What generative AI is

Generative AI is the umbrella term for models that create new content rather than pick an answer from a fixed set of options. The term went mainstream after ChatGPT was released to the public on 30 November 2022: language models gained an interface that anyone could use, not just developers.

For e-commerce, the most useful distinction is between generative and predictive models — they solve different problems and are evaluated differently.

Predictive (discriminative) ML Generative AI
Output A class, a probability, a rank A new object: text, an image, code
Typical question “Will this user buy?” “Describe this product”, “Pick options and explain why”
Examples in a store Recommendations, category sorting, churn prediction Assistant, product descriptions, creatives
How to evaluate Metrics on labelled data + A/B tests Factual accuracy of answers + A/B tests

Main types of generative models

  • Large language models (LLMs) predict the next token and, as a result, write coherent text and code. Assistants and description generation are built on them.
  • Reasoning models are LLMs that work through a chain of reasoning before answering; see Reasoning Model.
  • Diffusion models generate an image by gradually removing noise from a random starting picture (Stable Diffusion is one example). They are used for banners and backgrounds.
  • Multimodal models accept and produce several types of data: for instance, they can describe a product from its photo.

Where generative AI works in e-commerce

  • Shopping assistant — answers product questions and suggests options in a conversation. Answers are grounded in catalogue data through RAG.
  • Product descriptions — first drafts for product pages that have no copy, especially in the long tail of the range.
  • Search — parsing long conversational queries such as “a gift for my dad who loves fishing, under $60”.
  • Review summaries — a short digest of hundreds of reviews on the product page.
  • Creatives — banner and headline variants for A/B tests.

Limits and how to manage them

  • Hallucination. A model can confidently invent a specification or a price. The fix is grounding in the catalogue, rules in the system instructions and an explicit “nothing found” path.
  • Cost and latency. Every answer is an inference call billed by the token. Request size is capped by the context window, and filling it well is a discipline of its own — context engineering.
  • Memory. A model does not remember a shopper between requests; whatever needs to carry over, the application stores itself — that is agent memory.
  • Quality control. Generated descriptions are spot-checked by people, while the assistant is tested on a set of typical questions before launch and with an A/B test after it.

Important: generative AI does not replace the store’s data. An assistant’s answers are only as good as the product feed: if a product record has no size or material, the model cannot answer honestly about them.