OpenAI’s ChatGPT takes on e-commerce with Etsy, Shopify partnership

A new feature allows users to purchase items directly through chat interfaces, eliminating the need to navigate to external websites. This "instant checkout" functionality, starting with Etsy and soon expanding to Shopify, aims to transform chat AI into an autonomous assistant capable of completing entire transactions. This development has significantly boosted Etsy's stock, marking a potential power shift in how products are discovered and purchased online.

OpenAI is also open-sourcing its agent technology, enabling other businesses and developers to build similar in-chat purchasing experiences. This move positions OpenAI in direct competition with major tech players vying for control over the future of e-commerce. The model involves OpenAI receiving a percentage of transactions, described as a referral fee, which is a key monetization strategy.

Despite concerns about potential conflicts of interest and disclosure, it has been stated that this system will not allow for paid placement or affect search result rankings, aiming to remain native to the existing search algorithms.

• AI is enabling "instant checkout" directly within chat interfaces, allowing users to buy without leaving the conversation.
• This new functionality is being rolled out with Etsy and will soon include Shopify.
• Etsy's shares surged by almost 16% following the announcement of this partnership.
• OpenAI is open-sourcing its agent technology, encouraging broader adoption of in-chat checkout experiences.
• OpenAI will receive a percentage of transactions as a referral fee, a key monetization strategy, with assurances that search rankings will not be influenced by payment.

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Agentic Commerce and Instant Checkout [00:16]

• A major test of "Agentic Commerce at scale" is being introduced.
• The feature, called "instant checkout," enables buyers to purchase directly through chat interfaces like ChatGPT.
• This functionality will initially launch with Etsy and will soon be available for Shopify.
• The process eliminates the need for external links or new browser tabs, allowing users to "tap buy" within a conversation.
• The goal is for AI to act as an autonomous assistant that not only recommends but also completes the entire transaction.

This new feature represents a significant step towards enabling seamless, in-chat purchasing, transforming AI assistants into transactional agents. The vision is to streamline the entire buying process from discovery to completion within a conversational context.

The idea is to let ChateBT act like an autonomous assistant that doesn't just recommend products, it completes the whole transaction for you.

Market Impact and Open Sourcing [00:42]

• The announcement of this vision has led to a significant surge in Etsy's share price, with the company on track for its best trading day in nearly three years.
• OpenAI intends for this to be the beginning of a broader rollout of this technology.
• They are open-sourcing the agent technology, allowing other merchants and developers to build their own in-chat checkout experiences.
• This launch places OpenAI in direct competition with other major technology companies like Google, Amazon, and Perplexity, all competing to shape the future of e-commerce.
• A significant power shift could occur if a substantial amount of shopping begins to take place within chat bots, impacting who controls product discovery.

The market is reacting positively to this innovation, with Etsy experiencing substantial stock gains, and OpenAI is fostering wider adoption by making its technology accessible to others, setting the stage for intense competition in the e-commerce landscape.

And OpenAI says that this is just the beginning. They are open sourcing the agent tech so that other merchants and developers can build their own in chat checkout experiences as well.

Monetization and Disclosure Concerns [01:12]

• There is a question regarding how OpenAI will be compensated for these transactions.
• OpenAI will receive a percentage of the transactions completed through ChatGPT, functioning as a referral fee.
• This is identified as a key monetization strategy for OpenAI, with discussions of potentially 2% affiliate fees.
• A critical concern is whether users will be clearly informed about this payment structure, with a comparison made to sponsored ads.
• The absence of disclosure is raised as a potential ethical or legal issue, possibly bordering on antitrust violations.
• However, assurances have been given that users will not be able to pay for better ranking or preferential placement.
• The system is intended to remain native to the existing search algorithm, meaning it will not impact what appears in search results.

While the referral fee model is a core part of OpenAI's monetization plan, there's an emphasis on transparency and maintaining the integrity of search results, ensuring that payment does not influence product visibility.

But the key caveat here, and to your larger point, he said that this wouldn't be something where you can pay for better ranking. it would still remain completely native uh to like to the search algorithm that they have in place that wouldn't impact uh what shows up in search results.