In 2024, retailers like Walmart & ThredUp used generative AI to make shopping more personal

The natural-language search tool is one of three customer-facing AI shopping features ThredUp launched in 2024. The others were image search and a chatbot that creates tailored outfits from a given prompt. The company also found people using any of these three features are 55% more likely to return within the next seven days, and they’re 65% more likely to get to an item that they like — as in, they add it to their cart or press the favorite button. 

Many of the largest retailers made major investments in generative AI this year and have reported financial payoffs in doing so. They have used it for personalized search tools, virtual assistants and to generate marketing content, among other uses. Target, Walmart and Best Buy this year announced plans to launch AI-powered tools to enhance the brick-and-mortar experience, especially for employees. Amazon just unveiled a new suite of AI models that could help accelerate tools like its e-commerce chatbot Rufus.

“The transformative nature of GenAI is helping us accelerate the rate of innovation across our operations, and we’re excited about the role these new tools and applications will play in driving growth,” Target’s chief innovation officer Brett Craig said in a statement in June.

A Salesforce and Retail AI Council survey of retailers in multiple countries conducted at the end of 2023 found that 20% of retailers had rolled out generative AI technology, with most others at least exploring it, if not beginning implementation. Just over 80% of retailers had an AI budget, the survey found, with the top functions for generative AI being customer service, marketing and store operations.

“These new gen AI-powered capabilities further enhance our commitment to deliver better, more personalized experiences to our customers by unlocking the power of people,” Brian Tilzer, Best Buy’s chief digital analytics and technology officer, said in a statement when the retailer announced partnerships with Accenture and Google to create and scale new AI tools, per Retail Dive.

In August, John Furner, president and CEO of Walmart U.S., said generative AI has helped the company populate the attributes and characteristics of hundreds of millions of items on its website and that it would have taken 100 times longer to do this manually. “We’re able to match the catalog to their intent in a much more effective way because the detail of each item and the product display pages has gotten so much better,” Furner said in an earnings call.

“What brands are looking for is a way to do the most difficult or menial parts of the job better,” said Amit Jhawar, CEO of SMS marketing platform Attentive and former general manager of Venmo. Sending tailored text messages to individual customers is one instance where doing so would be difficult, if not impossible, and require thousands of workers. The Attentive platform now has AI features that can text specific customers when particular products they have been looking at go on sale, for example.

According to Jhawar, brands using Attentive’s AI features have seen their revenue growth rate double. “A lot of people are trying to save time and cut costs with AI. That’s not what we’re doing,” he said. “We’re trying to make these brands more revenue; we’re trying to build bespoke shopping experiences for each consumer.” Jhawar said more than half of the brands Attentive works with now use its AI products, a double-digit percentage increase from 2023.

Marius Laza, chief customer officer of chatbot provider Tidio, said because more people are using tools like ChatGPT in their personal lives, it has been easier this year to sell people on its potential. “People came in and they knew what it can do,” Laza said. “They trust the technology a bit more.”

Laza said the company has had to temper expectations from companies wanting to completely automate chat conversations on their websites, whereas, in 2023, they were more hesitant to do so. “Realistically, there’s always going to be some type of tier-two request that needs to be escalated,” Laza said, adding that most people think they have a good FAQ and a good knowledge base to help inform the AI, “but they almost never do.”

In DeMeyere’s opinion, generative AI could lead to a world where every customer gets a completely unique shopping experience geared to resonate with them, specifically, from email subject lines to push notifications and images on the homepage. He said ThredUp could become essentially a personal thrift store for each of its customers.

“We knew that this will transform e-commerce in some way,” he said. “If we don’t figure out what it means for us, someone else is going to, and then we’re going to be behind.”