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This is an article about how to approach the use of ChatGPT for improved ecommerce experiences without breaking shopper trust in the process. You probably aren’t expecting Jurassic Park references, but I’m going to make one anyway.
There’s a line of foreshadowing early on where Jeff Goldblum’s character speaks about the complexities and ethics involved in cloning dinosaurs. He says something to the effect of, “Everyone got so excited that they could that they never even stopped to consider if they should.”
ChatGPT, and transformers in general (the technology underlying ChatGPT and a lot of the newer software that’s emerging in the search and discovery world) are incredibly exciting. One of the most exciting parts is how easy it is to build something with ChatGPT, and we’re currently seeing a glut of new software that does just that. Still, what isn’t clear is how to leverage this technology in ways that aren’t just gimmicks, but are actually helpful to people.
It’s clear to just about everyone that we’re in a hype cycle, and that’s why it’s so important for new technology being marketed as “powered by ChatGPT” or “powered by transformers” to prove its business value and usefulness to end users. Not to mix blockbuster movie references, but with great computing power comes great responsibility.
So it’s a good time to ask the multibillion-dollar question: how can technology companies use ChatGPT responsibly and in ways that actually benefit people in the months and years to come?
We’ve adopted some overarching principles internally at Constructor that will serve as our north star as we continue to innovate in this space. As we came up with them, we realized they could be useful as best practices for technology companies in general, and especially those like us who are serving large e-commerce companies. As more and more ecommerce leaders across B2B and B2C evaluate AI solutions in the middle of a hype cycle, we think it’s especially important to publish our principles publicly.
Our hope is that if we stick to these principles, then we’ll maintain our customers’ trust while innovating on new technology, and we’ll do this while doing the right thing for shoppers as well.
1. Experimentation is a prerequisite for ROI
Lots of companies can release a cool-looking new product and make claims about its efficacy, but it’s important for all of us to recognize that we’re early in our understanding of what applications of ChatGPT are genuinely useful to humans, and which are just science projects.
Why? Because the vast majority of those results are still unproven.
With ecommerce technology, for example, it’s important to consider whether a technology partner is going to actually deliver a product that has a legitimate impact on revenue or user happiness. Succeeding at that is ultimately a manifestation of extensive experimentation, including testing, failure, iteration, and re-testing — over and over again. Like most good things, data science takes time. It’s complex, and it’s nuanced.
Why is this so important for all of us in ecommerce tech to recognize? Because if we release a bunch of gimmicky technology and promise it’s the next big thing, then when we do come up with something useful, no one is going to trust us anymore.
The critical takeaway here is that any breathless proselytizing about most ChatGPT-based tech at this stage is counterproductive and simply not honest. If a vendor says they know for certain where the gold is right now, it’s just very unlikely to be true.
That’s the critical difference between a culture of experimentation versus one that’s only interested in shipping the “new hotness,” no matter the results. Before a product goes to market, the company that created it needs to be able to explain, and ideally prove, how it will bring ROI.
Is it just a novelty, or will it — in our case as an ecommerce product discovery company — actually help shoppers discover more products they want to buy in a way that’s more convenient, more natural, or more delightful than what they already have? And how do we know?
At Constructor, we’re excited to be experimenting with ChatGPT and large language models and transformers, both internally and with willing customers. We’re excited about the experiments we’re doing, and we hope the customers testing them are too, but we also want to be very clear that these are still just experiments. I’m providing a sneak peek at one experiment we’re very excited about below, but please read on before watching it:
Because here’s what we’re not doing: we’re not claiming we’ve invented the best thing ever. We’re not promising 10000% ROI. This is an experiment we’re excited about, but there is a real possibility that it doesn’t work out.Taking risks is what innovation looks like. The difference is that at the end of the day, our charter is to create real value (and ideally revenue) for our customers — and we won’t sell them a product that delivers anything less.
2. ChatGPT for ecommerce should be trained on ecommerce data and built for the needs of ecommerce
Ecommerce is full of unique problems and use cases for the ways people find products and content. For example, an add-to-cart and a purchase are both “conversions,” but they’re very much not the same type of conversion. Software that’s built for ecommerce has to understand the distinction, because it’s incredibly important to the KPIs that B2C and B2B ecommerce companies care about.
That’s the primary reason that we built Constructor’s AI core from scratch — the keyword-matching and vector search algorithms that work for general document search just aren’t the best technology to apply to ecommerce product discovery where you have rich feedback from users via their clickstream, along with zero party data like answers in a product-finding quiz. And the same principles apply when we apply ChatGPT to ecommerce.
The idea here is, let’s not try to boil the ocean. We don’t need to create Artificial General Intelligence that can answer every type of human query. We just need to create a very specific form of Artificial Intelligence that does one thing (helping shoppers discover products they’ll love, in our case) very, very well.
In order to return the most personalized, attractive results to a shopper’s query, ChatGPT needs to be augmented with AI models trained on ecommerce-specific data like clickstream behavior, average order values, margins, and product attributes. What’s really exciting here is that it’s the underlying technology itself that has the potential to completely reshape ecommerce. At Constructor, for example, we are working on using transformers to provide better product retrieval and filter out irrelevant results in search queries. It’s possible that this work may have the greatest impact on customer revenue, even more than the “conversational commerce” element of ChatGPT. But we don’t know yet — that’s why we’re experimenting.
(Image courtesy of Constructor)
Another advantage to training transformers on ecommerce data is that it also might mitigate some of the public concerns around ChatGPT’s accuracy. We only surface products for shoppers based on their own zero-party data and an ecommerce company’s own catalog. This heavily limits the types of wrong answers the system can give, and is about as accurate (and effective) as you can get. You may not be able to ask the ChatGPT solution at your favorite retailer about the year Albert Einstein was born, but it will be much better equipped to help you find a shirt you’ll love, or that one snack you tried and enjoyed, but can’t remember the name of. That’s a sacrifice I think most companies will be willing to make.
3. ChatGPT should build — not erode — your customer relationships
We’ll be releasing the full results in the next few months, but our team at Constructor recently performed a survey of 400+ U.S. online shoppers. We found that more than half of them were at least somewhat hesitant about using ChatGPT to find products on websites.
In our current landscape of third-party cookies and data breaches, that response is understandable. And ChatGPT could trigger a similar backlash if it makes shopping uncomfortable or intimidating. New tech can be scary, and it’s a fair concern that you might not want to ask your grocery store to create a shopping list of your regular purchases if it automatically adds sensitive items like gas relief medicine without asking you first.
We don’t have all the answers yet (as a company, an industry, or even a society) for how we’re going to solve these problems. Some of it, especially in this experimental phase, will be creating more transparency for the shopper. Expedia is an example of a company approaching this the right way, in my opinion. They recently launched a ChatGPT interface, and they’re very open about it being experimental and not trying to “trick” customers into using it. It’s a small but important step in building customer trust and delivering the value that leads to long-term relationships.
(Image courtesy of Constructor)
Questions will come up as we break new ground here. They’re important to talk and think about, and that work is the shared responsibility of retailers and the partners they work with. Ecommerce companies and their technology partners coming together to consider these murky waters — and being willing to think through new solutions to put customers first — will be absolutely critical.
A balanced approach
The amount of excitement and buzz around the (virtual) water cooler here at Constructor when it comes to ChatGPT can’t be overstated. Speed to market is a noble pursuit in this agile, volatile economy, and we are experimenting every day to figure out which of our ideas with ChatGPT and transformers will bring customer value and which require rethinking.
But we also want to balance that excitement with humility. When ChatGPT and transformers are raising legitimate questions from consumers, from companies, and even from others in the AIcommunity, moving forward carefully and intentionally is equally important.
In this retail tech arms race, it’s the companies who widely release technology that doesn’t help their customers that have the most to lose. Ultimately, AI shouldn’t exist just for AI’s sake. Artificial Intelligence needs to yield real value if the companies using it want to be valued by their customers. We hope that our customers have come to trust us for doing right by them and their shoppers, but recognize that trust is something we have to constantly earn and maintain. My hope is these principles will help us and the wider technology ecosystem do exactly that as we embark on this next exciting adventure in AI.
Eli Finkelshteyn is co-founder and CEO of Constructor, an AI-powered product search and discovery platform tailor-made for ecommerce. This piece originally appeared on Constructor's blog, and was reprinted with permission.
Trending in Shopper Experience
Identity, value and innovation are keys to remaining relevant for specialty retail, CI&T's Melissa Minkow writes.
The recent Bed Bath & Beyond news has begged many questions, but the unbranded, overarching question that should be getting asked, is “What is the future of specialty retail?”
Every day, big box retailers bring another DTC brand under their roof and add even more categories to their assortment. What’s more, the increase in marketplace models and constant debut of new DTC brands paint a vivid picture of a challenging landscape for specialty. Over the last decade, and especially over the last year (thanks to inflation), retail has bifurcated from a price standpoint, matching the widening gap between high and low income. Now, it seems successful specialty retail is following a somewhat similar suit: either you’re DTC or you’re big box, there’s no Bed Bath & Inbetween.
For decades, Bed Bath & Beyond created a blueprint for towing the line between big box and specialty. The retailer possessed a footprint as large as big box stores, offered a much wider array of categories than typically within the bounds of specialty retail, yet sat strictly in the home space. This model eventually proved to be a struggle for Bed Bath & Beyond, but there are large specialty retailers who appear to have figured out how to hybrid. What does this mean for the landscape in the future? Let’s unpack.
FORCES AT PLAY
It goes without saying, but I’ll say it anyway: By definition, specialty retail products can always be bought at multi-category retailers. Specialty is intended, though, to provide both breadth and depth where larger retail typically doesn’t. Lately, however, between the increase in marketplace models and overall expansionist strategies among many big box chains, not only are the categories offered by multi-category retail broadening, but so is the level of assortment. When department stores, big box stores and dollar stores are actually offering more breadth and/or depth than a specialty store, that’s the first sign of rough waters ahead.
Growth of DTC
While one end of the specialty spectrum is rapidly growing due to large chains, the other end happens to be growing due to the inverse reason: small DTC startups. DTC brands have grown in quantity over the last several years, allowing founders freedom, flexibility and ample control over their business models. TikTok’s skyrocketing popularity has certainly played a key role in building DTC appeal among both entrepreneurs and consumers, along with the increasing marketing capabilities of social media overall. Just as it makes sense from a scalability perspective for large chains to enter into more specialty terrain, it is perfectly sensible for DTC to stick within the confines of one specialty in order to remain strategically focused. In general, developing a massive retail footprint (physically, with exorbitant square footage, and digitally) out of one niche is going to be economically challenging. Interestingly noteworthy, big box retailers such as Target and Walmart have embraced bringing in DTC brands (e.g. Billie, Quip, Casper) in home, beauty and personal care. This demonstrates that there can absolutely be a place for DTC within big box, as long as that DTC identity remains strong within that environment. Perhaps had Bed Bath & Beyond pulled big DTC brands in, rather than attempting its own private label DTC identity, there would have been more consumer engagement. DTC brands are who they are because of the relationships they build with shoppers, and smart large retailers leverage that to their advantage versus endeavoring their own wins in these aisles.
At the start of COVID, the big headline was that the virus had infected a long list of retailers, forcing them into the red. The reality was that the pandemic served as the sounding bell or nail in the coffin for many retailers who had actually been struggling for longer than they would have liked us to believe. Bed Bath & Beyond is a prime example of one of those retailers whose struggle has essentially been forgotten, leading many to assume that this is another coronavirus casualty. But it’s important to note that the home space as a whole has been a big pandemic winner, especially for specialty retailers such as Home Depot. Outside of the home world, specialty has seen success as well, with Ulta as a case in point. So, it’s clearly not that specialty retail has become irrelevant thanks to DTC and big box encroachments. Ultimately, specialty retail’s survival comes down to ensuring that retailers hoping to remain relevant as specialty players must evolve with the retail times.
THE FUTURE OF SPECIALTY
The first element in remaining relevant is matching the rest of retail’s price bifurcation strategy. Mid-price retail simply makes no sense given the economic backdrop. Both big ticket (including luxury) and discount have continued to thrive thanks to an erosion of middle income, and consequently, the erosion of mid-price retail. Smart specialty brands will pick a side and stick to it.
Beyond establishing a price identity, specialty brands in today’s competitive environment must also comprehensively establish their overall identity. Designating a price range is crucial, and so is determining a brand image that can be consistently achieved to keep that niche carved out. When a retailer struggles in specialty, it’s often because their brand has failed to fully differentiate. Consumers have their first-stops when shopping most categories, so securing a unique brand identity is foundational to loyalty. Especially considering the role specialty is meant to play, if there isn’t a specific reason a consumer would shop a particular brand, that ground will be easily lost to either DTC or big box.
Specialty is a tough type of retail to compete in for the aforementioned reasons, however, there’s also opportunity for specialty to soar in ways that other types of retail really can’t. Given how deep specialty retail inherently runs, the space is primed to offer services to compliment the products. There is a level of expertise and knowledge that greatly benefits specialty since consumers are making decisions between highly similar goods. Specialty retailers who double-down on the educational and service sides of providing will earn more loyalty. This investment in education could look like gated tutorials accessible upon purchase, pre-purchase consultations with obligation to buy after, free installation/styling/repairs/makeovers or exclusive, direct lines to associates who can answer nuanced questions. This can also merely mean that the retailer takes extreme care in building out detailed product comparison tools, FAQ’s and content that are available without purchase commitment. The bottom line is that specialty retail can and should focus on decision support in ways that more diversified retail wouldn’t.
Just as specialty retail is primed for educating and providing services, it is also primed for innovation. Brands playing in specialty need to own their specialty to cement their positioning as leaders with differentiated value and perspective. In order to lead, these retailers must innovate and improve the category they occupy. Specialty retailers can innovate via their own brands, collaborations with renowned brands, partnerships or ownership of a manufacturing component, or a demonstration of innovation in an alternative piece of the retail lifecycle (e.g. rolling out a new way to recycle products in the category). Not only is the innovator identity invaluable as a specialty retailer, but it is a status that must be maintained. It’s not enough to cause one breakthrough in the history of a category. Successful specialty retailers have to be influential in their category in perpetuity.
Every type of retail is facing dramatic change as the world opens up and technology continues to advance. Specialty retail, however, perhaps faces some of the most challenging changes, and Bed Bath & Beyond is one of the most visible victims of that. The stakes have been raised, and when a specialty retailer surpasses those stakes, the reward could be unconditional loyalty. If a specialty retailer fails to pick a price point lane, offer the breadth and depth expected, solidify its identity, offer creative services, and continually innovate, said retailer’s fate is just about sealed.
Melissa Minkow is director of Retail Strategy at CI&T.