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Holiday shopping is changing fast. Personally, this is now the second year in a row that I bought 100% my holiday gift list (and cards and decorations) online. And I’m not alone.

2016 marked the first year consumers said they did more shopping online than in stores.

Amazon, which accounts for around 60% of total U.S. online sales growth, announced that it shipped 1 billion items worldwide this holiday season, calling 2016 its best year ever.

Millennial consumers (who now outnumber Baby Boomers) drove mobile sales up 33% to $1.2 billion on Black Friday alone, breaking all past records.

In contrast, malls and department stores, once the mainstay destination for all holiday spending, are struggling; sales have been flatlining as more and more shoppers are going for the convenience of digital. With the ability to find almost any product at the same or cheaper price online, the range of reliable delivery options to choose from, and the increasing availability of free shipping and returns — all from the comfort of your own couch — why wouldn’t you? 

Plus, if you’re like me, you discover most of your gift ideas online now anyway. From Pinterest recommendations to Google image searches for things like “best handmade hammered copper moscow mule mugs;” online shopping has just gotten so good.

Why has it gotten so good? Almost all of these great online consumer experiences that we’re starting to rely on are made possible by artificial intelligence (AI). 

Picked for you

Maybe you’ve noticed Amazon’s new Interesting Finds section, where you can heart the products you like, and the next day it’ll show you “more like them” — a refined selection that better matches your preferences.  

Or perhaps you, like me, have been impressed at how spot-on many of Pinterest’s ‘Picked for you’ and paid promotions are; it’s like finding that friend that actually gets your taste and becomes your go-to shopping buddy.

These, and pretty much all the other personalized product recommendations and spot-on advertising and retargeting you see from online retailers now, all run on deep learning algorithms. Deep learning is a subfield of AI that uses big data (the massive amounts of customer interaction data now available to retailers) to power insights into individual consumer preferences that formerly could have only come from one-to-one human interactions and intuition.

Bottom line: thanks to new AI tools, online retailers can offer experiences similar to that of working with a personal shopper at a high-end traditional department store. Except way more efficiently, and at scale. So all of us can now enjoy unique recommendations that are related to what we’ve said we like, but not directly what we’re shopping for. And they automatically adapt and get better based on our responses.

Bots, at your service

If you are a Millennial (or if you know one), you won’t be surprised: Millennials would rather IM or chat when they need assistance. Anything but talk to an actual person on the phone.

And increasingly, they won’t even have to IM or chat with a real person, either. Retailers have coined it “conversational commerce” — when chatbots (i.e. computer programs that run on natural language processing, a subset of AI) assist with all the things that normally a retail associate would have to handle, understanding your conversational language and replying in a way that comes pretty close to talking with a human. This can be via a chat interface, interactive widget, mobile wallet, you name it. 

1-800-Flowers and H&M are two big-name retailers pioneering the use of chatbots to act as gift concierges (don’t have a clue as to what 13 year olds are into now? Chatbot to the rescue) and/or personalize your overall shopping experience. And while AI-powered service bots aren’t yet ubiquitous, those who spend their time looking at retail trends say they will be soon. According to Gartner, by 2020 85% of customer interactions will be managed without humans. And it’s predicted that by 2018, AI technology will advance to the point where service bots can recognize the voices and faces of customers.

AI has already made holiday gifting — and shopping in general — so much easier, efficient, and more personalized. I for one am excited to see what new AI-powered white glove service tricks will reveal themselves by the time the 2017 holiday shopping season rolls around.

Want to delve a little deeper and discover more about how AI is changing the world we live in? Check out our interactive quiz to test your AI knowledge — and find out what’s on the horizon.