Although King points out that luxury brands have been slower to optimise for AI search than more traditional direct-to-consumer (DTC) brands, he says, “now is the right time to move” as ChatGPT shopping traffic is expected to increase exponentially over the next 12 to 18 months.
In the last couple of months, however, brands including Ralph Lauren and Moncler have begun unveiling their own investments in rich, AI-powered storytelling features like styling tools and video generation, to up the appeal of their digital storefronts.
The new e-commerce tax
While Instant Checkout unlocks a huge revenue stream for OpenAI — which is currently restructuring to a “for profit” company — it raises big questions for brands’ current business models and advertising budgets.
OpenAI’s chief financial officer Sarah Friar previously told the Financial Times that the company was exploring advertising options, and the announcement today makes it difficult for brands to gauge to what extent the decision to partner with ChatGPT’s Instant Checkout will affect sales.
While OpenAI mentioned in the blog post that Instant Checkout items “are not preferred in product results”, the startup also said that when it’s ranking multiple merchants selling the same product, ChatGPT considers product availability, price, quality and whether a merchant is the primary seller, as well as “whether Instant Checkout is enabled, to optimise the user experience”.
Experts say that for the first nine months or so, brands already operating with Shopify will have a significant advantage.
“Given that it’s not a closed system, I’d imagine that OpenAI will quickly sign other partnerships after the Shopify integration and we’ll have a bigger pool of brands,” says Sinclair.
Meanwhile, for brands that can partner with Instant Checkout, OpenAI’s commission is a new cost for marketing teams to budget for. Although the size of the fee is unclear, experts say that neglecting website AIO will be a much bigger drag on brands’ bottom lines than the commission OpenAI will charge.
“Short term, it could produce a small drop in bottom line if left unmanaged; but long term, if brands manage AI like a new marketplace or channel, and proactively engage in AIO, they should see a neutral to positive bottom-line impact over six to 12 months,” says King.
Brands are well versed in the importance of online channel diversification, as marketing teams contend with unpredictable social media algorithms, platform outages and fluctuating Shopify rankings. Now, experts say AI search is the new non-negotiable channel.
“It’s just going to be the new normal,” says Sinclair. “The affiliate fee is just the cost of doing business on the internet, and they’re going to take that tax on everyone. But ultimately, this is just a new — very important — channel.”
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