Shopping bots have bills to pay

Your next bout of retail therapy could involve an AI personal shopper who knows your size, remembers your taste, and never judges your late-night impulse purchases. But letting it swipe your credit card? That’s another story.

Online shopping platforms are racing to put AI to work, both for customers and the people selling to them. Shopify offered a glimpse of that today, reporting that orders referred by AI chatbots jumped 3.3 times from a year ago.

Investors weren’t as enthusiastic. Shopify shares tumbled 8.74% after quarterly revenue of $3.74 billion and $119 billion in merchandise sales missed expectations, despite growing 32% and nearly 30%, respectively.

Meet the unpaid AI intern

Shopify provides the software that merchants use to run online stores, taking a cut of certain transactions. Now it’s giving those merchants an AI assistant called Sidekick, essentially a chatbot built right into their store dashboard.

Need to set up a Black Friday discount or figure out why sales dropped last week? Ask Sidekick. Its daily merchant users grew 3.7 times year-over-year, and it created roughly two-thirds of the store automations built on Shopify last quarter.

But even unpaid interns cost money when they’re powered by AI. Sidekick comes bundled with Shopify subscriptions, and the computing bills helped squeeze that business’s gross margin to 79%, below the company’s longstanding approximately 80% target.

Rivals are experimenting with different arrangements. Wix uses AI to help businesses build websites, while Etsy tried letting customers buy products inside ChatGPT—although that experiment ended in March thanks to disappointing sales. (Its newer approach emphasizes AI-powered product discovery instead.)

Your cart, your rules

Consumers appear increasingly willing to let AI help find products, even if they’re not ready to hand over the entire checkout process.

Shopify said AI-referred traffic grew 2.6 times year-over-year, and 74% of AI-attributed purchases came from outside its 100 largest product categories. That could give obscure products and smaller merchants a better shot at being discovered. A major disclaimer: “Volume is, of course, small,” Shopify President Harley Finkelstein said on an investor call. But “it’s growing.”

Meanwhile, brick-and-mortar stores aren’t going anywhere. Sales processed through Shopify’s in-store technology grew 30%, as retailers including Canada Goose and MAC Cosmetics expanded their use of the platform.

AI shopping could be a double-edged sword for e-commerce platforms. Shopify could benefit even when shoppers never visit its merchants’ websites, earning money from the transactions happening behind AI assistants. But if those assistants control what consumers see and buy, they could also gain leverage over the merchants and platforms doing the selling—and make choices for them without much transparency into why.

For investors, the question is who captures the bigger slice of each purchase. Shopify is already paying for AI, while AI-driven sales remain small. If AI platforms end up controlling the customer relationship, Shopify risks doing more of the work without capturing much more of the profit. Sidekick works around the clock, never complains, and never asks for a raise. But it bills like a McKinsey consultant.—HC