Online furniture retailer Temple & Webster (ASX: TPW) has revealed that integration of artificial intelligence (AI) into its business has been driving sales conversion and customer benefits as the company moves to have the technology implemented across all customer interactions and internal processes.
As part of a trading update, Sydney’s Temple & Webster says that AI-based language model ChatGPT is now powering all pre-sale product inquiry live chats - 25 per cent of all customer enquiries - and that AI is enhancing product descriptions across all 200,000-plus items on the site.
The retailer says it sees ‘significant potential’ for AI to enhance the customer experience, and as such it has increased its investment in Israeli AI startup Renovai by $2 million, following on from its first investment in the tech firm back in 2020.
Temple & Webster says Renovai is ‘disrupting the way in which customers shop’, and it currently powers product recommendation mood boards on site.
In a further sign of how keen the retailer is on the rapidly accelerating tech, Temple & Webster says it has also assembled an internal team dedicated to AI consisting of software engineers, data scientists and product managers.
Overall, TPW says integration of AI has led to ‘an increase in live chat customer satisfaction, an increase in customers adding products to their carts and an increase in conversion rates from this channel’.
“We have been excited about the potential game-changing technology of AI for many years now, with our first investment in Renovai in 2020,” says Temple & Webster CEO Mark Coulter.
“The pace of this next technology revolution is only getting faster. As the leading pure play online retailer, we have the resources and capabilities to ensure we are at the forefront of this revolution.
“For an online-only business without physical stores or in-person sales staff, the potential for AI to significantly lower our CODB (cost of doing business) per cent, drive conversion and customer benefits is going to be material. We believe this will further drive our competitive advantages and allow us to win market share.”
The company’s commitment to AI comes as Sam Altman, the CEO of OpenAI which is behind language model ChatGPT, testified in front of the US Congress overnight and called for stricter regulatory intervention to mitigate the risks of the emerging tech.
As reported by The Guardian, Altman has suggested the US Government could consider licensing and testing requirements for deployment and release of AI models, and proposed establishing a set of safety standards.
It also comes after global tech leaders including the likes of Elon Musk, Apple co-founder Steve Wozniak, Getty Images CEO Craig Peters and more signed an open letter calling for a pause on “out-of-control” AI development.
“We call on all AI labs to immediately pause for at least 6 months the training of AI systems more powerful than GPT-4,” the open letter published by the Future of Life Institute, a non-profit backed by Musk, stated.
“Advanced AI could represent a profound change in the history of life on Earth, and should be planned for and managed with commensurate care and resources.
“Unfortunately, this level of planning and management is not happening, even though recent months have seen AI labs locked in an out-of-control race to develop and deploy ever more powerful digital minds that no one – not even their creators – can understand, predict, or reliably control.”
Temple & Webster returns to year-on-year growth
In addition to the company’s update on its AI integration, Temple & Webster has today reported that the business has returned to year-on-year growth as it completes cycling comparisons against COVID-impacted periods.
Trading in the last four weeks was up 10 per cent vs the prior corresponding period, while over the entire half sales were down by 5 per cent compared to a decline of 7 per cent for the first five weeks of the half.
The company offered full-year EBITDA growth guidance of 3 to 5 per cent, and noted cash levels remained at approximately $100 million with no debt.
It follows a slump in first-half profits, with Temple & Webster posting a 46.7 per cent dip to $3.87 million in February.
“In the face of turbulent macroeconomic conditions, it’s incredibly satisfying to see Temple & Webster back in growth mode as we cycle out of periods impacted by COVID,” Coulter said.
“We recognised early that in this inflationary environment, customers would be looking for choice and value and we have successfully adjusted our range, promotional activity, pricing and on-site merchandising to reflect these changing customer needs.
“The Australian furniture & homewares category remains highly under-penetrated in terms of its shift to online compared to other leading markets such as the US and UK. As the pure-play online market leader, we believe this period will allow us to aggressively grow market share as we leverage our data capabilities, asset light model and strong balance sheet.”
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