Ecommerce Report - H1 2025

Arrowsmith Fox Ecommerce Report  | H1 2025

·       AI becomes the retail engine: From virtual try-ons to hyper-personalized recommendations, AI is now central to both customer experience and marketing efficiency.

·       Retail media surges: Retailers are turning their digital real estate into high-value ad platforms, harnessing first-party data and AI-driven targeting.

·       Social commerce explodes: Shopping via social media—fueled by influencers, shoppable content, and live events—is poised to account for a significant share of global ecommerce transactions this year.

·       Marketplaces power big retail: Major retailers are leveraging marketplace models to expand product ranges, boost customer engagement, and unlock new revenue streams.

The New Retail Playbook: AI, Media, Social, and the Marketplace

For years, digital transformation in retail was synonymous with “going online.” In 2025, the story is altogether more sophisticated: artificial intelligence, retail media, social commerce, and the marketplace model are converging to redraw the competitive map.

Artificial Intelligence: The New Retail Brain

AI is no longer a futuristic add-on; it is now the backbone of the modern retail experience. Shoppers expect AI-driven tools—think virtual try-ons, personalized recommendations, and voice-enabled search—to guide their decisions. Retailers are deploying AI to automate campaign management, optimize pricing, and deliver deeply personalized shopping journeys, both online and in-store. The result: frictionless experiences that boost conversion and foster loyalty, while freeing up human capital for higher-value work.

Retail Media: The Third Wave of Digital Advertising

Retail media has become a juggernaut, with projections showing rapid growth in the coming years. Big retailers are transforming their ecommerce sites and apps into advertising powerhouses, using first-party transaction data to offer brands precision targeting at the point of purchase. AI is supercharging this trend, automating ad placements and optimizing creative in real time. The ability to measure sales impact directly—closed-loop attribution—makes retail media uniquely attractive to brands seeking ROI clarity.

Social Commerce: Shopping Where We Scroll

Social media is now a marketplace in its own right. Social commerce is expected to account for a growing share of global ecommerce sales, with platforms like TikTok, Instagram, and Pinterest leading the charge. The rise of shoppable content, live shopping events, and influencer-driven campaigns has blurred the line between inspiration and transaction. Brands are harnessing influencer trust and authenticity to reach targeted audiences, while AI-powered personalization ensures that the right products appear in the right feeds at the right moment.

Influencers: The New Retail Tastemakers

The creator economy is now a fundamental part of ecommerce strategy. Influencer marketing is delivering some of the highest ROI among marketing channels. Micro- and macro-influencers drive brand awareness, engagement, and sales by connecting with audiences on a personal level, transforming followers into customers through authentic, relatable content.

Marketplaces: The Big Retailers’ Secret Weapon

Major retailers are not just selling their own inventory—they are becoming platforms. The marketplace model, pioneered by Amazon and now adopted by the likes of Tesco, Best Buy, and Superdrug, allows retailers to dramatically expand their product assortments by onboarding third-party sellers. This asset-light approach boosts SKU depth, attracts new customer segments, and enables rapid testing of new categories without the risks of inventory ownership. Critically, retailer-owned marketplaces also provide unparalleled access to first-party data, which is then fed back into AI and retail media engines to further refine targeting and personalization.

Superdrug’s marketplace, for example, now features tens of thousands of products—many from third-party brands—enabling rapid category expansion and keeping the retailer front-of-mind for a wider range of shopping missions. Tesco and Best Buy have similarly leveraged marketplaces to diversify offerings, improve fulfillment, and build resilience against supply chain shocks.

The Bottom Line

Retail in 2025 is defined by the interplay of AI, retail media, social commerce, and the marketplace model. Big retailers are no longer just sellers; they are platforms, media owners, and data powerhouses. The winners will be those who harness these forces to create seamless, personalized, and engaging shopping experiences—wherever and however the customer chooses to buy.