Algolia: Only 26% of retailers use AI-optimized search

Four in five (79%) retailers have little or no personalization or recommendation functionality on their commerce site, and only 26% noted the use of AI to optimize search results’ relevance.

Algolia, which makes an API platform for search and dynamic experiences, revealed its second annual State of Search Report, which includes insights from 900 technical and business decision makers from omnichannel, as well as from digital retailers with global revenues of over $100 million, exploring the current usage, investment, and value of search technologies.

The State of Search Report reveals the impact of search on a variety of key areas, including conversion rates, user experiences, demand surges, achieving a headless architecture, and more. The report found that only 13% of retailers claim to offer shoppers an advanced search experience, which would create a clear competitive advantage. AI continues to be a lesser used tool for generating personalized recommendations, with only 26% using it to optimize search result relevance. Companies that embrace AI-driven search are reaping the benefits. Gymshark, the fastest-growing fitness fashion brand in the U.K., is generating £2 million ($2.7 million USD) of incremental sales per year by using AI-powered relevance.

Additionally, as the holiday season approaches, the critical role of advanced search will be underscored. Algolia saw 4.5 billion search queries, peaking at 7.2 million queries per minute, on Black Friday of 2020. This translates into an 85% increase in search queries, compared to Black Friday in 2019. Sixty-five percent of retailers feel their ability to meet last year’s Black Friday demand needed to be handled better. Two in five (40%) retailers admitted they are currently not prepared to respond to new surges in consumer demand.

COVID-19 has also shaped how retailers view search, with over a third (35%) having increased their search investment in the last 12 months and 44% of businesses planning to increase search spend over the next 12 months. Retailers are seeing the true value of search when it comes to improving and converting online shoppers. Businesses with higher conversion rates have made more investment in search, which is proof that there is a clear return on investment when making a change in terms of search.

Retailers’ investments into search technology should focus on technologies that fit into headless architectures, which are commonly associated with easier implementation of omnichannel experiences. Ninety percent of retailers think that the fit of their search technology to a headless architecture is critical or somewhat important.

Read the full report by Algolia.