AI Search Wreaks Havoc on Publishing, but It's Shopify's Secret Weapon

E-commerce software maker Shopify seems to be benefiting handily from people using AI to search. On the company's second-quarter earnings call, Shopify President Harley Finkelstein said AI has become a "complement to search, rather than a substitute for it," and has particularly benefited the long tail of e-commerce, including the smaller merchants that make up the majority of its customer base. Indeed, the company credited its earnings beat and soaring revenue to AI search, at least partly.

This is quite different from how AI is impacting online publishing, where AI summaries have led to a measurable drop in click-through rates, which lowers traffic and consequently eats into advertising revenues. Instead, Shopify believes that AI is a boon to its business. The company noted that AI-driven traffic and orders to Shopify stores had tripled year-over-year in the second quarter.

And this was not a result of AI taking share from search. "In fact, search remains one of our largest sources of buyer traffic to our merchants, and it's still growing," Finkelstein told analysts on the call. "Traditional search sessions are up 1.3x over the past two years, holding roughly a third of all storefront sessions."

The e-commerce platform reported strong results in the quarter, with revenue rising 36% to $3.6 billion from a year earlier, outstripping Wall Street's forecast of $3.4 billion. Gross operating profit rose 31% to $1.71 billion, also ahead of analysts' expectations of $1.63 billion.

Why AI Search Works Differently for Commerce

The company went into further detail about why AI search was working for its business. "While search engines rank by popularity against a handful of keywords, AI agents make multiple calls into Shopify's catalog, working with richer structured data to match products with the buyer's specific intent, rather than just keywords," Finkelstein explained.

"When a buyer asks an AI assistant for the best car seat that fits three across a sedan, traditional search focuses on the keyword 'car seat.' An agent, however, understands the actual need, the dimensions, the vehicle type, and the fact that they need three. It searches across all of those constraints at once to find the product that actually works, not just the one that ranks highest," he said.

In other words, AI's capability to search across many dimensions to find the best product for users is resulting in better conversions for merchants. "Buyers' shopping journeys are being compressed as half of all AI-referred sessions are landing directly on a product description page. That is 2.5 times more than what we see with traditional search," Finkelstein added.

The Sweet Spot: Long-Tail E-Commerce

Plus, the company said 75% of AI-attributed purchases in Q2 happened outside the top 100 categories, or what Shopify called its "sweet spot." This suggests that AI is particularly effective at connecting shoppers with niche products, specialty items, and unique offerings from smaller merchants. Traditional search tends to favor high-volume, popular products with established SEO authority. AI search, by contrast, can match specific needs with specific products, making it a powerful tool for the long tail of commerce.

For Shopify's merchants, many of whom are small businesses with specialized products, this is a significant advantage. These businesses often struggle to compete with larger retailers in traditional search results, where popularity and SEO budgets dominate. AI search levels the playing field, allowing them to be discovered by shoppers with very specific needs.

The Ecosystem Play: Connectors and Vibe-Coding

In addition, the company suggested Shopify stands to benefit from AI playing a larger role in transactions thanks to its trusted checkout experience. The company pointed out that it's also working with AI tools and agents, having built connectors to Claude, ChatGPT, Perplexity, Manus, Replit, and Vercel, as well as vibe-coding platforms like Lovable that let merchants build on Shopify however they choose.

This ecosystem approach positions Shopify as the commerce layer for the AI economy. As more consumers turn to AI agents for shopping recommendations and transactions, Shopify's infrastructure ensures that these agents can interact seamlessly with its merchants. The company is not just benefiting from AI search; it's actively building the infrastructure to support it.

The Contrast with Publishing

The divergence between AI's impact on e-commerce and publishing is striking. For publishers, AI-generated summaries have reduced the need for users to click through to websites, cutting traffic and advertising revenue. Google's AI Overviews, which summarize content directly in search results, have been particularly disruptive, reducing click-through rates by an estimated 15-25% in some verticals.

For Shopify, however, AI is driving more qualified traffic and higher conversion rates. The difference lies in intent. When a user asks an AI assistant for a product recommendation, they are in a buying mindset. They are ready to purchase, and the AI is helping them find the right product. When a user asks an AI for information, they may not be in a buying mindset, and the AI's summary may satisfy their need without requiring a click-through.

The Numbers That Matter

Shopify's Q2 results underscore the strength of its business:

• Revenue: $3.6 billion, up 36% year-over-year

• Gross operating profit: $1.71 billion, up 31%

• AI-driven traffic and orders: tripled year-over-year

• AI-referred sessions landing directly on product pages: 50% (2.5x more than traditional search)

• AI-attributed purchases outside top 100 categories: 75%

The company also announced a $600 million AI infrastructure investment fund to grow the AI commerce ecosystem, further cementing its commitment to the technology.

The Cost Question

One potential challenge remains: the cost of AI search. While Shopify's merchants benefit from higher conversion rates, they may also face higher costs if AI agents' search queries become more expensive over time. Shopify, however, noted that it is working to keep the cost of AI-driven traffic manageable, and the higher conversion rates are more than offsetting any additional costs.

As AI continues to evolve, Shopify's position as a commerce layer for the AI economy could become even more valuable. The company is well-positioned to benefit from the growing integration of AI into shopping, and its ecosystem approach ensures that it will remain a central player.

For publishers, the news is less encouraging. The AI-generated summaries that are hurting click-through rates show no signs of abating, and the industry will need to adapt to a world where AI is the primary gateway to information.

For Shopify, however, the AI revolution is just getting started. The circus of commerce is always evolving, and Shopify is determined to stay at the center of the show.