AI Changed How People Shop. Why Hasn’t Your Merchandising Strategy?
Senior ecommerce leaders are facing a costly misalignment:
Put this in your pipe and smoke it: According to a recent Salesforce study, 39% of shoppers are already using AI as their preferred means of product discovery. And that percentage has increased in the time it took to read the sentence.
Not to mention, AI overviews in search results are simultaneously diverting clicks away from your site - with 34.5% fewer visits expected this year. Meanwhile, 58% of product discovery now happens without a single visit to your domain. Yet most strategies still split “off-site marketing” and “on-site merchandising” into separate silos.
But, wait a minute, there's yet another fun fact we want to make sure you're aware of: That silo distinction no longer holds. AI-powered search and social commerce aren’t just generating demand - they’re fulfilling it. These off-site experiences now guide shoppers through the full journey: from discovery to consideration to conversion - all before they reach your product page.
To adapt, ecommerce teams must begin treating these platforms as off-site merchandising environments as opposed to ad channels.
Unlike generic marketing automation advice, this strategy addresses the specific challenges facing ecommerce executives in 2025: declining organic reach, rising ad costs due to desperate attempts to mitigate zero-click search organic traffic losses, and customers who complete purchases without visiting your website. The result? A unified system that captures revenue whether customers buy on your site, through voice assistants, or directly from social platforms.
Closed-loop merchandising aligns your digital shelf with the rise of LLM search engines and AI agents - the new digital billboards.
These intelligent interfaces now shape the entire purchase journey: from discovery to conversion. When shoppers interact with tools like ChatGPT, Perplexity, or Gemini, the content they receive is your brand’s first (and sometimes only) chance to merchandise effectively.
In This Article...
Let's discuss how top retailers are synchronizing their digital shelf (product pages, structured data, site content) with these AI-powered surfaces, driving 20% lifts in conversion and higher AOV by optimizing where modern decisions begin.
The Convergence Crisis: When Billboards Become Shelves
Your "digital shelf" (product pages and on-site experience) and "digital billboard" (ads, social media, off-site content) now operate as one interconnected system. Shoppers frequently encounter products through off-site channels - search results, social posts, retail media ads - before visiting websites. For senior ecommerce leaders, this reality creates both challenge and opportunity: closing the loop between discovery and purchase.
Traditional approaches that optimize on-site experiences separately from advertising campaigns no longer work. Customers expect seamless transitions from initial discovery to final purchase, regardless of channel.
The retail media network explosion exemplifies this convergence. What began as retailers' side revenue streams has grown into a $179.5 billion annual market, projected to reach $140 billion by 2026 (16% annual growth). This reflects a broader trend: digital shelves function as billboards through retailer ad placements, while off-site "billboards" increasingly carry personalized, commerce-focused content.
Ecommerce growth figures highlight why closing this loop matters. Bain's retail outlook shows total U.S. retail sales reaching $5.2 trillion in 2025, driven by 10% ecommerce growth versus just 2% for in-store sales. The majority of retail growth happens online, on your digital shelf.
Yet customer routes to that shelf continue changing rapidly.
Discovery Disrupted: AI and Zero-Click Commerce
Off-site discovery traditionally belonged to marketing "billboards" - search ads, display banners, social posts - designed to drive traffic to the "shelf." Now generative AI and zero-click commerce disrupt this model, collapsing traditional conversion funnels.
Generative AI delivers rich answers and product recommendations directly in search results or chat interfaces, often eliminating website visits. Before AI chatbots became mainstream, most Google searches already ended without clicks. Current data shows approximately 58% of searches result in zero clicks, as users get needed information instantly on results pages.
Generative AI accelerates this zero-click trend through comprehensive, conversational answers. Ask an AI, "What's the best running shoe under $100?" and receive a single product recommendation with purchase options - all without visiting store websites. Voice commerce through Alexa works similarly; users say "Reorder my coffee pods," and AI handles the complete journey from awareness to action.
This AI-driven convenience rewires purchase paths. Customers appreciate the speed and ease - if AI serves exactly what they need, motivation to click through multiple sites decreases.
For ecommerce businesses, this raises critical questions: If discovery and transactions happen off-site, how do we ensure our brands and products remain prominent? How do we capture interest and drive conversion when customers might skip our product pages entirely?
Closed-Loop Merchandising: Connecting Discovery and Conversion
Closed-Loop Merchandising unites off-site and on-site efforts into feedback loops that continuously optimize both functions. Instead of marketing (billboard) and merchandising (shelf) operating on parallel tracks, they inform and reinforce each other in real time.
Practically, this means using data from every AI interaction to refine your presence across the generative search journey.
What users ask - and how AI platforms respond - offers a real-time feedback loop for merchandising. Top-converting queries, misunderstood intents, and even the structure of AI-generated answers can inform how you optimize product content, schema markup, and site architecture.
In return, a better-structured digital shelf improves how LLMs present your brand — influencing consideration and conversion before a customer ever clicks through.
The goal: consistent, personalized experiences from discovery to purchase, regardless of where each occurs.
Why pursue closed-loop approaches? They directly address today's fragmented shopper journeys. When executed properly, closed-loop merchandising ensures billboard stories match shelf experiences. This consistency builds trust and increases conversion likelihood.
McKinsey research shows 71% of consumers expect personalized interactions, and 76% get frustrated when this doesn't happen. Consider shoppers who find your brand through Facebook ads promoting "sustainable running shoes," then click to generic product listings - a jarring disconnect. In closed-loop models, ad clicks could land them on tailored pages mirroring ad messages, perhaps pre-sorting sustainable options. Results include smoother purchase paths and higher conversion chances.
Brands excelling at personalization achieve significant performance gains - omnichannel personalization can drive 10-15% revenue and retention uplifts.
Closed-loop strategies become essential in retail media and marketplace dominance eras. Increasingly, first contact points (billboards) might occur on retailers' own "shelves" - sponsored products on Amazon or Walmart sites.
Social commerce provides another billboard-meets-shelf example: Instagram and TikTok now allow direct shopping from ads or posts. The social commerce market reached $924.47 billion in 2025, with retailers reporting these channels among the most effective conversion locations. Browsing and buying lines blur.
If your ecommerce operation can't close loops - capitalize on interest when generated - you risk losing customers to competitors or distractions.
Measurable Benefits: Higher AOV to Lasting Loyalty
Closed-Loop Merchandising delivers concrete benefits across key ecommerce KPIs:
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Higher Conversion Rates: Personalization and smart merchandising technology significantly lift conversions. Studies show AI-driven optimization can increase online retailer conversion rates substantially. With many ecommerce sites averaging 2.7% conversion rates, these lifts prove game-changing.
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Larger Basket Sizes (AOV): Coordinated product presentation and complementary recommendations drive meaningful AOV increases across retail categories.
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Greater Trust and Brand Consistency: Trust influences conversion decisions for 46% of shoppers. Matching ads to on-site experiences builds credibility. Mismatches lose sales.
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Higher Retention and Loyalty: PwC studies found 65% of consumers become loyal customers when brands consistently deliver positive experiences.
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Improved Marketing Spend Efficiency: Sales teams using AI report 79% profitability improvements. Advertisers consolidate spend toward channels proving sales generation, not just clicks. More conversion data fed back into platforms improves campaign optimization. Brands adopting closed-loop merchandising see dramatically improved ad performance and reduced acquisition costs.
Key Takeaways
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Start with Data Integration: Break down silos between marketing and merchandising teams. Share customer behavior data, inventory levels, and campaign performance across departments to create unified customer experiences.
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Focus on Consistency: Ensure your off-site messaging matches on-site experiences. When customers click from ads to product pages, the story should continue seamlessly without jarring disconnects.
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Optimize for AI Discovery: With 58% of searches ending without clicks, optimize product data and content to appear in AI-generated answers and voice commerce results.
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Measure What Matters: Track conversion rates, AOV, and customer lifetime value across all touchpoints. Use this data to continuously refine both advertising and merchandising efforts.
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Act Now: The retail media market is growing 16% annually, reaching $140 billion by 2026. Early adopters of closed-loop systems gain competitive advantages that become harder to replicate over time.
Accepting the New Reality
The new ecommerce reality: distance between shelves and billboards has shrunk to zero. Shoppers don't distinguish between ads, social posts, search snippets, or product pages - to them, it's one brand journey.
Breaking down silos between marketing, merchandising, and technology departments provides starting points. Equally important: using AI and data analytics to make loops truly "closed." Notably, generative AI isn't the enemy - it can be an ally.
Gartner predicts generative AI will reach mainstream maturity within 2-5 years. Already, 97% of leaders report positive sales impacts from AI investments.
The mother of all takeaways? Now is the time to deploy AI-driven closed-loop systems ensuring your "billboard" feeds your "shelf" and vice versa.
Closed-Loop Merchandising is how ecommerce leaders will connect the dots - and more importantly, convert dots into dollars - in retail's new reality.
About Syntheum.ai
We help e-commerce retailers implement Agentic merchandising solutions that go beyond basic automation. By integrating truly intelligent systems into merchandising strategies, we help businesses unlock their full potential - delivering efficiencies that improve operations and redefine what’s possible in online sales.
