The generative AI hype cycle has officially hit the e-commerce industry, with both Amazon and Walmart recently announcing new shopping experiences powered by the technology.
Now a startup called XGen AI is unveiling its own suite of AI tools that it says will empower other e-commerce brands to compete for shopping dollars without employing AI experts in-house.
One of XGen’s products lets e-commerce teams build a generative AI search experience that returns relevant answers when customers type questions or use cases into a shopping site’s search bar, rather than just search keywords. Another dynamically changes product recommendations on a brand’s shopping site based on goals such as increasing sales of high-margin goods or slow-moving inventory. XGen offers online retailers and e-commerce brands a library of AI models to choose from, but also lets e-commerce teams train their AI models with their own product and customer data to create proprietary search engines, and have them up and running within around one week.
The startup will also soon release tools for e-commerce sites to unveil their own gen AI-powered conversational shopping assistant or chatbot, XGen AI founder Frank Faricy told Fortune in an exclusive interview. Along the way, Faricy is betting that offering AI tools attuned to the traits of a given vertical, in this case the e-commerce sector, will be more powerful than a more horizontal approach.
“Vertical AI is going to be as buzzy as generative AI in the next 12 months,” he said.
XGen AI’s public unveiling comes as retail titans like Walmart and Amazon have recently made splashy announcements promising to improve online shopping through gen AI technology. Walmart CEO Doug McMillon announced at CES in January that Walmart shoppers can now search on its app by typing more conversational prompts or use cases into the shopping app’s search bar to return a collection of relevant search results rather than searching for one at a time.
And Amazon recently announced a beta version of a new “shopping assistant” dubbed Rufus trained on Amazon’s massive collection of data, from its product catalog to its product reviews. The company is touting that it will “meaningfully improve how easy it is for customers to find and discover the best products to meet their needs.”
One key unanswered question is whether online shoppers actually want this; will they gravitate toward a new way to search for products online, by using conversational language, or is keyword-based shopping too ingrained by the biggest online players such as Amazon? Even if search habits don’t change overnight, Faricy said many search functions on e-commerce sites still return zero results for relatively straightforward queries. For example, a search for “black and orange sneakers” might return results for black sneakers and orange sneakers, but not footwear with both colors on the same sneaker. Faricy said the company’s AI tools solve problems like this too.
The startup, which employs more than 40 people, has landed some brand-name early customers such as Sonos and fashion brands Reformation and Golden Goose. It has raised around $16 million in funding to date, and is currently in conversations for more.
“If you look at Walmart’s 15,000-man dev team and go to a company and say, ‘You don’t have any devs, and you’re going to get the same capabilities,’ it’s pretty profound,” he said.
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