How Retailers Can Benefit From Small Language Models

If you're familiar or have read up about artificial intelligence, it’s likely you’ve heard about large language models (LLMs), a type of AI that's used to analyze large amounts of data and generate text. However, you may not be as familiar with a newer phrase that's becoming more common: small language models (SLMs).

SLMs are similar to LLMs in that they're AI models, however, they have fewer parameters and computational requirements than LLMs.

What are these benefits, and why should retailers be aware of SLMs? Let’s dig in.

Reducing Hallucinations

AI hallucinations happen when AI models create outputs that are nonsensical or inaccurate. LLMs gather so much information that there have been instances where they spit out data that's not correct. In fact, it has been reported that ChatGPT hallucinates about 3 percent of the time. While that number isn't astronomical, it’s worrisome when you're deploying a technology that's still somewhat in its infancy and evolving every day with few, if any, guardrails.

SLMs reduce the likelihood of hallucinations because they focus on a smaller and more manageable set of parameters. This minimizes the chances of generating content that's erroneous or irrelevant. For example, if a shopper is using a SLM-powered chatbot to ask an e-commerce site questions, the information the AI model will create will likely be more accurate and lead to a better customer experience.

Faster and Cost Effective

The massive amounts of data that LLMs need to operate often slows them down. By contrast, SLMs have more efficient performance and faster response times, in addition to reducing the risk of hallucinations.

What’s more, by being agile and small, SLMs are often more cost effective than LLMs. Every retail company, from a small startup to a big online retailer, can utilize them with success and at a lower cost.

Better Customer Experience

With reduced hallucinations and a faster response time, SLMs enable retailers to provide a better experience for customers. If your customers are able to get more accurate and faster answers from an AI chatbot, that immediately translates into a better experience as they search and transact. And that, in turn, can help bolster brand loyalty and repeat purchases.

Additionally, SLMs can offer a more personalized customer experience because they're easier to fine-tune for specific tasks and domains. Their smaller size allows for more efficient customization, enabling businesses to tailor the models to the unique needs and preferences of customers. This results in more relevant and personalized interactions, enhancing the customer experience.

LLMs vs. SLMs: Which is Right?

AI and its implementations can be daunting. It’s important to take time and consideration when choosing to utilize this technology, and understand how it can help map back to your company’s goals. It’s also worth considering if LLMs or SLMs are the most beneficial based on use cases. However, if you’re looking to implement an AI model that's more cost effective, efficient, and provides a better customer experience, consider SLMs.

Yandong Liu is the co-founder and CTO at Connectly, an AI-powered conversational commerce company.