Lily AI wants to give retailers their flowers.
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The California-based startup, which uses artificial intelligence to help retailers improve the power of search and discovery on their sites, released its inaugural Retail AI Index last week. The report highlighted 100 companies it believes have the most robust, impactful AI strategies.
When ranking companies, Lily AI and a third-party partner took into account technology talent inside organizations, historical and future AI investments, implementation of AI systems and media coverage of AI-based initiatives.
Unsurprisingly, behemoths Amazon and Walmart topped the list, with Amazon edging out its competitor by a bit. Both companies have used AI for supply chain optimization, customer-facing search and discovery and more. But Purva Gupta, Lily AI’s CEO and co-founder, said the online retailer’s strategy has moved quicker than its mixed-format retail competitor.
“[From] how dynamic their algorithms are… [to] the neural nets that they’re using to scour everything and understand things in real time…to all the automation that they’re using, it’s just superior, and it’s also a lot more wide in terms of the different use cases that they have versus Walmart,” she said. “Of course, Walmart has a different scale in terms of what they are able to do in retail. But I think [with] the AI-first mindset that Amazon has…they are definitely the ace in this space.”
Stitch Fix , which Gupta called “one of the players that has been an OG in using AI” claimed the third spot. The company has been vocal about its use of the technology, from recommender systems to generative AI systems powered by OpenAI. Nonetheless, its stock price remains close to record lows.
Other fashion and apparel retailers and brands, like eBay , Target, Macy’s and Nike, also cracked the top 10, coming it at No. 4, No. 7, No. 9 and No. 10, respectively. Target has recently introduced chatbot technology for employees, and eBay uses AI to help certify the authenticity of its products. Meanwhile, Macy’s uses AI for inventory management, and Nike has historically used AI for helping customers find the right fit for its shoes.
Shein , which has built much of its business model around using algorithms to identify trends that it can then produce low-priced apparel around, secured the No. 15 spot on the list, while fast-fashion competitor Zara scored the 67th spot.
Notably, Etsy, which has rolled out a series of AI-powered tools and has spoken about the technology’s internal use cases at the company, did not make the list, even as other digital marketplaces like Poshmark, eBay, ThredUp and more earned spots peppered throughout the top 100. Gupta said Lily AI used a third-party partner to help analyze the most deserving companies.
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Gupta said that as the team analyzed retail companies to determine which ones would make the list, she noticed a difference in the way fashion and apparel brands and retailers use AI when compared to general retailers or retailers in consumer packaged goods or grocery. For the latter group, she said, so much of AI is about efficiency with time as a metric; for fashion and apparel retailers, much of the implementation has been focused around customer sentiment.
“One big thing that jumps out to me is that, with the fashion [and] apparel brands, the whole angle of making the shopping experience better and making the consumer feel a certain way, that’s just the whole DNA of like, good fashion brands and retailers. They want to do that right—how do you make the consumer feel?” she told Sourcing Journal.
And some of the companies with the most advanced AI implementation prowess, she said, achieved that status because of their partnerships and acquisitions. The report makes particular note of Stitch Fix’s partnership with OpenAI, Poshmark’s 2021 acquisition of Suede One, Revolve’s work with Maison Meta and more.
Both Amazon and Walmart have also formed a variety of partnerships to advance their respective AI strategies. For instance, Amazon has been piloting with Glacier, a startup using AI and computer vision to revolutionize recycling and sortation. Meanwhile, Walmart has linked forces with Gatik, which uses AI to help power autonomous trucks for middle-mile deliveries between the company’s facilities.
Gupta said she has seen many companies—some of which had not previously been focused on AI in the way that Amazon, Walmart or Stitch Fix might have been for years—make enormous strides over the past two years.
To that end, Gupta said the company plans to re-up this report annually; over the course of the next two years or so, she expects more retailers will focus on using AI for inventory planning and demand forecasting and that fashion and apparel brands in particular will continue to step up their game on personalization.
“It’s just so exciting in how the consumer is going to benefit from all of this, and as a consumer, I’m excited with all the different things that I’m I’m going to experience,” she said.
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