The article was originally published by Digiday’s Modern Retail.
A report that OpenAI was developing a ChatGPT checkout system has sparked mixed reactions from retail startup founders. Some are worried that the system could become “pay-to-play” and disenfranchise small businesses.
July 16, The Financial Times reportedOpenAI had shown brands an early prototype of a checkout feature that allows users to complete transactions within ChatGPT. According to the publication, merchants who choose to receive and complete orders in this manner will pay a commission OpenAI. OpenAI declined to comment on this story when contacted by Modern Retail.
OpenAI’s entry into the checkout game is indicative of a new direction. Openai Saidthat it had “no plans to pursue advertising.” OpenAI considered restructuring as a for-profit business, but decided against it. In May, the plans were scrapped. ChatGPT, however, is on the right track to becoming an Affiliate by developing checkout for ChatGPT and asking brands to pay OpenAI a cut. This is a game changer for the founders of Modern Retail. ChatGPT will transform from a tool to research into a revenue generator. It’s also possible that other AI engines, such as Google Gemini and Perplexity, will launch their own checkout features, which could lead to a major shift in online shopping.
It fundamentally changes what an ecommerce brand is, said Jimmy Zollo. Joe & Bella, a brand of adaptive clothing. “We can’t think of ChatGPT and other AI models as just search engines. Now, we need to think of them as storefronts.”
At the moment, ChatGPT’s recommendations are tailored based on a user’s query, preferences, and question history. A prompt such as “What’s best lipstick for a date night?” will bring up a list that users can look up on the website of a brand or retailer. Some startups worry that the results could be skewed by OpenAI if it prioritizes companies who are willing to pay a cut.
Liz Williams, founder and CEO of The Checkroom, said that if ChatGPT became a pay-to play marketing platform, she would be “very concerned”. “I don’t think I could compete, especially with Amazon, H&M and other bigger brands.” I can see how this would help companies that are already ranking highly in Google. But I don’t think I could afford it.
AI is already changing the way consumers interact with brands on the internet. Some brands have already seen a dramatic increase in their online sales. Lift in trafficeven without checkout. Viv For Your V sells toxic-free menstrual care products. It reported a 400% increase in traffic to its website following the publication of a Studyon heavy metals such as lead and arsenic found in some tampons. Kelly Donohue is the marketing and design director of Viv For Your V. She said that people were looking for safer options and that ChatGPT and Google Gemini suggested our products because of the wealth of information on our website. Diasti said that the change would be a concern for people who have trusted the platform.
Questions and contingencies
OpenAI is yet to publicly announce when this new version will debut or what percentage OpenAI will take from each sale. But brands are already scrambling for ways to avoid being left behind. Joe & Bella is, for example, making sure that its web copy, which is “incredibly comprehensive and clean,” is “incredibly clean,” Zollo said. He said that people checking out via ChatGPT “won’t be able to benefit from the level of images or video we’ve posted [on our site]”.
Zollo continued, “Purchasing decisions are made based on how ChatGPT understands and describes your product.” “We need to do everything we can to ensure ChatGPT makes the right recommendations.” It is also updating its sizing info so that it goes beyond a chart. Zollo said that he uses “a conversational style” that says “If this is your waist or if these measurements are yours, this is what you should do and why.”
He added that it’s “almost like deconstructing the size quiz to allow ChatGPT to reconstruct it.” He added that accurate size recommendations could reduce returns.
Springrose is also fine-tuning the content of its website to optimize it for search engine optimization (SEO) and generative engine SEO, according to Nicole Cuervo, founder of Modern Retail. It has been doing this since months ago, even before the news of ChatGPT checkout was announced. Some sales have come from platforms such as ChatGPT. Hannah Cranston of Hannah Cranston PR, who works with brands like Bird&Be and Barriere, said that ChatGPT could lead to a surge in sales. She said that with traditional affiliates such as creator networks, “there is a lot back-end work to onboard new partners.”
Cranston continued, “If AI streamlines this, you could see a world where you’re getting lots of sales from the platform being integrated.”
Despite this, some founders are concerned about the future of the platform. She asked, “Are we receiving any of the consumer information and data [from sales on ChatGPT]?” Cuervo added, “If ChatGPT gives people outdated information, and a product turns out to be different than what someone expected, then that reflects badly on us, and not ChatGPT.” This is because people often don’t distinguish between brands and platforms.
