How AI Agents Are Changing the Digital Commerce Game

Anyone who’s read our latest Digital Commerce M&A Report probably won’t have been surprised to see generative AI highlighted as one of the major developments energising the sector. As the report puts it, “the seismic implications of generative AI on Digital Commerce are becoming apparent”, with more and more companies looking to leverage AI solutions “to improve inventory management, plan campaigns, streamline supply chain processes and engage with customers”.

There’s particular excitement around the latter application, with AI agents increasingly being utilised to manage data relating to their customers and to act as a human-like first point of contact for B2B and B2C purchases and queries. The key word here is “human-like”. Agents are fast evolving to be uncannily naturalistic and genuinely helpful – a far cry from chatbots which deploy a stock number of rigid responses, lack a distinctive tone of voice and are frankly in no danger of ever passing the Turing test.

Of course, the kind of white-hot hype being generated around customer service AI agents (see recent headlines like “Can Artificial Intelligence Rescue Customer Service?” and “Agents Are Real and They’re Spectacular”) has been accompanied by level-headed reminders that it’s still early days, and the true scale (and success) of the transformation remains to be seen. Tech commentator Ben Evans perhaps summed up the ambiguity of the situation best in an article on the gap between AI hype and actual usage, when he described “the utopian dreams of AI maximalism” meeting “the messy reality of consumer behaviour”. 

Such caveats notwithstanding, it’s clear that an AI-fuelled customer engagement revolution is underway. This is perhaps most strongly exemplified by the bullish strategy being deployed by Klarna, with the BNPL giant aiming to slash more than half its workforce in favour of marketing and customer service AI over the next few years. Earlier this year, it rolled out its OpenAI-powered chatbot which led two-thirds of its customer conversations in one month alone.

While the company’s full-steam-ahead commitment to automation at the expense of human employees has sparked a backlash on social media, this is only the most highly publicised example of the kind of implementation we’re seeing right across the business landscape.

Indeed, a recent report by Bain into AI use case adoption rates has found that customer service ranks second only to software code development, with the report also anticipating a new wave of demand for third-party AI solutions: “As we might expect with a new wave of technology, many applications are built in-house simply because off-the-shelf versions aren’t ready yet or don’t meet expectations. As these third-party solutions mature, we could see more decisions to buy. The percentage of companies buying off-the-shelf applications has already increased slightly as more tools become available.”

Let’s look at some of the startups that stand to benefit from this shift in how businesses handle customers and clients.

Founded last year, Yuma develops AI agents to automate the entire CX stack. The agents can deal with order inquiries, edit and cancel orders, manage subscriptions and answer any questions customers have following sales.

This diligent bots can also keep an eye on social media, alerting businesses to negative comments and replying automatically to questions there. Crucially, Yuma can be loaded with the intricate knowledge base required to both provide accurate information to customers and use the tone of voice appropriate to a brand. According to Pitchbook data, the startup has raised $500,000 to date.

Another customer support AI specialist founded in 2023, Decagon has attracted hefty funding in a very short space of time. Its mission to replace old school chatbots and their “maze of decision trees and canned responses” with truly human-like agents has so far drawn $100 million over a number of funding rounds, making this one of the leading names in the crowded AI CX field.

Its fundraising success reflects its robust client base of big-name companies, with the likes of Duolingo and Eventbrite deploying Decagon agents to interact with customers, analyse sales data and optimise engagement.

Chatting with customers, marshalling data and managing accounts is one thing, but can AI agents be trusted to go ahead and make purchases autonomously? Skyfire sees this as the natural next step, and has created what it calls “the financial stack for the AI economy”.

This is a blockchain-based network which allows AI agents to interact with each other and make payments using digital wallets whose parameters are closely controlled by businesses to prevent overspending. Having launched its network and raised $8.5 million in seed funding this year, Skyfire foresees an era where customers and businesses buy and sell solely through their AI intermediaries.

Founded in 2022, 11x is in the business of creating “AI-powered digital workers” to handle every step of the outreach process, from seeking out and researching potential leads to creating bespoke sales pitches and booking meetings for human sales reps.

While its “Alice” agent does all of this online, the company has also developed an  agent named “Jordan” who can make inbound and outbound voice calls to human buyers, and can speak over 30 languages. 11x has secured around $74 million in two funding rounds this year, and is developing new virtual employees to handle tasks beyond the realm of sales.

While such examples demonstrate the willingness of investors to stake their claims on the bustling AI agent market, the highly fragmented nature of the sector and the considerable overlap in what many startups are offering means that navigating the M&A market can be challenging.

Our Digital Commerce sector experts are here to guide your enterprise to optimal transaction outcomes; say hello to our Sector Principal Ralph Hubner to get the ball rolling.