Shopify goes all in on artificial intelligence as it launches new tools for users, automates work force

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Shopify Inc. SHOP-T is going all in on artificial intelligence, launching a suite of new AI products for the businesses that pay for its e-commerce platform, as it also automates its own labour force to reduce the work being done by humans.

At a semi-annual online product showcase Wednesday, dubbed Shopify Editions, the Ottawa-based company positioned several new tools – out of the nearly 100 updates and features being released – as important steps in a direction that chief executive officer Tobias Lütke had called “the dawn of the AI era” in a recent note to employees.

“Shopify believes that there isn’t any corner of the internet that will benefit more from AI than the pursuit of people building and growing their own businesses,” Miqdad Jaffer, Shopify’s director of product for AI, told The Globe and Mail. “There is still so much untapped potential for AI and entrepreneurs, and we’re both excited and deeply committed to making the power of AI accessible to businesses of all sizes.”

In February, Shopify first began to dabble in the world of large-language models and neural networks by introducing a new product-description tool called Shopify Magic. It used similar underlying technology that powers ChatGPT, an AI chatbot that has become incredibly popular since its launch late last year by employing computer programs to distribute probability over large sequences of words and generating results in real time based on its learnings.

Now, the e-commerce company is adding to Shopify Magic, joining a chorus of global businesses that are striving to cash in on the buzz surrounding fast-growing AI technology.

A new AI feature called Sidekick will allow Shopify merchants to perform administrative tasks and tackle creative challenges, such as responding to customer inquiries or helping out with marketing. Earlier this month, when Mr. Lütke released a teaser video for Sidekick, his short clip went viral on Twitter, gaining traction among many retailers.

Shopify is also launching AI-driven e-mail campaigns for its businesses: The new service will require “just a few words to produce engaging, tailored e-mail newsletters, announcements and more,” Mr. Jaffer said. This is expected to reduce the manpower and overhead for many small businesses around the world, according to Shopify, which provides merchants in around 170 countries with services to set up their online stores.

But as Shopify announces new AI tools for its merchants, the company is also undergoing a rapid transition as an organization itself, automating several tasks, such as translation and customer services. Many people who work at Shopify have been worried about losing their jobs because of AI-induced redundancies, especially since the company slashed more than 20 per cent of its work force in May – less than a year after Mr. Lütke first apologized for a previous round of job cuts in 2022 and after president Harley Finkelstein had said in February that no more cuts were coming.

Still, Mr. Lütke had eased some audience concerns about AI in May at the Elevate tech conference in Toronto, stating that it “replaces tasks, not jobs,” as he spoke on stage with OpenAI CEO Sam Altman, who is behind the advent of ChatGPT and other industry-leading tools such as GPT-4 and DALL-E.

Mr. Jaffer would not provide details about Shopify’s plans for further automation at the company and how AI will affect its employment structure.

“We’re positive sum thinkers,” he said. “AI technology is creating new opportunities and driving demand for highly skilled software engineers who can design, develop and maintain AI systems and applications.”

Gil Luria, managing director and senior software analyst for American investment bank D.A. Davidson, said many companies are incorporating AI into their products and that the new technology will be most helpful for small merchants, which form the bulk of Shopify’s clientele.

“A small merchant may not have customer-service capabilities, so the tools Shopify is introducing can help them handle customer engagement in a more automated and professional manner,” Mr. Luria said.

Apart from AI, Shopify also unveiled several upgrades in other areas on Wednesday, including its checkout; a new credit card for eligible merchants in the U.S.; and Marketplace Connect, which is a new centralized hub for merchants to connect their operations from different marketplaces where they sell their products, such as Amazon, Walmart, eBay and Etsy.