Online shopping trends are expected to remain strong this year, but e-commerce is more fragmented than ever. With brands selling on so many platforms — from the TikTok Shop, to established marketplaces, live marketplaces and proprietary channels — you’d think it would be easy for shoppers to find what they’re looking for. But this is not true at all, and buyers often have to spend a lot of time searching.
To make matters worse, search in its current state is no longer effective for shopping, as SEO algorithms and the massive influx of content make it difficult to separate the wheat from the chaff.
But it’s 2024, and if there’s one thing that’s supposed to be the solution to almost any problem, it’s artificial intelligence. That makes sense then Daydreama new e-commerce search engine that uses artificial intelligence to make search more personalized and useful for people has raised a massive $50 million seed round.
Founded by e-commerce veteran Julie Bornstein, Daydream focuses on delivering personalized shopping results using genetic artificial intelligence, machine learning and computer vision. The company plans to offer the platform in beta to US consumers this fall and will focus on the fashion industry for now. It has already integrated more than 2,000 brands, including Net-A-Porter, Altuzarra, Jimmy Choo, Doen, Alo Yoga and La DoubleJ.
Daydream essentially allows someone to search for products using natural language and image recognition — think questions like “I’m going to a wedding in Costa Rica this summer and need some suggestions on what to wear.” You can even upload an image of an item of clothing and provide an additional conversational filter such as “I want this in blue.”
Forerunner Ventures and Index Ventures co-led the round, which was also joined by Google Ventures and True Ventures. The startup did not disclose its valuation.
A new way to search
Bornstein, who has held executive positions at companies such as Nordstrom, Urban Outfitters, Sephora and Stitch Fix, believes that the current search tools available in e-commerce feel dry and unpersonalized. While he acknowledged that some progress has been made thanks to the rise of Gen AI, he stressed that generalized search engines often do not return accurate results.
“We have trained [consumers] over the past 20 years to find the right taxonomy from our site to find what you are looking for. When ChatGPT started, people who have been working in the space for a long time thought that this [tech] it allows us to leverage language and imagery together in a way that allows you, as a consumer, to express what you need,” he said.
To fix this, Daydream refines off-the-shelf models and creates a detailed product catalog dataset combined with the team’s deep understanding of the fashion world. Bornstein believes that with this kind of data, natural language queries could yield better results.
For her part, Bornstein realizes that the idea the startup is working on isn’t unique, and said that executing well, fine-tuning good models and creating a great user interface is key to making the company stand out.
Daydream is indeed entering a crowded field. Big companies like Amazon, Google, Mastercard and TikTok are already using different kinds of AI technology for their shopping platforms. You also have startups like True Fit, which focuses on finding the right fit for shoppers, and Remark, which trains AI personas based on human shopping experts. Google has even offered a somewhat similar way of searching for a while, and on a smaller scale, e-commerce startups like Deft and Cherry have tried to combine image and text searches to find relevant items to buy.
Kirsten Green of Forerunner Ventures believes that Google and Amazon provide uninspired and ineffective search tools for shopping, and that the only personalization many e-commerce companies offer is in the form of ads. He believes Daydream has the opportunity to create special experiences with deep personalization.
“The experience that Daydream will deliver reflects the user’s preferences and becomes increasingly customized as detail and pattern recognition increases. It also offers the ability to look at a much broader set of products while still providing a specialty store experience,” Green told TechCrunch via email.
Frédérique Dame, general partner at Google Ventures, believes Daydream will have an edge in the market because customers expect customized experiences. He added that the company has an experienced team to tackle all user adoption challenges.
Fortunately for Daydream, its team has plenty of experience building artificial intelligence, search technology, and e-commerce tools. Bornstein herself sold her latest AI-powered shopping service, The Yes, to Pinterest, and its chief product officer, Dan Cary, previously worked on Google’s AI research team. Daydream’s CTO is Matt Fisher, who led data and applied science at Microsoft. Its chief commercial officer is Lisa Green, who has worked in technology, fashion and business development at Google, The Yes and Condé Nast. and its chief strategist is Richard Kim, who was head of strategy and shopping operations at Pinterest.
Bornstein said much of the fresh capital will be used to hire engineering talent and scale quickly. The company currently has 23 employees and plans to increase that number to 35 by the end of the year.
He added that Daydream does not intend to fulfill orders and will simply act as a discovery layer for purchases, so it will rely on commission-based revenue at this time and does not want to monetize ads. Also, because it’s a discovery layer, white-labeling its technology, like fashion-focused visual search company Syte, is a possibility in the future.
