Let's first quickly get started with something basic like why retention is more important than acquisition? Simply because retention costs are much lower than acquisition costs and that is because acquiring a new customer involves a great deal of time, effort and money for marketing and reaching out, especially in terms of gaining their trust and ensuring they feel cared about as well as relevant and engaging on your store.

Personalization is such a important aspect of marketing and e-commerce that if you ignore you might pay for it terms of losing your customers and finding it hard to retain them and even hard to make your revenues stable. Surprisingly often companies ignore this aspect and continue to struggle and lot of times even shut down.

If we take an example of brick and mortar stores, we get salesmen to guide us and help us buy but what if our salesmen already knew what we were looking for last time, have a professional understanding relation, and could suggest us according to our preferences, but it is impractical to expect all this although they can definitely guide us once we tell them what we are looking for, also to remind brick and mortar stores have limited floor space, limited stock and variety, but same is not the case with e-commerce.
An e-commerce store doesn't have any limitation to stock and that gives it an advantage of varieties but poses a challenge for visitor getting overwhelmed, confused and unable to make a purchase decision. This is where personalization plays an important role to help visitor buy by giving exclusive suggestions based on previous information, buying behaviour, previous purchases, recommendations, exclusive for you section, etc.

By cutting down the choices to a reasonable number and giving relevant suggestions and options, lot of major e-commerce companies are using personalization technology and helping users to make better decisions about what to buy, helping them escape the feeling of too many choices.
The good thing is that the personalization technology is getting cheaper and so even new companies and startups can also utilize such technology to retain their customers as well as with this, increase their revenues by offering more relevant products. The software with more sophisticated complex algorithms that are very accurate and ensures customer is shown what they are most likely to buy based on deep understanding of a customer comes much more costly though, still companies got a choice of economical versions at least to get started.

So let's now get down to more specific points on how personalization works,
beginning with proper and clear categorization of your products so that customer knows exactly where to go, as well as if he doesn't know your search must be optimized enough that it gives the right results through right categorization.
Then cut down the number of recommendation and making sure you don't recommend too many products, ideally companies keep it between 6-10 max.
Then gain trust and convince users to sign up as trust plays major role whether visitor decides to buy from your site or not. You can convince them to sign up first through various means like discounts, incentives, membership programs and gain trust by showing a more smoother surfing experience.