AI’s latest conquest is shopping and e-commerce. Though AI engines like ChatGPT were already being used in shopping consideration cycles, there was always a sort of handoff between product research using AI, then a separate transaction at places like Amazon or physical stores.
The next logical step is for AI engines to swallow a greater and more comprehensive part of that clickstream – a full funnel play. This follows the footsteps of Google’s efforts to own the end-to-end shopping flow (more on that in a bit), and put AI engines in more directly monetizable territory.
With that in mind, we’ve seen OpenAI, among others, blitz this opportunity, including bringing transactional functionality into ChatGPT so that you can buy researched products without leaving its four walls. Then the next step is retail partnerships to get all the data and e-commerce integrations it needs.
That last part is an onerous business development process for OpenAI or any entity. But fortunately, retailers and e-tailers out there are incentivized to play ball in order to expand their own surface area and consumer touchpoints. So it’s been able to get several on board so far, from Walmart to Target.
Comforting Confines
OpenAI has now expanded that list, and done so in a more localized way. Its latest partner is Instacart, which brings a new category to ChatGPT for the first time. Users can now launch a grocery-shopping workflow right within ChatGPT, which could stimulate a new use case for the expansive AI engine.
For example, the behavior that OpenAI is trying to establish among new and existing users is to brainstorm meal ideas using its signature LLMs. Then they can take it to the next step to make a grocery list and transact with the convenience of, again, not having to leave the comforting confines of ChatGPT.
To be fair, this isn’t an entirely new use case, but it closes the loop on one by applying some of the one-stop-shop principles noted above. OpenAI and Instacart collaborated about two years ago to let consumers ask questions about what they could make for dinner, or how to shop for dietary restrictions.
It’s also worth noting that former Instacart CEO Fidji Simo is an OpenAI board member and has an operational role in the company, leading its app marketplace and partnerships. So it’s not hard to trace the DNA of this collaboration, nor extrapolate that we could see more coming from the two companies.
Hitting it Hard
Speaking of unsurprising moves, the Instacart Collaboration isn’t surprising on a broader level. OpenAI is hitting it hard with respect to business development efforts to round out its shopping capabilities. This is ostensibly a big area of priority for a company that currently has several high-stakes priorities.
Or, as we wrote back in October.
With that foundational layer of functionality, the program has potential… but only so far as the retailers and e-tailers that come on board as partners. These represent the content, product listings, and transactional functionality that are fed into ChatGPT to make it a comprehensive shopping experience.
Back to the part about Google, OpenAI’s shopping blitz clearly follows in the search giant’s footsteps in swallowing more and more of the consumer shopping funnel, as noted. So it’s not without irony that Google’s biggest threat in a long time is doing something similar, though through different means.
Speaking of differences, OpenAI’s revenue model will deviate from Google’s paid search structure. Sam Altman has spoken out about paid search’s inherently-conflicted model in maintaining the relevance-driven integrity of answers/results. So we could instead see affiliate revenue or cost-per-action models.
Questions like that will be answered in time.
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