ARK Invest, a prominent investment management firm led by Cathie Wood, has released new research indicating that artificial intelligence (AI)-powered digital wallets could significantly transform e-commerce, potentially driving an astonishing $9 trillion in global online spending by the year 2030. This forecast is hinged on the integration of Large Language Models into various payment platforms.
The research highlights how AI "purchasing agents," which can be integrated into digital wallet services such as Shopify’s Shop Pay, Block's Cash App, and Apple Pay, have the potential to change the landscape of online shopping. These agents promise to enhance the purchasing experience by evolving traditional one-click checkouts into a streamlined one-query purchase model. This technological advancement is being pursued as tech giants like Alphabet and Amazon aggressively enhance their AI capabilities.
ARK's analysis posits that AI purchasing agents could disrupt the market supremacy currently held by Google and Amazon, as these agents automate product comparisons and streamline purchase decisions. The application of these AI agents aims to reduce dependency on traditional search engines and online marketplaces, thereby reshaping consumer behaviour in significant ways.
Klarna, a player in the digital payments sector, is already demonstrating this trend by integrating Microsoft-backed OpenAI technology to create a shopping assistant that blends search functionalities with user preference aggregation. According to ARK Invest, there is an expectation that the share of global e-commerce transactions processed through digital wallets equipped with purchasing agents will rise from 50% in 2023 to 72% by 2030. This transition could lead to an estimated $43 billion in revenue for digital wallet providers if just 10% of global spending through AI agents occurs via these digital platforms, with a projected lead generation fee of 5%.
Supporting this trajectory are recent market developments that illustrate the growing role of AI in e-commerce. For instance, Amazon introduced its AI shopping assistant, Rufus, in July, which has already proven effective in assisting customers with product information and recommendations. In parallel, Google is reportedly working on an initiative named "Project Jarvis," intending to create an AI system tailored for managing shopping and travel bookings.
The transformative impact of AI on online sales was notably observed during Black Friday 2024, which saw a staggering $10.8 billion in online purchases—a 10.2% increase from the previous year. Research by Salesforce revealed that retailers that implemented AI chatbots experienced an 1,800% surge in website traffic and a 9% improvement in conversion rates compared to those that did not employ AI solutions.
ARK Invest underscores that for digital wallet providers to thrive in the AI-driven e-commerce landscape, there will be a critical need to find a balance between personalisation and user privacy. They draw parallels to traditional credit card rewards programmes, which disbursed $40 billion in rewards in 2022, suggesting that digital wallets may need to create appealing incentives to stimulate user adoption in this competitive market.
Source: Noah Wire Services