This holiday shopping season is poised for transformation, and small business owners are at the forefront of a significant shift driven by technology and changing consumer preferences. According to PayPal’s recent 2025 Holiday Shopping Survey, a notable 40% of consumers have utilized AI for their shopping experiences, with the majority indicating plans to leverage such tools this holiday season to seek out deals. PayPal aims to inform merchants on how to harness these trends for enhanced sales and customer loyalty.
The survey reveals that consumers are seamlessly blending online and offline shopping, utilizing AI to uncover the best bargains and receive product recommendations. "Shoppers are moving fluidly across channels, discovering products through AI, returning to stores, and choosing flexible payment options like Buy Now, Pay Later (BNPL) to maximize this holiday season," stated Michelle Gill, PayPal’s General Manager for Small Business and Financial Services. This multifaceted shopping behavior underscores the need for merchants to adapt and optimize their approaches to stay competitive.
As consumers embrace AI, small business owners have an unprecedented opportunity to enhance their visibility online. With 77% of those who have previously used AI expressing intentions to rely on it as a shopping assistant this year, ensuring product optimization across AI-driven platforms is vital. This trend is particularly strong among younger demographics, such as Gen Z and Millennials, where 61% and 57%, respectively, have reported AI usage.
Flexible payment options are also emerging as game-changers. Half of the consumers surveyed plan to use BNPL services to manage their holiday shopping budgets, citing the importance of affordability and control. Interestingly, 52% of respondents indicated they are more likely to complete a purchase when BNPL options are available, creating a compelling case for small businesses to incorporate these payment methods. As Gill emphasized, "When shoppers know they can pay over time, they’re more likely to complete their purchase."
Beyond just facilitating transactions, BNPL has shown to increase sales significantly. PayPal’s data indicates that businesses implementing BNPL experience a 91% rise in average order value for larger enterprises, and a remarkable 62% for small businesses. This clearly demonstrates that adopting such options is not merely beneficial but essential for businesses aiming for sustained success.
However, success in the upcoming season will not solely rely on payment options or AI. The survey highlights the importance of omnichannel retail as shoppers increasingly expect seamless experiences across various platforms. With 64% of consumers planning to shop in physical stores and 28% preferring online shopping, businesses must create unified experiences that cater to both modalities. This is critical as 74% of shoppers prefer to engage with merchants offering rewards or cash-back incentives, highlighting the need for businesses to create integrated loyalty programs.
PayPal is addressing these demands by expanding its services, including a new initiative that allows customers to earn 5% cash back on all BNPL purchases, both online and in-store. This expansion serves as a strategic move to attract shoppers looking for meaningful incentives and richer experiences throughout the purchasing journey.
While navigating these new trends offers promising potential, small business owners should also consider the challenges associated with rapid technological shifts. There may be initial costs and learning curves associated with integrating AI tools and BNPL payment options. To fully leverage these changes, it’s imperative for businesses to invest time and resources into understanding these technologies and aligning their operations accordingly.
As the holiday shopping landscape evolves, small business owners who strategically embrace these insights stand to not only boost their sales but also cultivate long-lasting customer relationships in an increasingly competitive environment. By adapting to consumers’ preferences for AI tools, flexible payment options, and a seamless shopping experience, merchants can position themselves to thrive this holiday season and beyond.
For further details, visit the original release at PayPal.
Image Via BizSugar
 strategies that can drive merchant success this holiday season. Learn how to leverage these trends to enhance customer experience and boost sales.){kind=link}