Retailers tap AI shopping traffic but fight to keep customer data
FILE PHOTO: People walk past an Ulta Beauty store in the Manhattan borough of New York City, New York, U.S., March 8, 2022. REUTERS/Carlo Allegri/File Photo
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NEW YORK, Aug 7 : As shoppers increasingly turn to ChatGPT and Google’s Gemini for product recommendations, retailers are racing to appear in chatbot results while resisting efforts to cede customer data that underpin online sales.
Growing online traffic from AI platforms has pushed retailers including Walmart, Ulta Beauty and Wayfair to update their websites so their products rank highly in chatbot searches. Yet many want purchases to remain on their own websites, where they can collect data on browsing habits, basket sizes and past purchases that help drive future sales and customer loyalty.
Shoppers are expected to spend $8 billion this year after AI agents such as Anthropic’s Claude and Gemini direct them to retail sites, according to Juniper Research. Adobe Analytics said 41 per cent of U.S. consumers used generative AI for online shopping in June and visitors referred by AI services generated 41 per cent higher revenue per visit than shoppers arriving through traditional channels.
Unlike search engines that rank pages based on keywords and links, chatbots respond to detailed questions, prompting retailers to rethink how they describe products online and how customers find brands.
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“We always want to be wherever our guest is,” Ulta Beauty’s head of digital and e-commerce, Josh Friedman, said. “Whether it’s Google search, affiliate marketing (or) Facebook, there’s always a tax for engaging customers on other people’s platforms. I don’t think this is any different.”
Ulta is seeing “double the conversion and intent” from shoppers finding its products through Gemini and ChatGPT. The company is working with Google to incorporate shopping carts and its Ulta Beauty Rewards loyalty program into AI-powered shopping within Gemini.
But Friedman said the retailer would prefer customers complete transactions on Ulta’s website.
RETAILERS DEFEND THEIR TURF
Executives argue that retailers retain an edge because they know far more about customer preferences than general-purpose AI tools do.
“When a shopper completes a purchase on a brand’s own site … the retailer maintains a direct relationship with that customer,” said Vince Koh, global head of digital commerce at Amazon Web Services.
AWS is encouraging retail clients, including Tapestry’s Kate Spade, to use AI platforms to market products while ensuring their own websites remain “the best place to buy.”
When shoppers use AWS-powered search tools on Kate Spade’s website to look for $380 suede bucket bags, the company can use information on products viewed, budgets and style preferences to personalize recommendations and build loyalty, Koh said.
Retailers know more about their products and customers than “general-purpose” AI tools, Koh said, giving them an edge in recommendations and customer loyalty.
Wedding-planning platform The Knot said it is taking a similar approach. The company is optimizing its website so its vendors appear in ChatGPT results, but it is trying to convince couples to book their wedding venues and invitations directly through the company’s website.
“LLMs are another place to start, another place to search, another place to plan, but we have three decades of data to help” people coordinate weddings, CEO Raina Moskowitz said, referring to AI large language models.
RETAILERS KEEP THE UPPER HAND, FOR NOW
While ChatGPT and Gemini are emerging as important ways to market products, consumers still appear more comfortable completing purchases on retailers’ own websites.
In March, OpenAI ended Instant Checkout, a tool that let shoppers buy clothes and other items through ChatGPT. The company is now focused on product discovery and helping merchants and marketplaces such as Etsy to use their own checkouts.
Etsy has seen a similar pattern. Users who find products through ChatGPT typically return to Etsy’s website to complete purchases, Chief Product and Technology Officer Rafe Colburn said.
“It’s the start of a deeper relationship, and not just one that’s always intermediated by ChatGPT,” Colburn said.
Source: Reuters
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