6/5/2023

• Upstage signs contract with Lotte-ON, Korea's leading distribution platform, to provide Recommendation AI API

• The contract brings an excellent synergy between Upstage's AI technology and Lotte-ON's big data

• Both companies are dedicated to leading AI-driven innovation in commerce through product and technology exchange, as well as collaborating in AI education and consulting.

(Seoul, Jun. 5, 2023 /Upstage) Upstage is spearheading AI innovation in the commerce sector by implementing its Personalization AI solution in Lotte-ON, Korea's leading e-commerce platform.

On June 5, Upstage announced its partnership with Lotte-ON, wherein they will provide the Recommendation AI API. This API system, deployed on Lotte-ON app and website, will enable highly personalized product recommendations for customers.

The AI boom triggered by ChatGPT has led to a surge in interest and a widespread adoption of AI across various platforms in the commerce ecosystem.

One significant advancement in AI is personalized recommendations, which have transitioned from analyzing users' basic information like age, occupation, and gender to leveraging specific behavioral patterns such as search history, purchase reactions, and shopping behavior, in addition to demographic data. This level of personalization has become crucial for the growth of commerce platforms.

Upstage will supply Lotte-ON with its Recommendation API system, which was introduced in March. Upstage's impressive technological achievements have been recognized globally, with numerous exceptional papers presented at renowned AI conferences such as NeurlPS, AAAI, ACL, and EMNLP. Additionally, the company achieved a remarkable feat by winning a double-digit gold medal in Kaggle. Last year, Upstage played a significant role in Brandi, a leading fashion e-commerce platform in Korea, by providing them with the Recommendation AI Pack, which contributed to their first profitable year since their establishment.

The performance of Upstage's Recommendation AI has once again been proven during its implementation on Lotte-ON. Beyond click-through rates, Upstage's recommendation AI has exhibited outstanding results across various metrics related to sales and transaction conversion rates, surpassing solutions offered by global AI companies. Upstage is widely recognized for its expertise in comparing different AI models, thanks to its dedicated in-house Recommendation AI team, specialized "Challenges" team focused on Kaggle competitions, and the Global Residency team at their Hong Kong office, all working together to deliver optimal outcomes.

Upstage's Recommendation AI will leverage the extensive data available from Lotte-ON, a massive e-commerce platform in Korea with a user base of 39 million. The goal is to analyze each customer's preferences and products comprehensively, enabling the delivery of highly personalized recommendations. Moreover, Upstage plans to utilize AI-based analysis tools and continuously enhance model performance through ongoing metric monitoring.

Launched in 2020, Lotte-ON emerged by amalgamating online and offline data from seven subsidiaries of the Lotte Group. Since then, it has been bolstering vertical commerce in beauty, luxury goods, and fashion specialty stores to expand its market reach. In December of the same year, Lotte-ON achieved a significant milestone of attaining two million monthly active users (MAU) since its inception. This accomplishment was accompanied by positive evaluations, attributing it to increased consumer engagement. Lotte-ON is actively pursuing further growth through AI transportation optimization and the strengthening of its IT capabilities.

The recent collaboration between Upstage and Lotte-ON exemplifies the synergy created by leveraging the strengths of a large corporation and a startup. Unlike the traditional model of open innovation where conglomerates unilaterally adopt startup technologies, Upstage and Lotte-ON have collaborated for approximately two years to implement AI technology. During this period, Upstage consistently honed its AI technological prowess by utilizing insights and commerce-related data provided by Lotte-ON, successfully delivering the most suitable AI model for the platform.

These efforts have been highlighted in four consecutive tests conducted since January. Throughout these tests, the conversion rate in the recommendation area steadily increased from the first to the fourth test. Notably, the fourth test showed a significant 30 percent improvement in the conversion rate compared to the initial test. Both companies have set a goal to achieve a remarkable 50 percent increase in conversion rates through further performance enhancements.

Moreover, Lotte-ON's IT capabilities has played a crucial role in their collaboration. By leveraging the commerce giant’s expertise in data management, internalized IT technology, and advanced techniques, the collaboration between the two companies has been optimized. This has facilitated the rapid integration of AI technology into their operations.

Upstage's expertise in AI-powered recommendation systems is highly regarded in the global academic community. In March, Upstage was honored with the Best Paper Honorable Mention Award, a distinction reserved for the top 0.5 percent of papers, at the prestigious WSDM 2023 (Web Search and Data Mining) conference. This recognition underscores the company's exceptional research capabilities. In the previous year, Upstage also achieved significant success, winning a silver medal in the H&M Personalized Fashion Recommendations competition hosted by the renowned global SPA brand, H&M, with a narrow margin of only 0.004 and 0.007 points.

With this new contract, Upstage's Seargest (search+suggest) AI technology is poised to expand its presence in the field of commerce platforms. Seargest AI, which leverages data analysis to provide search-and-recommendation functionalities, has emerged as a promising innovation that can boost revenue for businesses. Recently, Upstage integrated Seargest technology into KakaoTalk and unveiled "AskUp Seargest" during a press conference, further demonstrating its capabilities and potential impact.

Both companies have a shared vision to foster ongoing technological exchange and collaboration. They aim to explore topics such as Upstage's Document AI and AskUp Seargest, while also seeking opportunities for cooperation in education, consulting, and implementing AI solutions. By doing so, they aspire to take the lead in AI innovation within the distribution industry.

Sung Kim, Upstage CEO, emphasized the significance of the collaboration, stating, "Through our partnership with Lotte-ON, we strive to showcase practical examples of how various AI technologies can provide valuable support in the commerce sector. Upstage aims to break down barriers, both psychological and physical, for diverse corporate customers seeking to harness the power of AI. Our Recommendation API will enable them to seamlessly and conveniently leverage this transformative technology."

Na Young-Ho, CEO of Lotte-On, shared his optimistic outlook, stating, "By collaborating with Upstage, a globally recognized AI company, we believe this partnership will serve as a catalyst for the growth of both organizations. We will begin by implementing personalized recommendations and continue to integrate AI technology across various domains, demonstrating advanced commerce technology to our valued customers."

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