One day in May, Steven Hoel, a Los Angeles entrepreneur who runs a clothing brand for tall people, was browsing through incoming orders when something strange caught his attention.
The order source for the cotton tall T-shirt was listed as ChatGPT on his account. Shopify Dashboard is a Canadian e-commerce platform that he uses to create and manage his online store.
Hoel brushed it off at the time. It wasn't until a few weeks ago when he checked again that he realized the ChatGPT link was not an anomaly. Over the past six months, Shopify has attributed more than 50 orders to its generative AI platform, which is believed to have brought customers to Hoel's site. Since then, ChatGPT has become his sixth-largest source of referral traffic, with a conversion rate five times higher than the average for all traffic sources.
“It was really surprising to me because I didn't put any effort into it. I'm in a very, very niche market,” said Hoel, 62, who founded his brand Have It Tall in the US around 2018 after noticing a gap in the fashion market for taller consumers.
Many retail analysts say 2025 will be Canada's first truly Festive season powered by artificial intelligence. A KPMG survey of 1,200 Canadians conducted in November found that 78 per cent of shoppers plan to use artificial intelligence tools to manage their holiday shopping this season.
Canadian e-commerce software provider Shopify reported in November that traffic from artificial intelligence tools to its merchants' online stores has increased sevenfold since January, and purchases related to AI-powered search have grown elevenfold.
While Hoel had no idea why ChatGPT was recommending his products, he wonders what opportunities this brand new sales channel could open up for his brand.
“This is the smallest market there will ever be. It will only grow from there. This is just the beginning,” he said.
Shopify makes a deal with ChatGPT in the fall for the debut of the AI company's shopping feature, Instant Checkout, which allows users to buy products directly from Shopify without leaving the ChatGPT site (the feature is currently available exclusively to US users, but plans to expand it to other regions over time). Walmart and Etsy also joined the rollout.
Some industry experts told the Star that they applaud Shopify's decision to keep its merchants competitive and relevant as retailers enter a new era in which consumers are quickly turning to artificial intelligence for shopping.
“This will be the future,” said Fatih Nayebi, assistant professor of information systems at McGill University and founder of an artificial intelligence startup for retail. “It's already happening.”
But experts also noted that despite the enthusiasm for AI, Canadians remain wary of letting it influence their purchasing decisions due to concerns about privacy and how AI recommendations are generated.
Are sellers having paid influence on AI search?
In September, Shopify painted a picture of the future of shopping when it announced its partnership with ChatGPT, which has about 82 percent of the AI chatbot market. In this new marketplace, purchases occur not only through search or advertising, but also through conversations with artificial intelligence, with sellers appearing “naturally” in recommendations and purchases made without leaving the chat.
“Our goal is to always keep merchants on the cutting edge,” said Vanessa Lee, VP of Product at Shopify. “As we expand, merchants will discover new ways to sell automatically, while their relationships with the brand and customers will continue to be at the forefront.”
This announcement raises a key question for consumers: Will merchants be able to influence what products AI recommends?
OpenAI, the developer of ChatGPT, said in a statement that it does not support sponsored rankings or paid influence.
AI charges a nominal transaction fee to merchants selling products through ChatGPT, while Shopify itself does not charge its merchants.
However, with OpenAI, valued at US$500 billion, still unprofitable and facing staggering costs, Nayebi said the company will need to explore ways to monetize, such as raising subscription fees or offering paid advertising for brands.
Nayebi is optimistic about the benefits of chatbots over traditional online shopping, noting their ability to provide personalized recommendations and quickly gather information from a wide range of sites.
OpenAI said its AI shopping research is based on a wide range of publicly available retailers and reviews, weighing factors such as features, price, availability and signal quality to provide clear comparisons.
“The first and key thing is that users will be able to specify their own preferences and ChatGPT will understand their history, their preferences and context and remember that,” Nayebi said. “Any recommendation will be based on your preferences.”
What does it take for a business to become noticeable in the era of artificial intelligence?
Two months ago, Rick Klouvenberg, owner of an online jewelry store on Shopify in the Netherlands, first realized that customers were learning about his business through artificial intelligence.
A customer emailed him after finding his store, asking ChatGPT to find cheap moissanite jewelry. She wanted more information about the size and quality of the ring and later placed an order for $80.00.
“It was honestly very surprising and surprising,” said Klouvenberg, who later used the same prompt to ask a question on ChatGPT and found his products recommended in the chat.
Klouwenberg said he thinks his product names are simple but well described, so they likely match what people are looking for in ChatGPT.
Carl Boutet, chief strategist at Montreal-based retail consultancy Studio RX, told the Star that much is still unknown about how AI chatbots rate products, and retailers are now trying to figure out how to optimize their presence on AI platforms.
“It’s a black box,” Bute said. “These algorithms are very complex by design, and it is difficult to understand how they make recommendations.”
Chatbots are known to seek out authentic reviews on platforms like Reddit, Boutet said, prompting some companies to strategically embed information into topical social media platforms in an attempt to influence AI.
When asked by the Star how merchants can increase their presence on ChatGPT, OpenAI said the chatbot uses a web crawler called OAI-SearchBot to access information and businesses should make sure their websites don't block it.
On December 10, Shopify launched “Agent Storefronts,” allowing its merchants to “instantly and accurately” be detected in conversations with AI, catalog products with the correct descriptions, and prepare answers to questions customers might ask the AI.
Nayebi said AI chatbots favor websites that load quickly and provide clear product information, including return policies and detailed purchasing information.
Retailers who prioritize this, he added, will likely outperform their competitors in the AI-powered era of e-commerce.
Can we trust AI to make purchases?
Although Klouvenberg's jewelry store has already been recommended by ChatGPT, the 20-year-old entrepreneur said he remains skeptical that an AI chatbot can truly drive sales for his business.
“I don't think people will actually rely on (AI recommendations) because, however, ChatGPT can also give you false information. People will be a little reticent to shop through ChatGPT,” he said.
Bruce Winder, a retail analyst, told the Star that Canadian consumers are using AI much more this year to search, discover and compare products, but not necessarily to make purchases, as concerns remain about the criteria AI uses to select products and share credit card information.
“The biggest challenge they're going to face is the issue of accuracy and trust, because citizens don't necessarily trust AI that much,” he said.
While many customers are familiar with an AI chatbot for product searches and price comparisons, Nayebi said some companies, including ChatGPT, have implemented an “agent AI” mode that autonomously selects products, adds them to cart and pays using users' credentials – in some cases only requiring final confirmation at checkout.
According to a KPMG survey, agent AI has generated interest among Canadians, but 78 per cent are concerned about the privacy of their personal data, 72 per cent believe AI-powered agent purchases are impersonal, and 86 per cent want to approve every step before the AI agent takes action.
Nayebi, who wrote the book Fundamentals of Agent-Based Artificial Intelligence for Retail, said he believes Canadians will become more comfortable using the new technology. But he worries that if retailers and consumers don't increase their adoption of agent-based AI, Canada could miss out on significant economic growth.
Bute said agent-based AI could make shopping more convenient by eliminating steps that don't add value, but it could also encourage people to buy items they didn't intend to buy simply because it's so easy.
“I think we're a long way from the point where people can completely give up on their shopping and let an agent plan a trip to Paris and buy hockey equipment for their kids,” Boutet said.
