Generative AI and Firm Productivity: Field Experiments in Online Retail

Lu Fang, Zhe Yuan, Kaifu Zhang, Dante Donati and Miklos Sarvary

Papers from arXiv.org

Abstract: We quantify the impact of Generative Artificial Intelligence (GenAI) on firm productivity through a series of large-scale randomized field experiments involving millions of users and products at a leading cross-border online retail platform. Over six months in 2023-2024, GenAI-based enhancements were integrated into seven consumer-facing business workflows. We find that GenAI adoption significantly increases sales, with treatment effects ranging from $0\%$ to $16.3\%$, depending on GenAI's marginal contribution relative to existing firm practices. Because inputs and prices were held constant across experimental arms, these gains map directly into total factor productivity improvements. Across the four GenAI applications with positive sales effects, the implied annual incremental value is approximately $\$ 5$ per consumer-an economically meaningful impact given the retailer's scale and the early stage of GenAI adoption. The primary mechanism operates through higher conversion rates, consistent with GenAI reducing frictions and improving consumer experience. Importantly, these effects are not associated with worse post-purchase outcomes, as product return rates and customer ratings do not deteriorate. Finally, we document substantial demand-side heterogeneity, with larger gains for less experienced consumers. Our findings provide novel, large-scale causal evidence on the productivity effects of GenAI in online retail, highlighting both its immediate value and broader potential.

Date: 2025-10, Revised 2026-02
New Economics Papers: this item is included in nep-exp
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