Latest news with #productdiscovery
Forbes
3 days ago
- Business
- Forbes
Algolia Tops Google In Product Search — Windsurf May Not Help Much
Gartner rates privately-held Algolia ahead of Google in the $56 billion market for search and product discovery. With Alphabet stock down this year, investors should be worried. GERMANY - 2024/09/21: In this photo illustration, a mobile phone with the website of ai search ... More engine company Algolia Inc. is seen in front of business logo. (Photo Illustration by Timon Schneider/SOPA Images/LightRocket via Getty Images) SOPA Images/LightRocket via Getty Images Key Facts The market for digital commerce search reached $56.5 billion in 2024 and is forecast to grow at a 12.6% compound annual rate to $185.7 billion in 2033, reports Data Horizon Research . Algolia's customer base has grown at a 21% average annual rate to 18,000, according to my July 10 interview with Algolia CEO Bernadette Nixon. Google — shares of which have lost 5% of their value in 2025 — is confident in the strength of its product discovery search service, according to a Google company release. Gartner rates privately-held San Francisco-based Algolia ahead of Google according to an Algolia company release. Google's spent $2.4 billion to license Windsurf AI coding technology, according to CNBC . That may not be enough for Google to surpass Algolia. Google shares have lost value in 2025. That's because the search giant — which developed the core transformer concept underlying generative AI, according to my book, Brain Rush — is struggling to catch up with ChatGPT when it comes to commercializing its idea. Is the drop in Google stock a buying opportunity. The answer depends on whether Google can keep its search business relevant. "The market will need to see fundamental evidence that Google search is indeed going to be more durable than currently appreciated," Morgan Stanley analyst Brian Nowak wrote in a report featured by Investor's Business Daily . If rivals such as ChatGPT, Perplexity, and Meta AI better deploy generative AI to cash in on advertising and improved e-commerce and travel verticals, Google's stock could keep dropping, noted Nowak. For Google bulls, I have bad news: Algolia is clearly ahead of Google in those two verticals where search and product discovery services are critical. If you have ever searched for a product on an e-commerce, you have direct experience with . While this market seems like a natural for Google, In 2018, I was surprised to learn Google had abandoned the business of helping consumers search through a company's online product catalog, noted my October 2018 Forbes post. Google was good at bringing users to a website but once there, customers relied on the websites' own search functions to find products. Some companies "build their own engines; others use open-source software, such as Elasticsearch,' the Economist reported. At the time, Algolia — founded in Paris in 2012 — was rapidly taking a piece of that pie by supplying a service that "hunts the client's website and swiftly offers consumers relevant results," added the Economist . Since then Google has entered this market and this year was deemed a leader in Gartner's Magic Quadrant for vision and ability to execute. However, within that elite group of leaders, Algolia was the leader of the pack. Read on for why this market is significant and why I do not think Google is doing enough to overtake Algolia. I requested comment from Google and will update this post if I receive a reply. While analysts use many ways to describe the digital commerce search industry, they agree the industry is growing fast and will become far larger in the next decade. The industry's goal is to understand consumers' needs and recommend the products that best satisfy those needs. Since 2018, the most significant development propelling growth has been the use of AI to enhance consumer experiences, increase sales, and boost engagement, according to SuperAGI . AI-driven recommendation engines can boost customer loyalty, average order size and the lifetime value of a customer. For example, 71% of consumers are more likely to return to a website offering personalized experiences. Moreover, such systems suggest complementary products — thereby increasing average order value by 10% to 15%, reported SuperAGI . Algolia's Strategy, Performance, And Prospects Algolia — founded in Paris and now headquartered in San Francisco — appears to be riding this growth wave. The company provides an AI-native search and discovery platform to enable brands such as PetSmart, Best Buy, Chewy, Twitch, Stripe, and Under Armour to deliver fast, relevant, and personalized search experiences, according to an Algolia release. Algolia's search-as-a-service solution uses AI recommendations, NeuralSearch, and real-time personalization to boosts user engagement and increase conversion rates, the release added. Algolia has added many customers in the last five years. 'When I joined Algolia we had less than 7,000 customers, now we have 18,000,' Nixon told me. 'We process two billion transactions per year and have millions of developers on our platform.' Algolia's growth can be attributed to its ability to satisfy e-commerce search customers' need for reliable performance at scale. 'We provide five nine's reliability which means only 26 seconds of downtime per month,' she said. 'Reliability is really important and it is difficult to do when operating st scale.' Algolia has repeatedly introduced meaningful innovations. 'We disrupted the market three times and we are about to do it a fourth,' Nixon explained. Instead of relying on preexisting search software such as Lucene, Algolia's search was built from scratch to work on mobile. Next, the company introduced search as a service and charged customers based on the number of searches — with the price per search declining with the number of searches. Finally, in 2023, Algolia introduced hybrid search — 'combining keyword and natural language search incorporating large language models,' she told me. Algolia is most excited about agentic AI — which will enable consumers to take action towards a goal. The company uses Anthropic's Model Context Protocol — which allows AI agents to access Algolia's search, analytics, recommendations, and index configuration APIs. 'AI agents must be able to work across walled gardens to traverse a company's back-end seamlessly to retrieve data,' she said. 'To that end, we have partnered with Salesforce Commerce Cloud and Adobe Adobe Experience Manager.' Nixon is also excited about how much consumers' use of ChatGPT to search for products is adding to e-commerce providers' web traffic. ' Adobe Analytics has found generative AI is giving retailers and banks 1,200% traffic increases while travel sites are seeing 1,700% increases,' she told me. 'When people come to a retailer's site they bounce 23% less frequently and look at 12% more pages per visit.' Algolia also provides personalized digital shopping guides — say, for Mother's Day and Valentine's Day targeted towards various lifestyles. 'In beta test, we have 73 shopping guides already,' she concluded. Google's Product Search Strategy, Performance And Prospects Google's offerings — notably Google Ads and Vertex AI Search for Commerce — can boost retailer revenues in three ways: Driving traffic and sales via ads. Google Ads increase brand revenue through ads on Google Search and YouTube aimed at specific audiences and keywords, according to a Google release . Google Ads increase brand revenue through ads on Google Search and YouTube aimed at specific audiences and keywords, according to a . Enhancing discovery and personalization. Google Vertex AI Search for Commerce uses real-time back and forth conversation using Gemini models and deploys image or text-and-image search to match recommendations to each consumer's search and purchase behavior, Nimstrata wrote. Google Vertex AI Search for Commerce uses real-time back and forth conversation using Gemini models and deploys image or text-and-image search to match recommendations to each consumer's search and purchase behavior, wrote. Measuring ad effectiveness: Google Brand Lift and Search Lift tools allow brands to measure brand awareness, consideration, and user search behavior to optimize ad budgets, LYFE Marketing noted. What Gartner's Magic Quadrant Says About Algolia And Google In July 2025, Gartner ranked Google and Algolia as Magic Quadrant for Search and Product Discovery leaders based on their completeness of vision and ability to execute. Algolia is the leader among leaders — prevailing over Google. Algolia is proud of Gartner's recognition. 'This is the second year we have been a leader in the Gartner Magic Quadrant for Search and Product Discovery,' Nixon told me. 'We are up and to the right in the leader box which makes us the best in the industry for vision and ability to execute. How? We want to make search easy for the masses. We wanted to be massively scalable in the enterprise. We solve the search puzzle for the masses.' Google was happy to be an MQ leader. 'We believe this recognition affirms Google's evolving commitment to delivering high ROI-generating product discovery, through the use of AI in relevance, ranking, and personalization,' noted Google Cloud AI Director, Product Management in a July 8 company release. Will Google Prevail Over Algolia In Agentic Ai? Algolia is ahead of Google in applying agentic AI for search and product discovery. While Google has not yet launched such a service, on July 11 the search giant acquired executive talent and intellectual property from Windsurf — a leader in agentic AI, noted CNBC . Algolia's MCP Server — launched in June 2025 — enables LLMs and autonomous agents to work together to help consumers buy what they need more quickly. For example, Algolia's agentic AI service can help consumers book a Mediterranean cruise. By retrieving relevant consumer information from platforms such as Adobe and Salesforce. For example, Algolia agentic AI service can recommend and book a Mediterranean cruise based on each guest's chosen destinations, travel history, and other preferences — in milliseconds, according to a company release. 'This isn't about showing off what agents could do,' Nixon said. 'It's about showing what they can do right now with a powerful user experience, if they have the right layer of intelligence underneath. That's where Algolia fits.' Meanwhile, Google is currently experimenting with agentic AI for travel. Google's 'AI Mode' will be able to 'plan full itineraries, remember context, and keep users within the AI interface — even for booking,' noted 'Google's Project Mariner' will enable 'AI to take actions online -- like booking a hotel or tracking flight prices.' Google stock is 12% undervalued based on the average price target of 37 Wall Street analysts, according to TipRank . If Algolia's lead over Google in search and product discovery is any indication, those analysts could be too optimistic.
Yahoo
03-07-2025
- Business
- Yahoo
Salesforce: Consumers' Product Discovery Expectations Are Shifting Ahead of Holiday
As Christmas in July approaches, Salesforce has started thinking about the real holiday season. Every year, the company puts forth projections about the incoming holiday season—and this year, its hallmark theme is discovery. That's because emerging technologies, paired with changing consumer spending habits and interests, is bringing about a new journey for product discovery. More from Sourcing Journal Byte-Sized AI: Walmart Announces New Employee Tech; Startups Bag Funding for Virtual Try-On Teamsters' Top Dog Calls on Legislators to Oppose State AI Law Moratorium Daydream Unveils Fashion Search Engine Built to Elevate Discovery Salesforce data shows that shopping aided by artificial intelligence could be a major trend for holiday 2025. The technology giant projects that, this holiday season, AI will influence $260 billion worth of online sales and $1.6 trillion in in-store sales. Salesforce, which takes periodic consumer pulses, found that nearly four in 10 shoppers use an AI chatbot during their shopping journeys; about 5 percent of shoppers now begin their product discovery with publicly available large language models (LLMs), like ChatGPT's shopping feature. One in 10 Gen Z shoppers starts their journey with an LLM. Already, nearly half—44 percent—of consumers said they trust AI-generated, personalized product recommendations. Caila Schwartz, director, consumer strategy & insights for Salesforce, said AI-assisted search is redefining the way consumers view commerce. 'In our behavioral data, we see that LLM-generated traffic referrals to e-commerce websites convert very, very well—much better than social, and pretty much on par with more established and traditional traffic sources,' she said. 'We know these are tools that consumers not only are leaning into, but [that] they trust and are buying from.' While agentic AI—which is meant to autonomously complete specific tasks—has been tossed around as a probable next step for consumer-facing technology, it's not widely adopted in the industry today. Schwartz said she expects AI shopping agents could be the next frontier of e-commerce, and consumers' use of LLMs is teeing up agentic's potential future. 'The expectations that shoppers are building based off their experience with these LLMs will transform into how they expect to interact with the brand themselves, and the retailer themselves,' she said. 'Shoppers will be leaning into…AI agents, brand-owned and retail-owned agents, because their expectation for that personalized, high-touch, white-glove type of journey is going to extend.' In the consumer context, that could mean asking an agent to purchase a gift on their behalf, or enlisting an agent to monitor the price of a high-ticket item leading up to holiday season and Cyber Week. Salesforce's AI projections don't end with consumer behavior. The technology giant projects that agentic AI will help move the needle inside brands and retailers' own offices. It projects that 35 percent of all retailers will use agentic AI to amp employees' day-to-day work during the holiday season. While Schwartz noted that she expects customer service to be impacted by AI agents, she said Salesforce continues to monitor other business functions that could latch on to the burgeoning technology. For all Salesforce's discussion about emerging technologies, the store is still expected to reign supreme for holiday 2025 shopping; just over half of consumers said, when shopping on Black Friday, they prefer in-store shopping, up 20 percentage points from 2024's figure of 31 percent. Gen Z shoppers, who are often written off as digital natives, led the pack on in-store Black Friday hunting, with 65 percent of shoppers noting they prefer to shop in stores on Cyber Week. That, they report, is because the product is immediately in their hands, they prefer the experience of being in a store and they feel that discovery is stronger in the store. Salesforce projects that for every $1 a Gen Z consumer spends digitally, they will spend an additional $3 in stores during holiday 2025. That means brands and retailers need to find a way to further perpetuate unified commerce—and bring emerging technologies under the store umbrella, Salesforce contends. 'Being able to unlock [experiences] across channels, unlock data, to unify that data across those channels so that the brands and retailers can create a consistent and personalized experience even when they're in store, is really going to be the opportunity moving forward, especially as these younger generations gain more buying power,' Schwartz said. Consumers continue to place an onus on value—Salesforce's theme for holiday 2024—in 2025; that's especially true among U.S. consumers, nearly three in 10 of whom indicated that their personal financial situation has declined over the last six months. A major portion of the reason that shoppers continue to seek out value comes from uncertainty over U.S. President Donald Trump's tariff tumult, which has seen about one-third of American consumers frontloading purchases before prices increase and more than 40 percent of U.S. shoppers buying only what they need. Salesforce expects that the overall discount rate for holiday 2025 will drop by 2 percent compared with 2024, which could see the one-quarter of U.S. consumers who said they're holding off on large splurge purchases waiting until Cyber Week to purchase high-ticket items this year. Consumers' focus on value could also be driving resale forward; one in five consumers plan to purchase secondhand goods because of tariffs, and nearly half of U.S. consumers say they will gift a secondhand item this year. Salesforce projects resale will see a consumer spend of $64 billion for the holiday season. Unlike 2024, when players like Shein and Temu dominated holiday, consumers seem to be hyper focused on three key facets when it comes to loyalty: free delivery, lower prices and better product quality. 'We haven't seen product quality land in the top three of this list since around the 2021-2022 era, when consumers had a lot higher buying power, the economy just looked a lot different. Last year, we know that product quality was very low on the list, especially with the rise of these discount and value brands like Temu and Shein,' she said. 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