Shinsegae Group Chairman Chung Yong-jin, right, poses with Reflection AI Co-Founder and CEO Misha Laskin, left, and U.S. Secretary of Commerce Howard Lutnick after the two companies signed a memorandum of understanding for building an AI factory in Korea, San Francisco, March 16. Courtesy of Shinsegae Group

Retail conglomerate Shinsegae is pivoting on its plans to deploy artificial intelligence (AI) in its businesses, canceling a partnership with OpenAI just 11 days after entering into the agreement and signing a separate memorandum of understanding (MOU) with Reflection AI.

Shinsegae’s quick revocation of its partnership with OpenAI is raising doubts about the conglomerate’s AI strategy. While many retail companies are experimenting with ways to integrate AI into their businesses, such as improving logistics systems or enhancing user experience, Shinsegae appears to be contemplating a different direction in its deployment of AI.

The conglomerate said on Friday it has “decided to stop discussions with OpenAI in order to pursue a select-and-focus strategy and thereby rapidly expand collaboration with Reflection AI into the retail sector and efficiently and swiftly advance construction of an AI data center.”

Shinsegae Group’s Chief Strategy Officer Lim Young-rok, fourth from left, and OpenAI Korea Country Manager Kim Kyung-hoon, third from left, pose after signing a memorandum of understanding for jointly developing and introducing artificial intelligence commerce technology for customers of Emart and other Shinsegae subsidiaries, at The Westin Josun Seoul, April 6. Courtesy of Shinsegae Group

Shinsegae Chief Strategy Officer Lim Young-rok on April 6 signed an MOU with OpenAI Korea Country Manager Kim Kyung-hoon for jointly developing “AI commerce,” an e-commerce model with advanced customization features, aiming to lead retail markets in Korea. They agreed to launch the technology here next year.

Another reason speculated to have induced Shinsegae to let go of OpenAI is a belated realization that AI commerce does not give them an edge. Experts said the concept is not new in the industry, as other companies have already tried similar tools.

Shinsegae’s original idea with OpenAI was to make ChatGPT into a main grocery and retail shopping platform for its customers. The new e-commerce model would let AI control all steps of shopping from search to delivery, introducing a “complete AI commerce model.” Within this year, “ultra-personalization” using a new AI shopping agent was going to upgrade the online app for Emart, the largest supermarket chain here under Shinsegae.

But collaboration with OpenAI to take advantage of ChatGPT’s wide public exposure has already been explored by other companies. More importantly, this kind of initiative has not proven as effective as anticipated.

Walmart, the largest retailer in the United States, last November introduced an Instant Checkout feature inside ChatGPT in partnership with OpenAI. However, it later reported that checkouts using ChatGPT converted at less than one‑third the rate of purchases on its own website, and its executives described the experience as unsatisfying, prompting the company to end the partnership last month.

Source: Korea Times News