Retailers should keep generative AI firmly on their radar

In recent months, this talk has turned more specifically to ChatGPT which is a form of generative AI. It can understand and generate natural language and is able to create new content or data, something that has traditionally relied on human input. This content takes multiple forms, from text, image, and video, to audio and code.

When ChatGPT emerged, Google launched its own generative AI version, Bard, while Microsoft introduced a new version of Bing Search and Microsoft Edge, both powered by ChatGPT. With this, we can see that the generative AI race is certainly on, and while the technology is in its infancy, its potential is vast.

Some organizations in the retail sector are already dipping their toes in. For example, a French retailer has used ChatGPT to create content for videos helping consumers to shop more healthily and cheaply, while Shopify has launched a feature called Shopify Magic, which uses generative AI to create detailed product descriptions for retailers, based on inputting a few keywords.

In the future, retailers will also be able to augment open-source models (such as ChatGPT) with sector-specific knowledge, using proprietary data from their vertical, company, or brands.

How ChatGPT can drive e-commerce

E-commerce has boomed over the last few years, fueled in part by Covid, and ChatGPT – and its generative AI counterparts – promises to fuel this appetite, as online shopping becomes even more intuitive and convenient.

There are a number of clear areas in which ChatGPT can benefit e-commerce. Firstly, Chatbots powered by ChatGPT can understand and generate natural language, meaning they can quickly assist customers with queries about everything from product availability and store opening hours, to order tracking and updating personal data. Chatbots can then be incorporated into a retailer’s website and mobile app.

Secondly, by analyzing data relating to customers’ browsing habits and purchase history, ChatGPT can make personalized product recommendations as well as serve highly targeted ads tailored to specific audiences. This can improve the customer experience and, in turn, drive sales and foster loyalty.

ChatGPT can also be used to up-sell and cross-sell, suggesting complementary products and services based on consumers’ browsing behavior and purchases. With product descriptions, for example, ChatGPT can generate fast, accurate product descriptions for multiple Stock Keeping Units (SKUs), as well as create high-quality product imagery showcasing items being worn by a variety of shapes, sizes, and ethnicities.

Descriptions can be used for online listings as well as social media marketing. Highly accurate product descriptions can boost sales as well as markedly reduce returns, which were expected to cost British fashion retailers an eye-watering £7bn last year.

Backend functionality

There are some backend functions that could be transformed by ChatGPT too, impacting the bottom line and, indirectly, the overall customer experience (CX).

ChatGPT can support retailers with inventory management as it analyzes sales data to predict future demand, this enables retailers to optimize their inventory and reduce waste. ChatGPT’s ability to optimize market data means it can support pricing optimization, to empower retailers to set competitive prices that drive sales and profit, avoiding the pitfalls of pricing too low or too high - particularly important as the cost of living crisis bites.

In addition, by analyzing customer behavior and search trends, ChatGPT can identify keywords to optimize a retailer’s social media posts and product descriptions. This can improve search engine results pages and maximize website traffic. Finally, ChatGPT can analyze a retailer’s performance and produce detailed reports highlighting trends in customer behavior and sales, informing the wider business strategy.

Why omnichannel remains key

While generative AI, and specifically ChatGPT, has the power to take e-commerce to the next level, it could also see benefits for retailers who embrace an omnichannel strategy.

Integrating ChatGPT across multiple channels – from in-store purchases and online browsing to interactions with virtual assistants – can drive increased personalization and deliver an enhanced CX. This intuitive and seamless omnichannel experience can encourage loyalty and boost sales – online and in-store.

There are still a number of unknowns in the world of generative AI, not least the thorny issues of privacy, copyright, and brand safety, but one thing is clear, generative AI has a significant role to play in the future of retail.