E-Commerce 2025: Tackling Cyberthreats, AI, and Personalization

E-commerce in 2025 will face significant challenges, from ongoing supply chain disruptions and increasingly sophisticated cyberattacks to intensifying competition for customer trust and loyalty. At the same time, businesses must refine their strategies to reach less mature markets with distinct consumer preferences and infrastructure limitations.

Technology will continue reshaping the industry, with AI and automation leading the charge. AI will power personalization, dynamic pricing, chatbots, and predictive analytics, while automation will optimize warehouse management, inventory tracking, and customer service.

Social commerce and live shopping will gain momentum, with influencer partnerships and user-generated content playing a vital role in driving sales. Seamless integration between online and offline channels, click-and-collect services, virtual fitting rooms, and AR/VR shopping experiences — will further redefine how consumers interact with brands.

Meanwhile, subscription-based models will expand across categories, from everyday essentials to luxury goods.

To stay competitive, brands must prioritize innovation and customer-centric strategies. Secure, decentralized payment options and circular economy models emphasizing reuse, recycling, and resale will become essential for long-term success.

According to Colin Bodell, CTO at user-generated content and social commerce solutions firm Bazaarvoice, AI and machine learning (ML) will drive a transformative impact on e-commerce. They are revolutionizing how brands engage with consumers.

“From personalized recommendations to automated customer service, these technologies offer insights and experiences at a previously impossible scale. Personalized offers drive 45% of shoppers to complete purchases online,” he told The E-Commerce Times.

AI-Powered Personalization Drives E-Commerce Growth

Bodell predicted that in 2025, brands that leverage AI to deliver hyper-personalized experiences and maintain a responsive, flexible supply chain will have a significant edge in building long-term customer loyalty. These factors will be pivotal in securing customer loyalty.

His company’s AI capabilities enable brands to identify consumer preferences and behavior trends with greater accuracy. By analyzing millions of reviews and interactions, AI reveals what consumers say and uncovers the reasons behind their sentiments, offering marketers a valuable window into consumer expectations.

Michelle Wood, SVP of merchant business development at monetization platform Wildfire Systems, predicts online shoppers will experience a uniquely tailored shopping journey. Walmart’s Wallaby and Google’s AI-driven Google Shopping are setting new standards for customization, making research and purchases more intuitive.

“This trend underscores the importance of AI-driven tools in curating individualized shopping experiences,” she told The E-Commerce Times.

AI for Tax Compliance in Omnichannel Retail

Pete Olanday, director of retail consulting at tax compliance firm Vertex, underscores the increasing challenges retailers face in managing tax obligations across multiple sales channels.

“Omnichannel shopping will amplify tax compliance complexity, with regulations continuously evolving across jurisdictions. Advanced AI and ML technologies will enable real-time tax calculations, reducing errors and building customer trust,” he told The E-Commerce Times.

As retailers navigate these shifting regulations, predictive analytics will play a crucial role in helping retailers stay ahead of compliance challenges, especially during high-traffic periods. By identifying potential risks before they arise, businesses can streamline operations and maintain customer satisfaction.

Payments Personalization and Security Vital for Marketers

Cindy Turner, chief product officer at Worldpay, warned that neglecting payment personalization could lead to lost sales. To reduce transaction abandonment, retailers must adopt localized and unified payment strategies that align with customer preferences.

“Merchants that fail to offer personalized and localized payment methods risk losing up to 37% of prospective customers. Leveraging payment data enables businesses to identify friction points and make incremental changes to improve the customer experience,” she told The E-Commerce Times.

Turner also emphasized the need for balanced security measures that protect transactions without disrupting the user experience.

“Fraudsters’ techniques are more sophisticated than ever. Businesses must balance robust security measures with maintaining a seamless customer experience. Strategies like two-factor authentication and biometric verification can provide reassurance while minimizing friction,” she explained.

By integrating visual security cues and customer notifications, businesses can build trust and improve satisfaction without adding unnecessary hurdles to the checkout process.

Striking the Right Balance in Fraud Prevention

Turner noted that businesses have responded swiftly to rising fraud by strengthening payment security. However, she cautioned that overly rigid measures can backfire if they block legitimate transactions.

“Building the walls too high can have a negative knock-on effect as legitimate transactions may be rejected, so merchants must strike the right security balance,” she cautioned.

To achieve this, businesses can leverage ecosystem partners to implement holistic security strategies that enhance protection without disrupting the customer experience. Minor adjustments such as notifying customers of successful transactions or displaying lock symbols to confirm security can go a long way in reinforcing trust.

“What makes a trusted payments journey varies between markets, so it’s important to consider what measures make consumers feel like a safe transaction is being facilitated. Fundamentally, building strong defenses against fraudsters and managing risk more effectively, without adding friction into the customer experience, will be business-critical in the next 12 months and beyond,” said Turner.

Evolving Payment Options Demand Business Adaptation

Cash remains a critical payment method for billions, particularly during times of economic uncertainty. However, its use is steadily declining, noted Michelle Young, SVP and GM of merchant solutions for financial institutions at Worldpay.

According to Worldpay’s research, cash transactions are projected to decline at a -6% CAGR through 2027, eventually accounting for just 11% of global POS spending. Meanwhile, cashless payment methods continue gaining traction in the U.S.

In-store digital wallet adoption has surged from 19% in 2019 to 28% in 2024. Even traditionally cash-heavy demographics are increasingly turning to contactless and card payments for everyday purchases.

“More than ever, as the payments market evolves, businesses must balance this shift with equity and choice. Offering diverse payment options is essential to ensuring that all consumer needs are met while supporting the continued rise of cashless methods,” Young told the E-Commerce Times.

As this transition accelerates, businesses need to stay competitive while ensuring they do not overlook traditional payment methods that, while declining, still play a critical role for many consumers, she added.

Surcharging Risks and Rewards for Merchants

Randy Modos, co-founder and president of payment processing company PayJunction, cautions that rising credit card processing fees will drive greater adoption of surcharging as businesses look to offset costs. In a high-fee environment, surcharging will become a key strategy for protecting margins while still offering customers flexibility in payment options.

“However, in 2025, businesses will face stricter data privacy and security regulations. Businesses must be mindful of evolving legal standards, which can differ from state to state when implementing surcharges,” he told the E-Commerce Times.

Beyond surcharging, subscription-based businesses will require efficient recurring billing solutions to streamline payments while managing processing fees. Many will seek systems that allow surcharges on credit card transactions, helping to mitigate rising costs, Modos noted.

Meanwhile, AI and automation — already widely used for fraud detection and personalization — will see expanded roles in transaction analytics, predictive payment systems, and workflow automation.

“AI might enable businesses to anticipate payment issues or optimize transaction times, leading to more proactive payment management and costs,” he predicted.