When Steven Hoel, a Los Angeles-based entrepreneur who runs a clothing brand for tall people, noticed an order for a cotton tall T-shirt from a source listed as ChatGPT, he didn’t think much of it at first. However, in the following weeks, he discovered that this was not an isolated incident. Over the past six months, more than 50 orders have been attributed to the ChatGPT – an artificial intelligence (AI) platform – on his Shopify dashboard. The AI platform is now his sixth-largest source of referral traffic, driving customers to his website with a conversion rate five times higher than the average. This Shopify merchant received over 50 orders from ChatGPT. Is AI the future of retail?
AI-Powered Holiday Season
According to retail analysts, 2025 marks Canada’s first truly AI-powered holiday season. A KPMG survey of 1,200 Canadians conducted in November revealed that 78 per cent of shoppers plan to use artificial intelligence tools to guide their holiday shopping. Shopify, the Canadian e-commerce software provider, reported that traffic from AI tools to its merchants’ online stores has increased sevenfold since January, while purchases tied to AI-powered search have risen elevenfold.
The Promise of AI in E-Commerce
As the founder of the clothing brand Have It Tall, Hoel understands the potential implications of Shopify’s partnership with ChatGPT. This new sales channel could unlock new possibilities for his brand, which he established in the U.S. in 2018 to cater to the underserved market of taller consumers. Shopify’s collaboration with ChatGPT includes the AI company’s debut shopping feature, Instant Checkout, allowing users to make purchases directly from Shopify without leaving the ChatGPT site.
How AI is Changing the Retail Landscape
Retail experts and academics alike are noting the shift towards AI in the retail sector. According to Fatih Nayebi, an associate professor of information systems at McGill University and the founder of an AI start-up for retailers, this is just the tip of the iceberg. Despite the enthusiasm, some Canadians remain cautious about letting AI shape their shopping decisions due to concerns over privacy and the generation of AI recommendations.
AI Search and Merchant Influence
One key question posed by consumers is whether merchants can influence which products the AI recommends. OpenAI, the developer of ChatGPT, stated that it does not support sponsored ranking or paid influence. While OpenAI collects a nominal transaction fee from merchants selling on ChatGPT, Shopify does not charge its merchants. Nayebi suggests that the company may need to explore monetization strategies, such as raising subscription fees or offering paid advertising for brands, to offset costs.
The Future of AI in Retail
Many retailers are trying to understand how to optimize their presence on AI-powered platforms. Carl Boutet, chief strategist at Montreal-based retail advisory firm Studio RX, noted that much remains unknown about how AI chatbots rank products. To increase exposure within ChatGPT, OpenAI suggests that businesses ensure their websites are accessible to its web crawler, OAI-SearchBot.
Trust and Accuracy in AI Shopping
While AI can help consumers discover and compare products, there are still concerns about the accuracy and trustworthiness of AI recommendations. Bruce Winder, a retail analyst, notes that consumers are using AI more for searching and discovering products rather than making purchases. Nayebi believes that despite these concerns, Canadians will become more comfortable using AI technology. However, if the adoption rate of AI in retail does not increase, Canada could miss out on a significant economic boost.
