AI Personalization is Driving the Future of Commerce
The Artemis Fund believes technology can create prosperity for all. With offices in New York, Texas, and Nevada, Artemis leads seed rounds for companies creating resilient families, individuals, and businesses across the US.
Imagine a future where you no longer have to search for what you need — because the right options find you. Whether you’re planning a trip, searching for the perfect skincare routine, or curating a home upgrade, the experience isn’t driven by endless searches and comparison shopping. Instead, AI-powered platforms anticipate your needs, offering personalized recommendations that feel intuitive.
We’re already seeing this shift play out. Rather than relying solely on keyword-based search and traditional e-commerce funnels, founders are building for AI-driven discovery — where your habits, choices, and interests shape the experience. Instead of sifting through pages of results, companies are building the future of real-time aggregation, curation, and personalization.
With the AI-based personalization market projected to reach $704.37B by 2032, businesses are leveraging this technology to meet rising consumer expectations and stand out in an increasingly competitive fight for attention and spending — creating experiences that feel less like marketing and more like thoughtful recommendations.
The Power of Personalization
Nearly half of consumers head straight to the search bar with a specific product in mind, but even when you know exactly what you’re looking for, without the right keywords, it will probably be a slog to find it. AI has entered the chat, shifting this dynamic from an unintuitive search process to a natural discovery journey, benefitting both consumers and brands.
Successful AI-driven personalization has an undeniable impact on revenue and brand performance:
- 49% of consumers admitted to impulse buying products from a recommendation on the website.
- Up to 31% of online brands’ revenue can be attributed to personalized product recommendations.
- 28% of consumers are more likely to buy a product they didn’t intend to purchase when personalization is in play.
- Some brands have seen up to 20% higher customer satisfaction and a 10–15% boost in conversion rates.
How does it actually work?
- Better Search: When shoppers have a general idea of what they want, AI enhances the search process. Natural language processing (NLP), enriched data, element tagging, and computer vision work together to surface results that are more accurate and aligned with user intent. Customers find what they need faster, leading to higher satisfaction and quicker conversions.
- Better Discovery: AI doesn’t just help customers find what they already want — it introduces them to products they didn’t even know they needed. Machine learning (ML) analyzes past searches, engagements, and purchases to make personalized product recommendations that feel organic and relevant.
- Human-in-the-Loop Personalization: While AI algorithms can process massive amounts of data to tailor experiences, a human touch refines and enhances these recommendations. Human-in-the-loop systems involve people providing feedback, curating content, and fine-tuning algorithms to ensure recommendations remain relevant and accurate.
AI-powered personalization isn’t just about selling — it can also help consumers make better, more intentional choices.
Vertical Discovery Platforms: B2C
As AI evolves, so do vertical-specific discovery platforms — those catering to distinct consumer needs with specialized, tailored experiences. Higher intent traffic and deep personalization inspire stronger conversion rates, making switching costs significant.
- Commission & Referral Models: Vertical-specific platforms see higher conversion rates, making affiliate and referral models more attractive than broad-based search.
- Membership & Subscription Models: Vertical platforms will be able to offer premium features, deeper personalization, and automated actions for loyal subscribers, increasing retention and consumer switching costs.
For more on this, we highly recommend Forerunner Ventures’ comprehensive writeup on this topic.
For Brands: B2B
Our attention as consumers is so divided, and as a result, both brands and retailers are suffering from high customer acquisition costs and low customer loyalty.
To survive, brands and retailers need better search and discovery on their websites. This means finding tools to tag or understand less tangible qualities of items automatically and contextualize these searches in pop culture. For example, cowboy boots= coastal cowboy; faux fur coat= mafia wife.
As a result of search moving away from traditional search engines to AI-native discovery (i.e., vertical platforms like Daydream, or LLMs like Chat GPT), brands will need to navigate and position themselves intelligently in the new landscape of search and discovery. This creates pull in the market for AI search optimization tools.
For Brands: Applications
While AI-driven personalization is transforming how consumers discover and shop, we believe brands won’t necessarily own the full personalization stack — much like Shopify enables commerce without owning the storefronts. Instead, we anticipate the rise of platforms that provide personalization-as-a-service, helping brands deliver seamless, data-driven experiences without building the infrastructure themselves.
Here are some of the top ways you’ll see it being utilized:
- AI Search Optimization: Companies like Profound help brands optimize their discoverability via LLMs — like SEO for AI-engines.
- Landing Page Personalization: Tools like Instapage and Unbounce help brands tailor hyper-personalized landing pages based on user interests and behaviors.
- Real-Time Reaction to Consumer Behavior: Companies like Psykhe and Vue.ai analyze live consumer actions, dynamically adjusting campaigns, features, and pricing in real time.
- Personalized Pricing Strategies: AI tools like Charles and Ergo use customer-specific data to set dynamic prices, optimizing both customer satisfaction and profitability
- Post-Purchase Engagement: Tailored follow-ups, curated recommendations, and resale options keep customers engaged long after checkout.
Ultimately, more data is available than ever before, and consumer expectations are rising. AI has the potential to enable seamless, personalized discovery experiences via brands and retailers, and new vertical platforms. The Artemis Fund is investing in the founders that are bringing these possibilities to fruition.
We believe that in a generation companies will be built by unexpected founders. If that sounds like you, pitch us here!
