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- While AI has long been used as an enabler in specialized software to automate and improve specific business processes, the debut of mass-market generative AI based on large language models has opened a new dimension for AI: It is the first highly visible application of advanced AI models that is accessible and easy to use, enabling workers at all levels across many industries to quickly receive coherent, well-written responses to brief questions or text prompts.
- We expect generative AI to permeate and disrupt virtually every industry, but given generative AI's distinctive ability to produce informative content directly usable by humans, we expect its impact to be perhaps greatest in e-commerce. Indeed, there are likely few applications of generative AI that don't relate in some way to e-commerce.
- We briefly review the context in which generative AI has evolved and then explore its applications across e-commerce content and communication types. We also discuss the key factors we expect will drive rapid and widespread adoption in e-commerce and the challenges companies will need to overcome along the way. Lastly, we discuss some of the future directions for generative AI in e-commerce. In nearly all these discussions, we highlight relevant innovative companies using generative AI to provide extra value to their clients in e-commerce applications and beyond.
TABLE OF CONTENTS
Includes discussion of 11 private companies
Latest addition to our work in AI
Multiple communication and content type applications
Against the hype, maintain healthy skepticism
First Analysis E-commerce Optimization Index near one-year high
E-commerce M&A: Notable transactions include Jeeng, Momentive, UserTesting
E-commerce private placements: Notable transactions include Wunderkind, SOCi
Latest addition to our work in AI
Through our venture capital investments and our transaction advisory work, we've long tapped into the potential of artificial intelligence (AI). Many of our venture capital portfolio companies, such as CoolR Group (IoT-based visual AI solutions), SmartCommerce (e-commerce software that helps consumer packaged goods companies sell online), Tracer (Human-in-the-Loop AI brand protection technology), Visage (AI-powered recruiting technology platform), and Yunu (a multi-site clinical trials imaging workflow platform), have used AI to create distinctive value for their clients and investors. To date, however, AI has been mainly an application-centric enabler. These companies' AI models have been trained on highly curated and often proprietary data sets, which enables them to produce very accurate output that can be relied on in mission-critical applications. Companies then use this output to increase the speed, accuracy, and capabilities of software that automates and improves specific business processes and workflows.
Now, the debut of mass-market generative AI has opened a new dimension for AI. It is difficult to identify another technological breakthrough that has affected the public consciousness as significantly and as quickly as generative AI. Since OpenAI launched its natural language AI chatbot application ChatGPT in November 2022, generative AI has dominated headlines and discussions. While AI has existed for a long time, as noted above, the capabilities were not mature or cost effective enough to make them widely available to many businesses or most consumers. ChatGPT (derived from Chat Generative Pre-trained Transformer) represents a clear evolution of the market, as it is the first highly visible application of advanced AI models that is both accessible and easy to use.