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AI Technology can help both buyers
and sellers
Shopping on online marketplaces such as eBay and Etsy, or
even second-hand clothing seller ThredUp, can feel like treasure hunting at a
giant flea market, except even more daunting as there are millions of unique
listings to sort through. So it is no wonder that online marketplaces are eager
to add artificial-intelligence functionality to their search bars. The
technology has the potential to behave like a ChatGPT version of a personal shopper,
acting on sentence commands to come up with relevant results and digging up
products the consumer might not even have known existed on the platform.
Getting there could take a bit of time, though. This year, Etsy launched Gift
Mode, an AI-powered feature that lets shoppers click a few details about the
person they are shopping for. The marketplace could certainly do with some help
sifting: Etsy has more than 100 million listings and the average search result
yields upward of 10,000 items. In April, eBay—which had about 2 billion live
listings as of yearend 2023—introduced a generative AI-powered feature called
“shop the look” that gives users a selection of curated outfits based on their
shopping history. ThredUp also launched a new AI search product earlier this
year. “In second-hand, where you have 4 million items and you’re adding 100,000
a day, one of the biggest things we hear from customers is ‘oh, I can’t find
something I want,’” ThredUp Chief Executive James Reinhart said at an industry
conference earlier this year. Reinhart said ThredUp used to tag four to six
attributes—such as colour and pattern—that a customer might search by, using human
intuition. With AI, it can tag hundreds of attributes and then cluster those
attributes “in ways that it can intuit what the user is actually looking for.”
Enhanced search is already leading to more searches on ThredUp, according to
the company. A fully conversational online shopping experience might take some
time to materialize, and it isn’t yet clear whether the switch will be worth
it. For one, online shoppers are impatient, and large language models still
take a relatively long time to spit out responses. Google previously found
that, as page-load time goes from one second to five seconds, the probability
of a user bouncing away increases 90%. Etsy CEO Josh Silverman previously said
that while Etsy measures latency in search by the millisecond, latency in GenAI is measured in
seconds, adding that such a length of time is “more than most consumers will bear.” Cost is
another issue. Morgan
Stanley analysts estimated that large-language query costs are about five times
more expensive than traditional models. For Etsy to maintain the
same earnings before interest, taxes, depreciation and amortization at the higher
search cost, Morgan Stanley estimated the buyers’ basket size would have to
increase by 13% on average every year through 2025. That would be a tall order
for a company that has seen that metric decline over the past year. In the near
term, a more promising use case for AI might be reducing friction for sellers,
which itself could encourage more listings and sales. For example, eBay last
year launched a feature called magical listing that allows sellers to instantly
populate detailed product information through generative AI based on the
product’s title, category and other items. Jamie Iannone, CEO of eBay, said at
an industry conference in March that more than 90% of the sellers accept the
automatically generated content, some with edits. The company is working on a
version that can spit out a product description based on the image of the
product. Like AI search results, further breakthroughs in AI can’t come fast
enough for online market place.
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