The State of E-Commerce Personalization in 2025: Where Brands Are Succeeding, Falling Short, and How AI Is Shaping the Future

We’ve come a long way from the days when Hello %%first_name%% passed for personalization. In today’s e-commerce landscape, consumers expect brands to deliver dynamic, relevant experiences tailored to their needs and behaviors across every touchpoint. Yet while technology — especially AI — has unlocked powerful new capabilities, many organizations are still grappling with how to scale these efforts effectively.

This article examines the current state of personalization maturity, drawing insights from the latest research report, The State of Personalization Maturity in E-Commerce. It highlights where brands are making progress, where common pitfalls remain, and how AI is shaping the path forward.

What is Personalization and Why Does It Matter?

With breakthroughs in AI technology and machine learning models, 2024 was a landmark year for personalization — and this year is shaping up to be another one.

The State of Personalization Maturity in E-Commerce

At its core, personalization is the practice of tailoring customer experiences, content, offers, and interactions to individual users based on their behavior, preferences, and data. The goal is to create more relevant and engaging experiences that foster deeper customer relationships and ultimately lead to better business outcomes.

Historically, personalization may have meant simply addressing an email with a customer’s name or recommending products based on past purchases. Today, it encompasses far more sophisticated strategies — dynamic website content, individualized product recommendations, real-time interaction adjustments, and omnichannel experiences — all powered by data and AI.

Tailoring customer experiences: Personalization involves shaping the user journey based on individual preferences, behaviors, and contexts—adapting everything from website navigation to checkout flows in ways that feel intuitive and relevant to each customer.

Delivering personalized content: Brands customize content such as headlines, product descriptions, blog posts, videos, and images to resonate with individual interests and browsing history, increasing engagement and time on site.

Targeting individualized offers: Promotional offers, discounts, and loyalty rewards are presented based on prior purchases, customer lifecycle stage, and predictive modeling, ensuring each customer sees offers most likely to drive conversion.

Facilitating dynamic interactions: Real-time adjustments in chatbots, recommendations, and emails are made based on customer actions—powered increasingly by machine learning (ML) models that learn from past interactions to improve relevance over time.

Utilizing segmentation and audience strategy: Personalization starts with effective segmentation—dividing audiences based on behavioral, demographic, and psychographic data—and evolves toward more sophisticated audience strategies that allow for hyper-relevant personalization across segments.

Scaling with machine learning and AI: ML algorithms enable personalization to move beyond rule-based approaches, leveraging large-scale data inputs to predict user needs, automate content selection, and optimize interactions dynamically across touchpoints.

The modern consumer now expects these experiences to be the standard. Personalization has moved from being a competitive advantage to a business imperative. And as AI technology continues to mature, it unlocks new capabilities for brands to deliver these experiences at scale.

Where Personalization Falls Short

67% of brands report they lack a singular audience strategy for approaching ideation, execution and analysis.

The State of Personalization Maturity in E-Commerce

Despite its promise, many organizations struggle to implement personalization effectively. One common pitfall is a lack of strategic alignment: different teams (marketing, product, UX) may pursue disconnected personalization efforts without a shared audience framework. This leads to inconsistent customer experiences that can undermine trust.

Another gap lies in resources. Many brands treat personalization as a secondary function — something to be bolted onto existing marketing activities — rather than a discipline requiring dedicated talent and investment. Only 50% of companies have established dedicated support for personalization. Without a central team driving execution across departments and channels, scaling personalization remains elusive.

Measurement is yet another challenge. Without clear KPIs and an ability to tie efforts back to business value, personalization programs often fail to gain sustained executive buy-in. In the absence of tangible ROI, they risk stagnating or being deprioritized.

The Benefits of Personalization Done Right

With a $2 trillion opportunity up for grabs over the next five years according to BCG research, the stakes are high.

The State of Personalization Maturity in E-Commerce

When executed well, personalization delivers powerful benefits. It enhances customer engagement, boosts conversion rates, increases customer lifetime value, and fosters brand loyalty. Consumers respond positively to experiences that feel tailored and relevant to their needs.

Additionally, personalization helps brands stand out in a crowded digital landscape. In an era of abundant choice, relevance is key to capturing attention. Personalization makes marketing more efficient by focusing efforts on what resonates with individual users, rather than relying on broad, one-size-fits-all campaigns.

Perhaps most critically, personalization drives measurable business outcomes. By aligning personalization efforts to clear KPIs — such as increased revenue per visitor or higher repeat purchase rates — brands can connect these programs to larger strategic goals and justify ongoing investment.

The State of Personalization Maturity in 2025

Advanced processes will prove crucial for brands not only looking to launch more effective basic campaigns but also in leveraging powerful AI technology that can adapt to customer needs in new and even empathic ways.

The State of Personalization Maturity in E-Commerce

The maturity of personalization in today’s market is mixed. The majority of organizations recognize its importance — 67% have made personalization a top priority with plans to invest further — but many still lack the internal alignment, resources, and measurement frameworks needed for success.

On the positive side, companies have made significant progress in process maturity. Sixty-five percent now derive insights from test data, and nearly half circulate testing results across their organizations. This growing focus on experimentation and optimization is crucial for building effective personalization programs.

However, resource investment lags. Only 50% of organizations combine business, technical, and creative expertise in their personalization efforts. Many rely on small, ad hoc teams without the capacity to scale.

Strategic alignment is also a work in progress. Sixty-seven percent of brands still lack a unified audience strategy, resulting in fragmented customer experiences. And without a strong cultural foundation — where personalization is championed from the C-suite down — it isn’t easy to drive sustained progress.

AI: The New Frontier for Scaling Personalization

Data analysis, ideation, testing, reporting — e-commerce brands have risen to the occasion on all fronts, recognizing that to unlock personalization’s full potential requires a strong set of processes.

The State of Personalization Maturity in E-Commerce

Artificial intelligence is transforming what’s possible with personalization. AI-driven engines can analyze vast amounts of behavioral and contextual data in real time, enabling experiences that are not only relevant but also adaptive. They can anticipate customer needs and adjust experiences dynamically, at a scale and speed that manual approaches cannot match.

Today, brands with strong process maturity are best positioned to leverage AI for personalization. Their ability to test, iterate, and derive insights will be key to training AI models and optimizing outcomes.

Yet to fully unlock AI’s potential, brands must also address foundational gaps — aligning on strategy, investing in resources, and building a culture that supports personalization as a core business function. Without this groundwork, even the most advanced AI tools will struggle to deliver consistent, cohesive customer experiences.

Download The State of Personalization Maturity in E-Commerce

Conclusion

Personalization remains one of the most promising opportunities in modern marketing, but it is also one of the most challenging disciplines to master. Brands that approach it strategically, invest in resources, and build strong processes will be well-positioned to turn personalization from a buzzword into a genuine driver of customer loyalty and business growth.

The future of personalization lies in the ability to combine human insight with AI-powered scale. For companies willing to make that investment, the rewards are substantial — a potential $2 trillion opportunity over the next five years. The question is no longer whether to personalize, but how quickly and effectively brands can rise to meet customer expectations.

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Originally Published on Martech Zone: The State of E-Commerce Personalization in 2025: Where Brands Are Succeeding, Falling Short, and How AI Is Shaping the Future