTION WITH SEARCH-DRIVEN REVENUE LEVELS

12%10%

4%3%

NOT vERYSATISFIED

NOT AT ALL SATISFIED

N/A - WE dO NOT DIRECTLY MEASURE REVENUE ACHIEVED VIA SEARCH

TOTAL 2023 TOTAL 2022

Q:BY APPROXIMATELY HOW MUCH HAS YOUR COMPANY'S INVESTMENT IN SITE SEARCH FUNCTION CHANGED IN THE PAST 12 MONTHS COMPARED TO THE PREVIOUS 12 MONTHS?

Year-over-year investment levels in search and discovery technology remain broadly consistent, with 43% of respondents increasing their investment in site search in 2023 by an average of more than 8% compared to 2022. This trend looks set to continue into 2O24 as businesses continue to predict healthy investment in search with more than a third (42%) saying they will increase site search investment over the next year.

LAST 12 MONTHS - INVESTMENT IN SITE SEARCH

AVERAGE INCREASE

AVERAGE DECREASE

TOTAL 2023 TOTAL 2022

Q:BY APPROXIMATELY HOW MUCH WILL YOUR COMPANY'S INVESTMENT IN SITE SEARCH FUNCTION CHANGE IN THE NEXT12 MONTHS COMPARED TO THE CURRENT12 MONTHS?

Conversely, moving into 2024, just 6% of businesses responded that they are likely to decrease their investment, a slightly higher number when compared to 2022 (3%). This can be attributed in large part to the evolution of retail ecommerce following the pandemic. Many of the critical investments made during that period have reached a level of stability and maturity, generating predictable ROl and requiring no significant modification for the time being.

NEXT 12 MONTHS - INVESTMENT IN SITE SEARCH

AvERAGE INCREASE

AVERAGE DECREASE

Although the business environment in 2023 can be described as‘post pandemic,'the ongoing uncertain economic climate continued to impact site search investment levels. While 12% of businesses participating in the study invested less, nearly two-thirds (64%) of the businesses invested more in site search in 2O23. For almost a quarter (24%) of respondents, the economic climate has had no significant impact on site search investment. Overall, businesses investment in site search remained broadly consistent between 2022 and 2023.

Q:WHICH OFTHE FOLLOWING BESTDESCRIBES THE IMPACT OFTHE POST PANDEMIC PERIOD AND RECENTTOUGH ECONOMIC CLIMATE ON YOUR SITESEARCH INVESTMENT?

WE INvESTED A LITTLE LESS

For those starting to explore the possibility and power of search technology, and its accompanying Al tools, the pressure of an unpredictable economic environment drives a cautious approach. For the rest, an intended increase in site search investment is based on a range of factors that include responding to the competition (53%) and unlocking incremental revenue (24%) with product recommendations.

Q:WHAT ARE THE REASONS FOR THE INTENDED INCREASE IN INVESTMENT LEVELS? ALLRESPONDENTSWHOSELECTED“INCREASED"

ABILITY TO RESPOND TO COMPeTItION

NEED TO ADAPT TO UNPREDICTABLE MARKET CONDITIONS

PREDICT AND
SURFACE OFFERS
RELEVANT TO
CUSTOMERS

TOTAL 2023
TOTAL 2022

Just over half (53%) of participants attribute their company's increasing investment levels in search as a way of ensuring that they have an effective response to their competition, while over 4O% are using investment to boost customer focus. Forty-four percent are increasing search investment to enable faster search results for customers while 40% are seeking to improve the customer experience and retail journey.

Every second matters in the world of digital experiences. Brands are fighting for eyeballs and their competitors are doing the same. Keeping up with new technological and merchandising trends remains critically important as retailers strive to deliver

accurate and personalized, search and browse experiences to their customers at lightning speed.

FOR B2C COMPANIES
OPERATING ECOMMERCEOR MULtI-CHANNEL
RETAIL OPERATIONS,
GENERATING A
MEANINGFUL CUSTOMERJOURNEY IS CRITICAL ATALL POINTS IN THE SALESFUNNEL.

SEARCH CAPABILITIES

MENU当

Our research demonstrates that B2C retailers continue to pay close attention to the quality and effectiveness of the search technology they employ and are keenly aware of its effectiveness in increasing revenue and converting web users into loyal customers. But the pros and cons of building vs. buying off-the-shelf, as well as the costs involved in either option, are increasingly driving B2C companies to more dynamic and cost-effective intermediary solutions like customizable APl technology to enhance their search capabilities.

collaboration with a third party and just over a quarter (28%) opted to develop them in-house only. The data remains broadly consistent year on year, with businesses more likely to use in-house or third-party customization to develop their search capabilities and less likely to use off-the-shelf pre-packaged software (22% versus 27% in 2022).

Developing search capabilities

Nearly half (49%) of businesses surveyed developed their search capabilities in

Q:HOW HAVE YOUR SEARCH BASE 2023 (1100) CAPABILITIES BEEN DEVELOPED? BASE 2022(900)

22%

27%

28%

26%

49%

47%

TOTAL 2023

TOTAL 2022

IN COLLABORATION WITH A THIRD PARTYIN HOUSE ONLYOFF HE SHELF PRE-PACKAGED SOFTWARE

The debates over building vs. buying search and discovery technology remain inconclusive. Though there are many benefits to building bespoke technology, this demands a significant ongoing resource investment. Another option is to tailor solutions using an APl-based platform, like Algolia Al Search. This comes with expanded offerings and the ability to customize into the future. The end result generates superior benefits with limited investment.

Given the pace of technological development and its associated costs, in-house development might give businesses more control over their search capabilities. But respondents who ventured down this road also faced a new array of challenges that their businesses needed to overcome.

Over half of the respondents said their business lacks the ability to adapt fast enough to the latest trends and more than 43% said they lacked the expertise needed to develop in-house search capabilities, while over a third reported shortage of development staff.

WHAT,IF ANYTHING,DID YOU FIND CHALLENGING ABOUTIN-HOUSESEARCHDEVELOPMENT?THOSE WHO DEVELOPED“IN-HOUSE ONLY” OR“IN COLLABORATION WITH A THIRD PARTY" SEARCH CAPABILITIES. BASE 2023 (853)

LACK OF ABILITY TO ADAPT FAST ENOUGH TO The LATeST TReNDS

52%

LACK OF EXPERTISE

43%

SHORTAGE OF DEVELOPMENT STAFF 37%

UNSURE OF COMPATIBILITY WITH EXISTING TECH STACK

27%

TOO EXPENSIVE

14%

THERE WERE NO CHALLENGES 12%

THE BENEFITS OF SEARCH

Put simply, if the customer can't find it, how are they going to buy it? Ecommerce users increasingly expect powerful and meaningful search and discovery that helps them find not only what they are looking for, but also items they might like but hadn't considered. Quick and accurate search results and tools that make search easier are critical to the ecommerce shopping journey and a top-of-mind concern for B2Cs.

In addition to simply helping customers find what they are looking for, there are a host of different types of search features that businesses implemented or plan to implement in an effort to see better ROl. These range from leveraging Al to better

understand user intent to providing refined and personalized search results based on a customer profile and history.

"Search all content sources" continues to be a key feature already implemented by over half of businesses, followed by personalization features at 53% and spelling mistake correction (typo tolerance) at 50%. The top search feature businesses plan to implement over the next year is to provide their users with “as-you-type"results.

CONSUMER EXPECTATIONS HAVE BEEN RESET TO NEW STANDARDS WHERE SHOPPERS EXPECT TO ENJOY FLAWLESS CONNECTED EXPERIENCES ACROSS CHANNELS.

ALREADY IMPLEMENTED

SOURCES USED WHEN RESEARCHING SOLUTIONS

Search all your content sources such as product catalog, webpages,blogs,resources,documentation or e-commerce Us

Personalize search results based on user preferences and behaviors

Provide relevant results even when users make spelling mistakes, use plurals or synonyms

Merchandize search results (e.g., promote products with the highest margin, or most popular articles)

Provide to users “as-you-type"results (updating search results at every keystroke)

Offer recommendations and related products as additional options to consider based on selections

Leverage Al to understand users'intent and automatically suggest relevance improvements

54%	34%	11%

53%	31%	16%

50%	33%	17%

48%	34%	19%

46%	39%	15%

44%	37%	20%

43%	34%	23%

NO PLANS TO IMPLEMENT IN THE NEXT 12 MONTHS

Businesses that already implemented search features reported multiple benefits such as revenue increase, repeat customer loyalty, and increased digital traffic. Over half (54%) of those already offering recommendations and related search products have seen an increase in revenue and a 5O% increase in digital traffic.

Q:WHAT IMPACT HAVE YOU SEEN,IF ANY, FROM THE FOLLOWING FEATURES HAVING BEEN IMPLEMENTED?

Offer recommendations and related products as additional options to consider based on selections

Leverage Al to understand users'intent and automatically suggest relevance improvements

Search all your content sources such as product catalog, webpages, blogs, documentation, or e-commerce SkUs

Provide relevant results even when users make spelling mistakes, use plurals or synonyms

Merchandize search results (e.g., promote products with the highest margin, or most popular articles)

Provide to users “as-you-type" results (updating search results at every keystroke)

Personalize search results based on user preference and behavior

Over a third (36%) of those who are already leveraging Al to understand users'behavior have seen both an impact on customer loyalty and a more positive impact on revenue increase. This suggests that businesses that have no plans to implement search features in the next 12 months are set to miss out on the potential to increase revenue and improve sales through increased digital traffic and repeat customer loyalty.

Consumer expectations have been reset to

new standards where shoppers expect to

enjoy flawless connected experiences

across channels. Meeting these

expectations and converting them into

loyalty and sales will require B2C companies

to think about using the right types of

solutions quickly and effectively.

QUICK AND ACCURATE SEARCH RESULTS AND TOOLS THAT MAKE SEARCH EASIER ARE CRITICAL TO THE ECOMMERCE SHOPPING JOURNEY AND A TOP-OF-MIND CONCERN FOR B2CS.

PERSONALIZATION

One of the most powerful applications of new technology in search and discovery is its ability to improve personalization and help B2C businesses,and the merchandisers on their teams, deliver targeted and curated offerings to their existing and prospective customers. Personalization can be delivered to users in a number of different ways that can range from personalized shopping profiles to targeted email messaging.

Types of search personalization

OVER HALF OR 56% OFBUSINESSES CURRENTLYOFFER CUSTOMERS APERSONALIZEDSHOPPING PROFILE

That's followed by 46% offering product recommendations based on items searched for or purchased. Forty percent offer subscription to email messaging programs in exchange for a more personalized experience. Over a third of businesses (34%) use a text subscription service for a more personalized experience.

It is important to note the significance and potential of Al: over a quarter (28%) of respondents offer conversational commerce to their customers and more than two thirds of businesses surveyed are planning to implement this functionality over the next year.

PERSONALIZED SHOPPING PROFILE

PRODUCT RECOMMENDATIONS BASED ON ITEMS SEARCHED FOR / PURCHASED

SUBSCRIBE TO EMAIL MESSAGING PROGRAMS AND RECEIVE A MORE PERSONALIZED EXPERIENCE IN RETURN

SUBSCRIBE TO TEXT MESSAGING PROGRAMS AND RECEIVE A MORE PERSONALIZED EXPERIENCE IN RETURN

SAVED (ITEMS) FOR LATER

CONVERSATIONAL COMMERCE

POST CHECKOUT PERSONALIZATION

Importance of search personalization

Personalization continues to be a significant part of a business's ecommerce strategy. Seventy percent of those surveyed said that personalization will be an integral or large part of their ecommerce strategy over the next year.

The results can be attributed to customer expectations. Retail customers want to interact and engage in experiences that are tailored to their preferences and specific needs. Customers expect brands to know who they are and what they want.

Q:TO WHAT EXTENT DOES PERSONALIZATION FORM PART OF YOUR ECOMMERCE STRATEGY FOR THE NEXT 12 MONTHS?

BASE (1100)

27%

IT IS AN INTEGRAL PART OF OUR ECOMMERCE STRATEGY FOR THE NEXT 12 MONTHS

17%

IT IS A FAIRLY SMALL PART OF OUR ECOMMERCE STRATEGY FOR THE NEXT 12 MONTHS

43%

IT IS A LARGE PART OF OUR ECOMMERCE STRATEGY FOR THE NEXT 12 MONTHS

13%

IT IS NOT A PART OF OUR ECOMMERCE STRATEGY FOR THE NEXT 12 MONTHS

AI AND THE IMPACT OF CHAT GPT

Al is in the midst of becoming a keystone technology in the search and discovery space. It is significantly improving both the search experience and the user journey for customers in the sales funnel. In addition,it is increasingly playing a role as a critical tool in improving the fundamentals of search and discovery technology. This opens a host of new possibilities for B2C companies.

Sixty percent of those surveyed believe Al has an important role to their business's search strategy compared to the 4% saying that Al doesn't feature as an important consideration. Thus, Al adoption looks set to offer businesses new opportunities in their search strategy development over the longer term.

Q:HOW IMPORTANT IS AI TO YOUR BASE (1100) BUSINESS SEARCH STRATEGY?

Given these results, Al adoption is likely to offer businesses significant new opportunities in shaping their search strategy development in the future.

In terms of Al’s role in augmenting search, more than half (5l%) of those surveyed believe that it will improve the accuracy of search results, followed by 45% saying it will improve the relevance of search results.

Interestingly, for more than a quarter (26%), Al will help achieve positive business results at scale. Only a minority at 3% are saying that it's too early to predict the role of Al in search.

Q:WHAT DO YOU CONSIDER TO BE THE ROLE OF AI IN SEARCH?

IMPROVING THE ACCURACY OF SEARCH RESULTS

IMPROVING THE RELEVANCE OF SEARCH RESULTS

INCREASING THE FOCUS OF UNDERSTANDING USER INTENT

ACCOMPLISH POSITIVE BUSINESS RESULTS AT SCALE

ALLEVIATING MANUAL WORKLOAD ON MERCHANDISERS

DON'T KnOW / tOO EaRLy tO Say 3%

BASE (1100)

Respondents believe that Al can catalyze change in search and discovery solutions. The two most common use cases they cited were to generate product comparisons (5l%) and buyer's guides (46%).

This data is a powerful indication that businesses recognize the importance of using emerging technologies to offer their customers a more personalized shopping experience. While conversational tools have existed for some time, the application of generative Al in search, which remains in testing mode for many B2C companies, is likely to elevate the overall shopping experience for customers.

Q: WHAT,IF ANYTHING,WOULD YOU LIKE TO BE ABLE TO USE GENERATIVE AI FOR?

PRODUCT COMPARISON (I.E, A
CONVERSATIONAL SHOPPING EXPERIENCE
THAT ASSISTS YOU IN FINDING THE IDEAL PRODUCTS FOR YOUR NEEDS)

BUYER'S GUIDE (I.E., PERSONALIZEDGUIDANCE AND SEAMLESS UX GUIDESHOPPERS TO THE RIGHT PRODUCTS)

SMART CHATBOTS / CONVERSATIONAL INTERFACE

PRODUCT REvIEWS

51%

46%

31%

MERCHANDISING

The convergence of Al and ecommerce heralds a new era for online merchandising. Merchandisers must now balance both product promotion and generate meaningful personalized experiences for their retail online customers. Given their increasingly important role in the era of Al-driven ecommerce, merchandisers must now maximize the power of their companies' online real estate. Increasingly, Al-based search and discovery technology gives them the tools they need.

Types of search personalization

More than two-thirds (68%) of businesses have a dedicated merchandising team and 54% have a dedicated solution in place for their merchandising needs.

Q:DO YOU HAVE A DEDICATED MERCHANDISING TEAM?DO YOU HAVEADEDICATED SOLUTIONIN PLACE FOR YOUR MERCHANDISING NEEDS? BASE (1100)

Overall, responses suggest that businesses are more advanced in having full-time, committed merchandising teams on their payroll than dedicated tools and solutions for those teams. A large part of this can be attributed to the evolutionary growth of digital merchandising. In the recent past, merchandising teams have been at the front lines of driving ecommerce as wellas brick and mortar consumer experiences and revenue.

Businesses that have dedicated solutions in place for their merchandisers indicate that customization is important for them to effectively reach out to their customers.

For 5l% of those interviewed, the available merchandising solution they were using had comprehensive capabilities and customizabl functionality. Just under a third (32%) used out-of-the-box solutions. The data reflects the dynamic nature of ecommerce: no two businesses are alike. Every ecommerce business must tailor functionality to suit its particular needs.

Q: WHICH OF THE FOLLOWING BEST DESCRIBES THE TYPE OF SOLUTION YOU HAVE IN PLACE FOR YOUR MERCHANDISING? BASE: RESPONDENTS HAVING IN PLACE A DEDICATED SOLUTION FOR MERCHANDISING NEEDS(593)

OUT OF THE BOX/ EASY TO USE SIMPLE SOLUTION

32%

COMPREHENSIVE CAPABILITIES WITH CUSTOMIZABLE FUNCTIONALITY

51%

FULLY CUSTOMIZABLESOLUTION REQUIRING ALL FUNCTIONALITYTO BE BUILT

17%

Limits to out-of-box ecommerce merchandising solutions

There are limitations to out-of-the-box solutions. These include fewer capabilities or a lack of relevant features that may be required by specific sub-industries. This further reinforces the need for customization, as further illustrated in Figure 18.

Only around a third (32%) believe that the out-of-box solutions can fully meet their needs. For the remaining 68% of respondents, these out-of-box merchandising technologies are partially or wholly inadequate.

Q: STILL THINKING ABOUT MERCHANDISING, HOW IMPORTANT IS CUSTOMIZATION COMPARED WITH“OUT OF THE BOX” SOLUTIONS? BASE:RESPONDENTS HAVING IN PLACE A DEDICATED SOLUTION FOR MERCHANDISING NEEDS(593)

32%

OUT OF THE BOX SOLUTIONS ARE ABLE TO MEET OUR NEEDS CURRENTLY

12%

OUT OF THE BOX SOLUTIONS ARE NOT ABLE TO MEET OUR NEEDS FOR THE MOST PART

50%

OUT OF THE BOX SOLUTIONS ARE MOSTLYABLE TO MEET OUR NEEDS CURRENTLY, BUTTHERE ARE SOME GAPS WHERE WE NEEDMORE CUSTOMIZATION

OUT OF THE BOX SOLUTIONS ARE NOT AT ALL ABLE TO MEET OUR NEEDS AND WE NEED A FULLY CUSTOMIZED SOLUTION

Investing in merchandising

While 68% of respondents are working in B2Cs that have a dedicated merchandising team, nearly two- thirds or 64% of the businesses that were part of our research plan to hire more merchandisers and 73% plan to invest in an IT developer team to support merchandising efforts.

Q:IN WHICH OF THE FOLLOWING BASE (1100) AREAS,IF ANY,ARE YOU PLANNING TO INVEST IN THE NEXT 12 MONTHS?

PLANS TO INVEST HEAVILY IN NEXT 12 MONTHS PLANS TO INVEST A LITTLE IN NEXT 12 MONTHS NO PLANS TO INVEST IN NEXT 12 MONTHS

These numbers highlight the growing importance of merchandising tools in the ecommerce business space. It is also important to note that over half (52%) of those interviewed plan to implement Al powered tools to help merchandisers. The investment in tools and technologies to improve the merchandising function is a strong signal of the increasingly central role these teams are expected to play, especially when it comes to making an impact on revenue using datadriven strategies.

Different approaches to ecommerce merchandising

The data shows that businesses'approaches to merchandising vary with different stages of Al implementation. Nearly half of businesses (49%) employ a combination of manual and automated merchandising processes. Thirty-three percent indicate they are already fully automated and just under 18% remain fully manual. Implementing Al-powered tools as businesses plan to help merchandisers across the year has the potential to improve their merchandising strategies and enhance automated processes.In order to execute the best strategies for their businesses, merchandisers need to have access to manual and Al functionality, with the ability to fully

Q:HOW WOULD YOU DESCRIBE YOUR APPROACH TO MERCHANDISING? BASE:RESPONDENTS HAVING IN PLACE A DEDICATED SOLUTION FOR MERCHANDISING NEEDS (593)

FULLY MANUAL PROCESS 18%

FULLY AUTOMATED PROCESS

33%

COMBINATION OF MANUAL AND AUTOMATED PROCESSES

49%

control and intervene as needed.

Businesses planning to help merchandisers implement Al-powered tools over the next year have the potential to improve their merchandising strategies and enhance automated processes. In order to execute the best strategies for their businesses, merchandisers need to have access to a mix o manual and Al-automated functionality. They must also have the ability to fully control and intervene in processes as required.

Measuring merchandising impacts and strategy

The top metrics used to measure merchandising impacts are team productivity at 54%, speed to change merchandising products at 42%,and revenue uplift at 38%. This is a clear indicator of the exhaustive list of jobs to be done by merchandisers and the area most benefited.

The breadth of these three variables is a clear indication of the broad scope of activity involved in the merchandising function and its accompanying roles.

Q: HOW,IF AT ALL, DO YOU MEASURE THE IMPACT OF YOUR MERCHANDISING? BASE: RESPONDENTS HAVING IN PLACE A DEDICATED SOLUTION FOR MERCHANDISING NEEDS (593)

TEAM PRODUCTIVITY

54%

SPEED TO CHANGE MERCHANDISING PRODUCTS

42%

REveNUE UPLIFT

38%

QUALITATIVE FEEDBACK/WORD OF MOUTH

33%

Data and analytics play a critical role in merchandising strategy. Merchandising decisions are based on applying available data and analytics for more than half (53%) of respondents, while 44% continue to use brand-oriented thinking. Surprisingly, nearly a third (3O%) claim to rely on intuition. Automation also has a place with just over a quarter (27%) using automated optimizations when applying merchandising strategy.

Q:WHICH OF THE FOLLOWING ARE INPUTS TO YOUR MERCHANDISING STRATEGY? BASE: RESPONDENTS HAVING IN PLACE A DEDICATED SOLUTION FOR MERCHANDISING NEEDS (593)

DATA AND ANALYTICS

53%

BRAND-ORIENTED THINKING

44%

INTUITION

30%

AUTOMATED OPTIMIZATION

27%

While intuition-based campaigns can lead to short-term gains, they lack predictability especially when scaling. Additionally, it is nearly impossible to replicate results when the consumer is constantly evolving. Data from a brand's business is the most valuable input in determining strategy. In particular, click and conversion metrics help merchandisers build and modify their strategies for continuous impact.

· CUSTOMER EXPERIENCE

Creating a positive and delightful shopping experience is an important element in the retail business proposition for B2C companies. However, delivering this is a constant challenge. Data from the research suggests there are a gamut of variables at play Al-driven search and discovery ecommerce technology has an important role to play in fulfilling customer expectations.

For all the businesses surveyed, remaining focused on the customer is a critical concern and one of the main drivers for any intended increase in investment levels.

Q: WHICH AREAS ARE YOU MOST FOCUSED ON WHEN IT COMES TO CUSTOMER EXPERIENCE? BASE (1100)

QUICK DELIVERY OF DESIRED GOODS

58%

49%

INSTANT GRATIFICATION

49%

PERSONALIZATION

42%

Businesses focus on a number of areas when it comes to customer experience. More than half (58%) of respondents highlight the importance of quick and speedy delivery of goods. This is followed by recommended products at 52%, payment experience at 50%, and personalization at 42%.

FUTURE STATE OF SEARCH

Some of the consumer trends anticipated over the next year include increased demand for more payment options, more Al-driven activity, and more special offers during the shopping process.

Additionally, with the increased usage and acceptance of Al, more than a quarter (27%) of respondents expect that Al will play an increasingly mainstream role in search experiences in 2024. This is in addition to demand for more voice-activated search functionality.

DEMAND FOR MORE PAYMENTOPTIONS

50%

INCREASE IN AI-DRIVEN INTERACTIVITY WITH CUSTOMERS

46%

INCREASE IN SPECIAL OFFERS DURING THE SHOPPING PROCESS

35%

DEMAND FOR MORE PERSONALIZATION

31%

MAINSTREAM ROLE OF AI IN SEARCH AND DISCOVERY EXPERIENCES

27%

DEMAND FOR MORECONVERSATIONAL CHATBOTS

20%

MORE DEMAND FOR VOICE-ACTIVATED SEARCHES

18%

SALES EVENTS

BASE(1100)

Outside of Black Friday, Cyber Monday and Christmas, Easter is seen as the biggest sales event for B2C ecommerce businesses surveyed. Following Easter, the biggest sales are in January and at Halloween. In terms of country specific events, Easter sales are popular in the UK, while in the US, Labor Day is a big event. In France, Paris Jazz Festival season is a key sales period, while in Germany, Oktoberfest sales days emerge as an important part of the shopping calendar.

Q: EXCLUDING BLACK FRIDAY/CYBER MONDAY AND CHRISTMAS,WHICH ARE THEЗBIGGEST SALES EVENTS FOR YOUR BUSINESS DURING THE YEAR?

EASTER - EXTRAVAGANZA / MARKETS / MONDAY / MAYHEM

NEW YEAR / JANUARY SALES / CLEARENCCE /COUNTDOWN

HALLOWEEN /SPOOKTACULAR

VALENTINE'S DAY /SWEETHEART SPECIALS /SALES

SUMMER - BANK HOLIDAY / FESTIVAL/SALES

LABOR DAY

SPRING - BANK HOLIDAY / FAIR /MAYHEM /SALES

BACK TO SCHOOL

THANKSGIVING/FEAST OF DEALS/SALES

SMALL BUSINESS SATURDAY

OKTOBERFEST SALES /BEER FESTIVAL/ BIERGARTEN

WINE FESTIVALS/SALES (UNSPECIFIED)

KEY INSIGHTS

Site based search and discovery technology will continue to be a critical element in the B2C online space as we move into 2O24. The data suggests that as the technology advances and incorporates increasingly powerful Al tools and functionality, retailers will be able to better shape the business offering. In turn, customers will benefit from an enriched and more personalized shopping journey across the sales funnel.

64%

of respondents recognize Al as a critical means to drive accuracy and relevance. Respondents view Al as a key technology driving the accuracy and relevance of search results. Nearly half associate generative Al with improving product comparisons and buyer's guides.

61%

of respondents indicated they are able to accomplish revenue goals with search. Nearly half believe revenue is a strong driving factor for search implementation and 6l% are satisfied by the revenue achieved via search. Overall, revenue satisfaction remains fairly high.

70%

of those surveyed said personalization will be an integral or large part of their ecommerce strategy over the next year. Personalization remains a significant part of B2C ecommerce strategy and this will continue over the next year.

NEARLY HALF

of businesses employ a combination of manual and automated merchandising processes.

Merchandising will continue to play an increasingly important role in the retail ecommerce space as we move into 2024.As merchandising tools and technologies

become easier to use and businesses take advantage of the increasing automation that Al technology can provide, data shows that businesses will continue to combine manual and automated merchandising processes to shape the customer journey and drive sales.

58%

said quick delivery of goods is the most important part of a great customer experience. Not surprisingly, having goods in hand remains a top-of-mind concern for online shoppers.As a result, the data overwhelmingly demonstrates that for most respondents, the quick delivery of goods is an essential focus when it comes to ensuring a positive customer experience.

With the pressure on ecommerce players to incorporate the latest Al technologies and respond to customer needs at lightning speed, tools like Algolia Search and the Merchandising Studio can help B2Cs streamline processes and deliver world class customer centered solutions.

SITE BASED SEARCH AND DISCOVERY TECHNOLOGY WILL CONTINUE TO BE A CRITICAL ELEMENT IN THE B2C ONLINE SPACE AS WE MOVE INTO 2024.

CONCLUSION

Forbes reports that 82% of global brands seek to deliver value through improved customer experience-the customer journey,then, remains a critical element in the value proposition for any B2C company. Powerful search and discovery technology like Algolia's Search solution and Merchandising Studio deliver solutions that maximize B2C companies' ability to effectively orchestrate the art and science of modern online retailing.

As the respondents in the study affirm,Al,along with generative Al,are integral in the evolving ecommerce landscape. Ensuring that B2C companies have the tools they need to harness and use the technology to shape customer journeys and apply data and analytics to drive business decisions has become the new normal.

Online merchandising is at the heart of this new dynamic. Merchandisers must now be able to harness an array of available technological solutions. Their goal is to understand customers, channel conversions. increase sales,and ultimately improve ROl. In such a fast-paced and competitive retail landscape, generating new ways for customers to shop virtual retail spaces will always be a challenge.

As we enter 2O24, using the right tools helps deliver B2C outcomes that enable progress and drive valuable results. It lets retailers focus on the dynamic, creative,and customer-centered solutions that will set them apart from the competition.

ALGOLIA'S
PRedIctiONS
FOR THE
EvoLutioN OF B2C AI SEARCH IN 2024

As 2024 shapes up to be a pivotal year for Al-powered B2C search functionality, Algolia Al search subject matter experts weigh in on where they expect the biggest developments to occur this year. These are the top five they landed on:

ARTIFICIAL INTELLIGENCE WILL BE USED MORE BROADLY ACROSS THE ENTIRE CUSTOMER JOURNEY

As Al proliferates, B2C industry focus will shift from simply using Al-enabled capabilities for specific needs to a more holistic approach for ecommerce, embedding Al along critical paths of the customer journey to add value, drive revenue, and stimulate growth.

PERSONALIZATION MOVeS FRONT AND CENTER

While there's been consistent development around improving personalization for many years, 2024 will see even greater emphasis around this subject. Armed with new ML and Al-led tools, merchandisers and other business decision makers wil further crystallize which aspects of personalization have a greater impact on their buyer's journey and implement it with a more targeted approach as opposed to a generalist one-size-fits-al functionality.

CATERING TO MIXED AUDIeNceS

Businesses wanting to build a performant Al-led ecommerce solution will need to make sure that they are speaking to both business and technical audiences to architect solutions that meet both of their increasingly intertwined goals.

The UNifIcatiON Of DATA TO UNDERSTAND The SHOPPer
Businesses will move to a singular, multi
channel customer view across critical data
points such as user on-site behavior and
customer intent mapping. Even social media

interactions will become more important to businesses. Businesses can then use data from a single source to communicate with customers across multiple channels and seamlessly deliver an augmented shopping experience.

ROI becOMeS A MOrE CENTRAL COMPONENT IN TeCHNOLOgy INVESTMeNT

Although the impact of environmental variables such as supply chain shocks and the lingering pandemic continue to soften, prevailing global economic uncertainty wil lead businesses to prioritize their bottom line and be conscious of ROl in technologyled investments. Al search will be no exception but will emerge as a competitive differentiator in the overall ecommerce landscape.

MOVING INTO 2024 THE DATA SUGGESTS THAT AI WILL CONTINUE TO PLAY A MORE CENTRAL ROLE IN THE SEARCH AND DISCOVERY SPACE.

ABOUT ALGOLIA

Algolia is the world's only end-to-end Al
search and discovery platform. Our engineers
invented a breakthrough use of Al to create
exponentially better search & discovery.
Algolia's proprietary NeuralSearch tech
combines vector-based natural language
processing & keyword matching in a single APl
Algolia powers 1.75 trillion search requests a
year or more than 30 billion a week enabling
more than 17,000 customers in 150+
countries to build blazing-fast and relevant
search and discovery experiences for their
in-app users and/or online visitors using any
web, mobile or voice device - by surfacing
the desired content instantly and at scale.

54%	34%	11%

53%	31%	16%

50%	33%	17%

48%	34%	19%

46%	39%	15%

44%	37%	20%

43%	34%	23%

54%	34%	11%

53%	31%	16%

50%	33%	17%

48%	34%	19%

46%	39%	15%

44%	37%	20%

43%	34%	23%

B2C ECOMMERCE SITE SEARCH TRENDS

TABLE OF CONTENTS

INTRODUCTION: THE B2C STATE OF SEARCH

DATA AND INSIGHTS FROM THE REPORT REVEAL THAT BUSINESS TO CONSUMeR (b2C) COMPANIES PREDICT HEALTHY ONGOING INVESTMENT IN SEARCH MOVING INTO 2024.

INTRODUCTION: THE B2C STATE OF SEARCH

NOTABLY, RESPONDENTS VIEWED AI AS AN IMPORTANT PART OF THEIR BUSINESS'S SEARCH STRATEGY AND A CRITICAL TECHNOLOGY DRIVING THE ACCURACY AND RELEVANCE OF SEARCH RESULTS.

EXECUTIVE SUMMARY

Expected consumer trends in the coming year

Grenter importance of

EXECUTIVE SUMMARY

An increase in Al-driven customer interactions:

More demand for different payment options:

Enabling search capabilities

EXECUTIVE SUMMARY

Third-orations for search:

Features driving search:

Revenue, personalization, and an ecommerce strategy

EXECUTIVE SUMMARY

Revenue growth and search:

Personalization as an integral part of ecommerce strategy:

The importance of quick delivery:

EXECUTIVE SUMMARY

Al's impact on merchandising

Al as a critical tool for merchandising:

. Harnessing the benefits of Al:

EXECUTIVE SUMMARY

THE LINGERING IMPACT OF THe CoVId-19 PANDEMIC CONTINUED TO CAST A SHADOW OVER SEARCH AND DISCOVERY INVESTMENT IN 2023.

BUSINESS PROFILES

ITDM (NET)

50%

BDM (NET)

SITE SEARCH INVESTMENT

Factors driving implementation

Satisfaction with search-driven revenue levels

SATISFACTION WITH SEARCH-DRIVEN REVENUE LEVELS

Q:BY APPROXIMATELY HOW MUCH HAS YOUR COMPANY'S INVESTMENT IN SITE SEARCH FUNCTION CHANGED IN THE PAST 12 MONTHS COMPARED TO THE PREVIOUS 12 MONTHS?

LAST 12 MONTHS - INVESTMENT IN SITE SEARCH

Q:BY APPROXIMATELY HOW MUCH WILL YOUR COMPANY'S INVESTMENT IN SITE SEARCH FUNCTION CHANGE IN THE NEXT12 MONTHS COMPARED TO THE CURRENT12 MONTHS?

NEXT 12 MONTHS - INVESTMENT IN SITE SEARCH

Q:WHAT ARE THE REASONS FOR THE INTENDED INCREASE IN INVESTMENT LEVELS? ALLRESPONDENTSWHOSELECTED“INCREASED"

SEARCH CAPABILITIES

MENU当

Developing search capabilities

THE BENEFITS OF SEARCH

CONSUMER EXPECTATIONS HAVE BEEN RESET TO NEW STANDARDS WHERE SHOPPERS EXPECT TO ENJOY FLAWLESS CONNECTED EXPERIENCES ACROSS CHANNELS.

SOURCES USED WHEN RESEARCHING SOLUTIONS

QUICK AND ACCURATE SEARCH RESULTS AND TOOLS THAT MAKE SEARCH EASIER ARE CRITICAL TO THE ECOMMERCE SHOPPING JOURNEY AND A TOP-OF-MIND CONCERN FOR B2CS.

PERSONALIZATION

Importance of search personalization

AI AND THE IMPACT OF CHAT GPT

Q: WHAT,IF ANYTHING,WOULD YOU LIKE TO BE ABLE TO USE GENERATIVE AI FOR?

MERCHANDISING

Types of search personalization

32%

Limits to out-of-box ecommerce merchandising solutions

Q: STILL THINKING ABOUT MERCHANDISING, HOW IMPORTANT IS CUSTOMIZATION COMPARED WITH“OUT OF THE BOX” SOLUTIONS? BASE:RESPONDENTS HAVING IN PLACE A DEDICATED SOLUTION FOR MERCHANDISING NEEDS(593)

Investing in merchandising

Different approaches to ecommerce merchandising

Measuring merchandising impacts and strategy

TEAM PRODUCTIVITY

54%

38%

33%

INTUITION

· CUSTOMER EXPERIENCE

49%

49%

FUTURE STATE OF SEARCH

31%

SALES EVENTS

KEY INSIGHTS

64%

61%

70%

NEARLY HALF

58%

SITE BASED SEARCH AND DISCOVERY TECHNOLOGY WILL CONTINUE TO BE A CRITICAL ELEMENT IN THE B2C ONLINE SPACE AS WE MOVE INTO 2024.

CONCLUSION

ARTIFICIAL INTELLIGENCE WILL BE USED MORE BROADLY ACROSS THE ENTIRE CUSTOMER JOURNEY

PERSONALIZATION MOVeS FRONT AND CENTER

54%	34%	11%

53%	31%	16%

50%	33%	17%

48%	34%	19%

46%	39%	15%

44%	37%	20%

43%	34%	23%

2024年B2C电子商务网站搜索趋势

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