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Amazon enters the chatbot battle with a shopping tool

Written by The Anand Market

Updated on:

Amazon entered the consumer chatbot fray on Thursday, announcing a new artificial intelligence personal shopping assistant as the company races to catch up with other tech giants.

Customers can ask product questions to the Rufus tool directly in the search bar of the company’s mobile app, Amazon said in a blog post. The AI ​​will then provide responses in a conversational tone. Examples provided in the ad included a comparison of different types of coffee makers, gift recommendations, and a follow-up question about the durability of running shoes.

Rufus will be available starting Thursday to a “small subset of customers,” according to the post, and it will roll out to additional customers in the coming weeks. Amazon declined to provide further details on how many people will participate in the initial version of the tool.

Amazon allows its employees to bring their dogs to work, and a dog named Rufus was one of the first to tour its offices in the company’s early days.

Amazon has been working to shake off the perception of being behind the wave of AI tools launched more than a year ago, when startup OpenAI launched its chatbot ChatGPT. If customers find Rufus useful and popular, Amazon could disrupt the product search industry and further control the online shopping experience.

Rufus “allows customers to discover items in a very different way than they’ve been able to do on e-commerce sites,” Andy Jassy, ​​the company’s chief executive, said on a call. with investors. “It’s seamlessly integrated into the Amazon experience that customers are accustomed to and love being able to take action,” he said.

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Amazon’s new chatbot, Rufus, in images provided by the company.Credit…via Amazon
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Rufus will be available starting Thursday for a “small subset of customers.”Credit…via Amazon

Microsoft and Google launched chatbots and AI tools for their search engines last spring, often highlighting shopping-related uses, and startups like Perplexity have attempted to rethink the search experience by taking AI account.

In the fall, Amazon launched an enterprise chatbot, called Q, for customers of its cloud computing division, and the company said it was working to make its Alexa voice assistant more conversational.

Even without generative AI, the Amazon search bar and the top results it produces are among the most important locations in online retail. They have been the subject of antitrust investigations, and product ads in search results are the basis of the company’s booming advertising business.

Consumers are more than twice as likely search first on Amazon compared to other search engines when looking for a specific product to purchase. But the e-commerce giant has long wanted to attract customers while they are still thinking and researching their options, when they typically turn to other sources, from TikTok to Google. Rufus is an attempt to bring customers to Amazon before they know precisely what they want.

“You’ll still be able to search in the search bar if you’re very clear about what you want,” Brian Olsavsky, the company’s chief financial officer, said on a call with reporters Thursday. “Rufus is here more to help you explore, and maybe if you have any more questions.”

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“It becomes more of a conversation with Amazon,” he said.

The Rufus tool is “trained on Amazon’s extensive product catalog, customer reviews, community questions and answers, and information from across the web,” the company said.

Mr. Jassy said on the earnings call that customers can ask Rufus for recommendations on the best golf ball to use for better spin control, or the best rain jackets for cold weather “and get thoughtful explanations of what matters and product recommendations.”

If Rufus takes off, Amazon could pull ad sales away from Google and social media sites, where companies try to influence what customers decide to buy.

Amazon itself is a prolific advertiser on Google and social media apps, trying to attract customers earlier in their purchasing process. Google, for its part, has been trying for years to also encroach on Amazon’s territory, launching several commercial initiatives to attract independent sellers, without much success.

Separately, Amazon reported strong fourth-quarter profits on Thursday, fueled in part by the holiday season.

Sales for the quarter reached $170 billion, up 17% from a year earlier. The company made $10.6 billion in profits. The results exceeded analysts’ expectations and Amazon’s own forecasts.

The services the company offers to third-party sellers on its marketplace, including fulfillment and shipping, as well as the advertising it offers to brands and sellers, had particularly strong quarters.

Investors are closely watching Amazon’s most profitable segments: cloud computing and advertising. Advertising sales rose 27 percent to $14.7 billion, and Amazon Web Services sales rose 13 percent to $24.2 billion, just meeting investors’ expectations.

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Over the past year, the company has cut tens of thousands of jobs, terminated speculative projects, halted some expansion projects and reorganized its logistics operations to make them faster and more efficient. The company reported its highest quarterly operating profit on record and expects profitability to continue.