Recommendation Engine Market Size
| Study Period | 2019 - 2029 |
| Market Size (2024) | USD 6.88 Billion |
| Market Size (2029) | USD 28.70 Billion |
| CAGR (2024 - 2029) | 33.06 % |
| Fastest Growing Market | Asia-Pacific |
| Largest Market | Asia-Pacific |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order |
Recommendation Engine Market Analysis
The Recommendation Engine Market size is estimated at USD 6.88 billion in 2024, and is expected to reach USD 28.70 billion by 2029, growing at a CAGR of 33.06% during the forecast period (2024-2029).
With the growing number of enterprises and the rising competition among them, many companies are trying to integrate technologies, like artificial intelligence (AI), with their applications, businesses, analytics, and services. Most organizations globally are pursuing digital transformation, focusing on improving the experience of customers and employees, which is being leveraged by automation solutions.
- The advancement of digitalization across emerging economies, coupled with the growth of the e-commerce market, has driven the demand for recommendation engines. Integrating the machine learning model across AI-based cloud platforms drives automation across multiple end-user industries.
- Consumers traditionally make purchase decisions at the store shelf, providing institutional brick-and-mortar retailers a high-power level to learn about and influence consumers' behavior and preferences. However, with the rise of internet penetration and the emergence of new sales channels through e-commerce, mobile shopping, and smart technologies, the retail industry is adapting to new and advanced technologies. These technologies, such as smart point-of-sale solutions and self-checkout kiosks, transform traditional brick-and-mortar stores into omnichannel ones. According to ZDNet, 70% of the companies either have a digital transformation strategy or are working with one.
- Digital transformation provides opportunities for retailers to acquire new customers, engage with existing customers better, reduce the cost of operations, and improve employee motivation. These benefits, among others, positively impact the revenue and margins. This positive impact will create significant opportunities for adopting recommendation engines over the forecast period.
- The challenge of incorrect labeling due to changing user preferences is an ongoing concern for the recommendation engine market. However, developers are continually working to improve the accuracy and relevance of recommendations. As technology advances, we can expect to see more effective solutions to this challenge in the future.
- According to the recent "Agents of Transformation Report" from AppDynamics, part of Cisco, technology priorities during the COVID-19 pandemic changed within 95% of organizations, and 88% reported that digital customer experience was the priority for their organization. Customers turned to self-service tools in the form of chats, messaging, and conversational bots. As a result, companies enabled these tools to deliver a great customer experience while reducing traditional dependencies on brick-and-mortar and live events, which were not feasible in a time of social distancing. This was further expected to increase the benefits achieved by recommendation engines due to the increased adoption of technologies in these companies.
Recommendation Engine Market Trends
Increasing Demand for Customization of Digital Commerce Experience Across Mobile and Web Drives the Market's Growth
- Enterprises are looking for ways and technologies to leverage the advantage that could be difficult for their competitors to imitate by providing highly personalized customer experiences. Such experiences use proprietary data to offer a better experience to millions of individual customers. The results depend on the execution. When executed well, personalized customer experience can enable businesses to differentiate themselves and gain customer loyalty and sustainable competitive advantage, which is much needed in the present scenario.
- Customers' decisions are no longer being made in a physical store but online on web browsers and mobile phones in front of the digital shelf. For the enterprises operating in the retail space, the price, place, and promotion of their products are no longer just being compared to products on neighboring shelves but to alternative products from retailers with websites worldwide. In this regard, technologies such as recommendation engines, using AI and ML, ensure customers' requirements are met and ensure that customers' needs and offerings are on the same level, enough to be one step ahead of their competitors.
- Over the years, many marketing professionals across organizations have increased their focus on enhancing customer experience due to the customers' growing demand. For instance, according to Adobe, companies with the most robust omnichannel customer engagement strategies could witness a 10% Y-o-Y growth, a 10% increase in average order value, and a 25% increase in close rates. Also, brands that adopted robust omnichannel customer engagement strategies and consumer service enhancement programs retain, on average, 89% of their customers, compared to 33% for brands with weak omnichannel customer engagement strategies.
- With a growing number of channels coming into play, technologies ensure that the brands provide a consistent message about their offerings across all channels. The growing demand for better customer service is expected to drive the demand and positively affect the market during the forecast period.
- Overall, the growing demand for personalized digital commerce experiences drives the recommendation engine market. According to Thales Group, the banking and financial sector was considered trustworthy for the security of consumers' information. Over 40% of consumers globally stated they trusted the digital banking and financial services sector with their data. Healthcare providers were the second-most trusted industry in the digital services sector, with 37% of the respondents indicating this sector as among the most secure. Businesses seek to leverage AI technology to deliver targeted customer recommendations, drive sales, and improve customer satisfaction.
Asia-Pacific to Witness the Fastest Growth
- Led by countries like Australia, India, China, and South Korea, the Asia-Pacific region is expected to witness the fastest growth in the recommendation engine market.
- China is one of the major countries in Asia-Pacific with growing technological adoption. The country is home to one of the fastest internet bands and strong e-commerce players, like Alibaba.
- Moreover, China is the second-largest OTT market in the world after the United States. According to Instituto Federal de Telecommunications (Mexico), there were 68 subscriptions per 100 homes in China, and the rate of online video users is increasing effectively. However, the country is very strict in terms of regulations surrounding the industry and the data used, as well as the content that is allowed to be circulated in the country.
- The tripartite (iQiyi, Tencent, Youku) domination is further secured by the strict regulatory environment in China, which prevents international players, such as the FAANG (Facebook, Amazon, Apple, Netflix, and Google), from operating in the country. These international players use the recommendations engine at a large scale and drive other businesses through advertising. This leaves the region ample opportunities for domestic players, thus leading to moderate growth compared to the United States.
- Furthermore, one e-commerce giant, Alibaba, uses AI and machine learning to drive its recommendations. For instance, AI OS is an online platform developed by the Alibaba search engineering team that integrates personalized search, recommendation, and advertising. The AI OS engine system supports various business scenarios, including all Taobao Mobile search pages, Taobao Mobile information flow venues for major promotion activities, product recommendations on the Taobao homepage, personalized recommendations, and product selection by category and industry.
Recommendation Engine Industry Overview
The recommendation engine market is fragmented with the presence of major players like IBM Corporation, Google LLC (Alphabet Inc.), Amazon Web Services Inc.(Amazon.com Inc.), Microsoft Corporation, and Salesforce Inc. Players in the market are adopting strategies such as partnerships, mergers, and acquisitions to enhance their product offerings and gain sustainable competitive advantage.
- January 2023 - New Coveo Merchandising Hub's debut was announced by Coveo. The Hub offers a rich feature set that enables companies to deliver a highly relevant shopping journey that helps foster loyalty and boost profitability. It is designed to empower merchandisers to create tailored experiences that convert. Qubit, a London-based start-up that offers AI-powered customization technology for fashion companies and retailers, was acquired by Coveo in October 2021.
- October 2022 - Algonomy announced the availability of two significant connectors for Shopify and Commercetools, which will enable automatic and smooth data interchange between Algonomy's products and e-stores. Algonomy Connectors offer a simple method for integrating online shops with Shopify or Commercetools, enabling real-time product data collecting. Connectors give improved control and insight over the catalog integration process and remove the need for relying on external organizations and resources to update catalog data regularly.
Recommendation Engine Market Leaders
-
IBM Corporation
-
Google LLC (Alphabet Inc.)
-
Amazon Web Services Inc.
-
Microsoft Corporation
-
Salesforce Inc.
*Disclaimer: Major Players sorted in no particular order
Recommendation Engine Market News
- January 2023 - Coveo Solutions Inc. opened a new office in London, England, to assist growth in Europe. The new office will serve clients in Europe, such as Philips, SWIFT, Vestas, Nestlé, Kurt Geiger, River Island, MandM Direct, Halfords, and Healthspan, which have chosen Coveo AI to improve the experiences of their customers, employees, and workplace. Coveo also collaborated with system integrators, referral partners, and strategic partners in other regions to offer search, personalization, recommendations, and merchandising to major corporations that want to significantly raise customer satisfaction, employee productivity, and overall profitability.
- August 2022 - Google announced plans to open three new Google Cloud regions in Malaysia, Thailand, and New Zealand, in addition to the six previously announced regions in Berlin, Dammam, Doha, Mexico, Tel Aviv, and Turin.
Recommendation Engine Market Report - Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
4.1 Market Overview
4.2 Industry Attractiveness - Porter's Five Forces Analysis
4.2.1 Bargaining Power of Suppliers
4.2.2 Bargaining Power of Buyers/Consumers
4.2.3 Threat of New Entrants
4.2.4 Intensity of Competitive Rivalry
4.2.5 Threat of Substitute Products
4.3 Assessment of the Impact of COVID-19 on the Market
4.4 Technology Snapshot
4.4.1 Geospatial Aware
4.4.2 Context Aware (Machine Learning and Deep Learning, Natural Language Processing)
4.5 Emerging Use-cases (Key Use-cases Pertaining to the Utilization of Recommendation Engine Across Multiple End Users)
5. MARKET DYNAMICS
5.1 Market Drivers
5.1.1 Increasing Demand for the Customization of Digital Commerce Experience Across Mobile and Web
5.1.2 Growing Adoption by Retailers for Controlling Merchandising and Inventory Rules
5.2 Market Restraints
5.2.1 Complexity Regarding Incorrect Labeling Due to Changing User Preferences
6. MARKET SEGMENTATION
6.1 By Deployment Mode
6.1.1 On-premise
6.1.2 Cloud
6.2 By Types
6.2.1 Collaborative Filtering
6.2.2 Content-based Filtering
6.2.3 Hybrid Recommendation Systems
6.2.4 Other Types
6.3 By End-user Industry
6.3.1 IT and Telecommunication
6.3.2 BFSI
6.3.3 Retail
6.3.4 Media and Entertainment
6.3.5 Healthcare
6.3.6 Other End-user Industries
6.4 By Geography
6.4.1 North America
6.4.2 Europe
6.4.3 Asia-Pacific
6.4.4 Latin America
6.4.5 Middle East and Africa
7. COMPETITIVE LANDSCAPE
7.1 Company Profiles
7.1.1 IBM Corporation
7.1.2 Google LLC (Alphabet Inc.)
7.1.3 Amazon Web Services Inc. (Amazon.com, Inc.)
7.1.4 Microsoft Corporation
7.1.5 Salesforce Inc.
7.1.6 Unbxd Inc.
7.1.7 Oracle Corporation
7.1.8 Intel Corporation
7.1.9 SAP SE
7.1.10 Hewlett Packard Enterprise Development LP
7.1.11 Qubit Digital Ltd (COVEO)
7.1.12 Algonomy Software Pvt. Ltd
7.1.13 Recolize GmbH
7.1.14 Adobe Inc.
7.1.15 Dynamic Yield Inc.
7.1.16 Kibo Commerce
7.1.17 Netflix Inc.
- *List Not Exhaustive
8. INVESTMENT ANALYSIS
9. FUTURE OF THE MARKET
Recommendation Engine Industry Segmentation
Recommendation engines are data filtering tools that use various algorithms and data to recommend the most relevant items to a particular customer. They first capture the past behavior of a customer. Based on that, they recommend products the users are likely to buy. The integrated software analyzes the available data to suggest something a website user might be interested in (products/services), among other possibilities. Recommendation engine systems are common in e-commerce, social media platforms, and content-based websites. The recommendation engine market study includes the revenues generated from the recommendation engine type, such as collaborative filtering, content-based filtering, hybrid recommendation systems, and other types used in various end-user industries through different deployment modes globally. The study also analyzes the overall impact of the COVID-19 pandemic on the ecosystem. The study includes qualitative coverage of the most adopted strategies and an analysis of the key base indicators in emerging markets.
The recommendation engine market is segmented by deployment mode (on-premise, cloud), type (collaborative filtering, content-based filtering, hybrid recommendation systems), end-user industry (IT and telecommunication, BFSI, retail, media and entertainment, healthcare), geography (North America, Europe, Asia-Pacific, Latin America, Middle East and Africa). The market sizes and forecasts are provided in terms of value in USD million for all the above segments.
| By Deployment Mode | |
| On-premise | |
| Cloud |
| By Types | |
| Collaborative Filtering | |
| Content-based Filtering | |
| Hybrid Recommendation Systems | |
| Other Types |
| By End-user Industry | |
| IT and Telecommunication | |
| BFSI | |
| Retail | |
| Media and Entertainment | |
| Healthcare | |
| Other End-user Industries |
| By Geography | |
| North America | |
| Europe | |
| Asia-Pacific | |
| Latin America | |
| Middle East and Africa |
Recommendation Engine Market Research FAQs
How big is the Recommendation Engine Market?
The Recommendation Engine Market size is expected to reach USD 6.88 billion in 2024 and grow at a CAGR of 33.06% to reach USD 28.70 billion by 2029.
What is the current Recommendation Engine Market size?
In 2024, the Recommendation Engine Market size is expected to reach USD 6.88 billion.
Who are the key players in Recommendation Engine Market?
IBM Corporation, Google LLC (Alphabet Inc.), Amazon Web Services Inc., Microsoft Corporation and Salesforce Inc. are the major companies operating in the Recommendation Engine Market.
Which is the fastest growing region in Recommendation Engine Market?
Asia-Pacific is estimated to grow at the highest CAGR over the forecast period (2024-2029).
Which region has the biggest share in Recommendation Engine Market?
In 2024, the Asia-Pacific accounts for the largest market share in Recommendation Engine Market.
What years does this Recommendation Engine Market cover, and what was the market size in 2023?
In 2023, the Recommendation Engine Market size was estimated at USD 5.17 billion. The report covers the Recommendation Engine Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the Recommendation Engine Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
Recommendation Engine Industry Report
The report on the Global Recommendation Engine Market provides a comprehensive market overview and market analysis, highlighting the market growth and market forecast for the coming years. The industry report segments the market by deployment mode, type, end-user industry, and geography, offering insights into the market size and market share. The industry research covers various aspects such as industry trends, industry outlook, and industry statistics, providing a detailed industry analysis. The market report also includes information on market leaders and market segmentation, offering a thorough market review.
The report example and report pdf are available for download, providing valuable market data and market predictions. The industry information and industry reports offer insights into the industry size, industry sales, and growth rate, contributing to a better understanding of the market value. The market forecast and market outlook sections provide a future perspective on the market, while the industry research and industry overview sections offer a historical context.
Additionally, the report covers the market trends and market growth, highlighting the key drivers and challenges in the market. The research companies involved in the study provide a detailed analysis of the market segmentation and market value, ensuring a comprehensive understanding of the market dynamics. The industry statistics and industry trends sections offer valuable insights into the current state of the market, while the market data and market predictions provide a future outlook.
Overall, this report serves as a valuable resource for anyone looking to gain insights into the Global Recommendation Engine Market, offering a detailed analysis of the market size, market growth, and market forecast. The report is a must-read for industry professionals, researchers, and market leaders, providing a thorough understanding of the market dynamics and future trends.
Recommendation Engine Market Report Snapshots
