ChatGPT appears to have taken the world by storm. Within the first week of the initial release of the artificial intelligence (“AI”)-powered chatbot on November 30, 2022, it had amassed over 1 million users; fast forward two months and the OpenAI-developed tech boasted 100 million active users, making it the fastest-growing consumer application ever launched. The draw for users? They are attracted to the tool’s advanced capabilities, including its ability to provide quick, conversational responses to user prompts, according to Uri Gal, a Professor in Business Information Systems at the University of Sydney. At the same time, ChatGPT and rival chatbots have garnered widespread attention due to their “potential to cause disruption in various sectors,” including fashion and retail more broadly.
As for how companies in the fashion/retail space are making use of AI chatbots, SECOO Group has provided an indication of what the status quo could be. On the heels of announcing last month that it would “conduct in-depth research and expansion on AI Generated Content and ChatGPT-related technologies” to improve its customer conversion rate (an announcement that prompted its Nasdaq-traded stock to jump by 124 percent on Feb. 6), SECOO Group revealed that it is among the first batch of partners that will make use of the Baudi-developed ERNIE Bot. SECOO confirmed that as part of the initial group of parties to adopt Baidu’s chatbot – which is being characterized as “the Chinese version of ChatGPT” – it will apply the Chinese search giant’s “leading intelligent dialogue technology to the field of luxury smart marketing,” marking what it calls “the first landing of the dialogic language model technology in the domestic luxury smart marketing scene.”
Specifically, the Chinese luxury e-commerce platform says that it is interested in utilizing chat-centric AI to “realize interactive dialogue similar to real people through ChatGPT technology,” as well as to “further improve the richness of luxury related text and video content, commodity selling point description and other related content, and significantly improve the [customer] conversion rate.”
More recently, SECOO announced that it will “combine the advantages of OpenAI’s multimodal GPT-4 technology and the Chinese version of ChatGPT Baidu ERNIE Bot, and use its own powerful global supply chain advantages and the shopping needs of more than 50 million high-end registered users to achieve interactive dialogue similar to human beings.” The aim? To get the AI to “complete product recommendations, selling point explanations, discount promotions, and generate visual images and videos through AI robots,” and thus, reduce costs. Moreover, through the two platforms of OpenAI and ERNIE Bot, SECOO says it can better understand its “users’ needs, improve its intelligent marketing capabilities, explore more intelligent luxury goods marketing models, and make luxury goods intelligent marketing scenes more accurate.”
In a nod to the fact that the practical uses for AI and machine learning go far beyond bots like ChatGPT and the not-yet-unveiled ERNIE, a February 2023 Rackspace Technology survey of 1,420 global IT decision-makers across industries revealed that 71 percent of retail respondents said artificial intelligence/machine learning (“AI/ML”) is at the forefront of their IT/business strategies. Specifically, 62 percent of survey respondents said that they are using AI/ML to predict business performance.
Using AI models to anticipate popular products by type/style and/or by geography, for example, and then making manufacturing/distribution and pricing decisions accordingly (to avoid over- or under-stocking and to help with full-price sell-through) is one use-case that retail industry entities have already been employing.
Case in Point: Coach, Kate Spade, and Stuart Weitzman owner Tapestry Inc.’s CEO Joanne Crevoiserat said in a Q2 earnings call in February that the company is “leverag[ing] new data analytics capabilities to optimize our product allocation processes, such as utilizing artificial intelligence to forecast customer demand, and better position inventory and stores.” The result: “An increase of inventory availability and help to ensure our product was in the right place at the right time, as we match supply with demand to help deliver superior customer experiences.”
Not the only company adopting – and/or touting the benefits of – AI, Fortune reported in March 1 that references to AI and related terms during calls with investors are already up 77 percent from a year earlier.
Meanwhile, 61 percent of Rackspace Tech’s respondents said they are making use of AI/ML for data analysis, followed by 56 percent who are using it as a driver of innovation, and 52 percent who are using it both to “improve speed and efficiency and to reduce risk in the future.”
On a separate but related note, 73 percent of retail respondents who have utilized AI/ML in furtherance of their operations said that it had led to “faster time to profitability, increased productivity, increased revenue streams, [and] operation cost reduction” and 72 percent cited “improved customer satisfaction and risk management” as a byproducts of their use of AI. Still yet, in terms of key benefits stemming from the use of AI/ML, 69 percent pointed to “increased innovation and personalized advertising/marketing,” 66 percent said that “increased understanding of [their] business/customers,” 65 percent said “reduced cost of new product development,” and 64 percent said “the ability to hire/recruit new talent and increased sales.”
Finally, when it comes to adoption of AI, no shortage of companies have had efforts in the works for years; LVMH, for one, announced back in 2021 that it had entered into a 5-year, AI-focused partnership with Google Cloud Platform to enable its brands to leverage new AI tools across “product development, global supply chain and logistic operations, and partner, employee, and customer interfaces; enabling the development of new business use cases at scale and ensuring the highest standards of customer service and assistance.”
Yet, the reality for many looks like more recent adoption of AI, per Rackspace, which found that “more respondents began their AI/ML journey within the past year.” This reflects “the fact that these technologies are seen as key to driving efficiencies in uncertain economic times,” per Rackspace, which also notes that its survey result “make clear” that many organizations are “still struggling to understand or realize the technologies’ full benefits of AI/ML.”
UPDATED (Mar. 17, 2023): This article was updated to include an announcement from SECOO about its plans for using GPT-4 and ERNIE Bot.