Etsy launches ChatGPT app, tests AI search agent to help with gifting

Etsy’s ChatGPT strategy is focused on being “bold” and “early,” as the company experiments with new ways to blend conversational AI with online shopping, according to Chief Product and Technology Officer Rafe Colburn.

The company that sells handmade and vintage items and also connects artists to shoppers, is beta testing the Etsy app inside ChatGPT.

After OpenAI’s Instant Checkout feature didn’t quite land, the company appears to be building out its shopping experience more like an app store, and has been partnering with companies like Instacart and Target to test shopping via newly constructed ChatGPT apps directly inside ChatGPT.

The way Colburn described it, the app experience is a true two-way integration. “I think we’re going to understand how people interact with our inventory conversationally in a much richer way through the ChatGPT app,” he said.

Etsy is also testing a conversational agent to assist with gift searches (like Amazon’s Rufus and Walmart’s Sparky) on the platform.

Colburn talked to Retail Brew about how Etsy wants to work with tech companies like OpenAI and the broader AI reset in retail.

How has Etsy’s relationship with OpenAI evolved since the pilot for Instant Checkout?

If we go back to last spring, we heard that OpenAI was going to build a proper shopping setup there. We sort of jumped on it and said, “Hey, we want to be your partner on this.”…The challenge on Etsy has always been that shoppers benefit from lots of context.

One of our bets is this is a great technological era for Etsy, because suddenly we have LLMs that hopefully understand you, understand these items, and they can collapse all that context into something. ChatGPT—if it has memories about you, it might say, “We know you love handcrafted items from small sellers. Here’s one on Etsy that’s $20 that checks all your boxes, or you can go buy this cheap one.” That’s a lot easier than looking on both sites and trying to figure out what the things are. Oddly enough, we’re all about human connection, but we’re trying to connect 130 million items to 86 million buyers. You need something to make that connective tissue. That really is AI, or we believe that it is. We want to give it a chance.

Did the Instant Checkout rollback cause any anxiety?

I would actually say the opposite, because I know OpenAI is also trying to figure it out as they go. We’re in these channels with them. They’re all doing it in their own way, but they’re all trying to figure out what is the business model for really leveraging LLMs in a way that’s good for people and good for their business.

It didn’t surprise me that they didn’t stick with Instant Checkout, because we found that most people also wanted to click through and dig in in more detail on the site. They’re not going to buy things exclusively in OpenAI. And so, their pivot is: Pull the experience more into theirs with native apps, like with ChatGPT apps, rather than trying to encapsulate it all in their existing chat.

Do you prioritize building your own AI agents or AI surfaces, as opposed to partnering with third parties?

I think yes. We built one—a gifting assistant—but I would say it’s also an experiment. Do I think that people are going to be using a fully conversational interface? Probably some. We’ll see how many. And I think we’re also exploring what are the intermediate experiences.

The No. 1 search query on Etsy is the word “gift.” We have millions of things that could be a gift, so that doesn’t work so well. How do you go from someone typing “gift” to finding the perfect gift? It’s probably not just dump them into the gifting assistant. It may be some search pathways. It may be a little bit of conversation and a little bit of giving them things to pick.

The other fun part of it is the answer for the next two years is not going to be the answer for five years from now. I feel like we need to look at what our customers are doing. We need to look at what’s happening in the industry, and then try a broad spectrum of things and learn what's going to work rather than relying on our own ability to predict.