Latest / Retail Media Breakfast Club / 11% of Consumers Think They've Already Shopped with AI — Here's Why That Changes Everything
Transcript
- Rick Watson Snips Ep === [00:00:00] Kiri: Good morning, happy Thursday, and welcome back to the Retail Media Breakfast Club. I'm Kiri Masters, and I'm sharing today a snippet with you from one of my favorite podcasts, The Watson Weekly with Rick Watson. And on [00:00:15] this episode, the most recent episode that aired, he is talking with Holden Bail, who is the global chief strategy officer at Merkle. [00:00:24] and Holden has some interesting data from Merkle, both stated preference [00:00:30] research from consumers, but also the receipts that Merkle sees across their network. They've been in the data analytics game for a long, long time, and so a very worthy source of this [00:00:45] type of data. The thing that really struck me, that I'm gonna play a snippet of, is what consumers think that they've done with AI chat assistants. [00:00:58] [00:00:59] Kiri: [00:01:00] And it reminds me, um, my son had this really cute word that he used. He doesn't use it anymore. He's far too grown up now. But he would say, "I'm sorry, I misunderheard you," as in I [00:01:15] misunderstood, and I misheard you. And it was, it's, it's actually a great amalgamation of two terms. I misheard you, I misunderstood you. [00:01:26] And that is what consumers are doing [00:01:30] with their AI chat assistants. Eleven percent of consumers believe that they have bought something through an AI chat assistant like ChatGPT or Gemini. And as Holden points out in this [00:01:45] episode, that cannot possibly be true. They are wrong. they are misunderhearing themselves But Holden makes the case we should still listen to these consumers even [00:02:00] though they are wrong, and that in fact, particularly because they are wrong. [00:02:04] Let's listen in [00:02:05] Rick: We saw this, and, and I think this is one of your earlier points, we saw this with social commerce for a while, where people wouldn't admit or didn't fully understand that [00:02:15] halo effect. [00:02:15] Do you think something similar is still happening here? [00:02:18] Holden: Yeah, I think it's... I, so I used to get into arguments, um, with our friends at Forrester and like Insider Intelligence, and of course I, I, I drink from the cup of the pundit industrial [00:02:30] complex of which you and I are both a part of, right? Right. But they'd say, "Well, you know, social commerce doesn't seem to be that big in terms of GMV." [00:02:36] And I would say, "Look, Jay at Forrester-" I have data that says that 60% of North American consumers above 40 years old think they've [00:02:45] bought something through social commerce in the last four months. Is that true? No. Of course, it's not true. The GMV, the, the math doesn't make sense. There's too much commerce on the internet. [00:02:53] But it is their perception- Mm-hmm ... that, like, the equivalent of, like, the iframe in the year of our Lord [00:03:00] 2026, you know, they're clicking through a shoppable tag, and they're going to your website. In their mind, they've purchased through social commerce, and it's Conway's Law. It's the failures of omni-channel on the internet. [00:03:10] We've maybe succeeded with omni-channel physical versus digital, but ironically, now we have a channel management [00:03:15] problem- Mm ... in digital, where I would have people who are heads of e-commerce who would say, "I'm not gonna spend time assorting a product catalog before all the tools are automated inside of, like, an Instagram shop because it's gonna be a rounding error in my revenue." [00:03:26] And the marketer owned the search channel, and the CMO would say, [00:03:30] "Well, you know, it's, uh, really annoying for my, like, media management agency to do all the shoppable tags, so I'm just not gonna do it." And the consumer isn't browsing that way. I mean, I could show you data that shows that if somebody sees a shoppable product inside of something like Pinterest as [00:03:45] opposed to something that doesn't have a shoppable tag- Right [00:03:46] they are more cognitively primed, and they're more likely to convert as traffic. But we have very siloed notions on the internet of commerce attribution, and I think a similar thing is happening with AI because I could tell you about, like, the 53% of people who [00:04:00] say that they go to a website to purchase after they've done some product discovery and evaluation inside of an AI app, like Claw. [00:04:07] Right. Like, you know, gone the product carousel. They go to a website. 11% of consumers are telling us they purchase inside of the AI app. No, they don't. [00:04:15] No, they don't. They don't. They, they literally don't because the math isn't there, and the GMV of these apps aren't high enough, and most of them don't have the connections to do embedded checkout. [00:04:22] Like, you know, people talk about OpenAI walking away from commerce- Yeah. Yeah ... which I think maybe they're walking away from parts of commerce, but the consumer feels that they have. And [00:04:30] there's a little bit of, like, arrogance almost in, on, on the brands that say, like, "Well, who are you to say because they checked out on your .com, but their perception is that their source of travel was through an AI app?" [00:04:40] And I think AI is exposing the exact same thing that social exposed, which is [00:04:45] if a consumer thinks that they're shopping through a thing, they're shopping through a thing. [00:04:48] [00:04:49] Kiri: Wow, I just love this framing. It is such an interesting way to think about it So few consumers have actually used AI models [00:05:00] to complete a transaction. They barely had a chance even when it was available through instant checkout on ChatGPT. [00:05:09] But Holden makes the point that it doesn't matter. The consumers think that they [00:05:15] did, and they are attributing this purchase journey to AI. And all that means is if and when the checkout capabilities, the transaction capabilities come back [00:05:30] again, there is this halo effect that's already in place where consumers think that they have already been shopping through this mechanism, and they're more open to it. [00:05:45] poor audience targeting is frustrating, but for retail media teams it can be costly too. With Growth Loop's composable commerce media solution, you can turn your first-party data into [00:06:00] hundreds of high-value audience segments and launch campaigns faster. After partnering with Growth Loop, instant commerce pioneer Gopuff scaled from a hundred syndicated audience segments to more than [00:06:15] six hundred, and now it takes less than forty-eight hours to turn around a custom segment for one of their brand partners. [00:06:24] Kiri Masters: Learn more about how Growth Loop is powering Gopuff's [00:06:30] best-in-class retail media operations at go.growthloop.com/breakfast. That is go.growthloop.com/breakfast [00:06:44] Kiri: [00:06:45] The next thing that I wanted to share from the conversation [00:06:48] is how the context that these LLMs have about us as consumers can change over time. And the question of how are these horizontal AI assistants going [00:07:00] to build up the requisite amount of shopping context and order history that someone like an Amazon has, for example? [00:07:09] That is a big barrier [00:07:11] to the use of these models because we want [00:07:15] personalization. We want to be remembered by our AI assistants. We wanna want our preferences remembered. We want the ages of our children remembered, but, like, also not in a creepy way. And this is another really interesting [00:07:30] part of the conversation where Rick and Holden talk about what it is going to take for horizontal AI agents to actually collect all of that information about us. Let's listen [00:07:40] Holden: The most obvious thing is a replenishment Trip mission. I need [00:07:45] Dove body wash. I'm out. I need detergent. I always get the same detergent. My socks have holes in them. I buy Hanes or whatever. We estimate, if you could, which is you can't really, but if you could code the share of wallet of basically the entire internet into Trip missions, on the [00:08:00] B2C side, at least 25% would be replenishment. [00:08:02] Mm. And that's the obvious stuff, and that's the stuff where you can imagine over time I'm training a personal AI assistant with a tremendous amount of context over time about my life. [00:08:12] Rick: Can, can, can I stop you, Holden? Yep. Who the hell has [00:08:15] the time? Like who's got that kind of time with like working families- Yep [00:08:20] and all these things? Like who the, who are these people who have time to train their AI? Like, I mean, having worked on AI sort of on my own, it's like the context is the thing. [00:08:29] Holden: The context is the [00:08:30] thing. Yep. [00:08:30] Rick: The context is the thing because the model can do whatever, and we already have way more model power than we probably need. [00:08:38] It's the context that nobody wants to sit there all day and tell them like, "Oh, Aunt, this person named Joan is my aunt, and she [00:08:45] met my mom and this time and like 20 years ago-" Right. "... and that's why we buy this fucking soap." [00:08:49] Holden: Right. Fair [00:08:50] Rick: enough. You know what I mean? That's the answer. Yeah. It's not because we like the soap. [00:08:53] Holden: Well, nobody needs the soap. What you need, one thing the model doesn't have, which is why it's important they come to term [00:09:00] with marketplaces, which is the vast majority of the GMV on the internet flows through, is I need your order history. That is the one piece of context data that I have if I'm a marketplace or if I'm a retailer, and I don't have if I'm an LLM app. [00:09:13] On the flip side- So why [00:09:13] Rick: did they give that [00:09:15] up? Like you, you're saying like I understand the OTAs and travel and like, you know, I'm gonna go short Travelocity if that's still a thing anymore. I haven't been on Travelocity in like probably 15 years. But Amazon's not gonna give it up, and that's, that's 50%- No, but if- [00:09:27] of the US right there. [00:09:29] Holden: [00:09:30] They're trying to create their own discrete AI app that's embedded into their own retailer experience or that it's a standalone thing, whether it's Rufus or the artist formerly known as Rufus that is now Alexa again. [00:09:39] Rick: Right. [00:09:40] Holden: The argument you could make that they might- That they might consider doing [00:09:45] this is I and you and the people with working families are just gonna spend more and more time talking to our AI app. [00:09:53] Rick: Mm-hmm. [00:09:54] Holden: And it's just gonna become the thing we go to when 87, 76% of the time we went to [00:10:00] Google to search. We're gonna go to our AI app to search, and it's going to maintain stateful information, and it's going to learn over time. And even the people who are really busy. I'm relatively busy. I transparently use ChatGPT to help plan my mom's [00:10:15] elder care 'cause I wanted to ask good questions to lawyers. [00:10:17] And you're like, "What does this have to do with commerce?" I'm like, if I trust if I trust over time this app to help me with something that serious and I say like, "Look, I got three grand, go find me a TV," you think I'm not gonna [00:10:30] trust that thing? And if that's the first place for product discovery, the companies who choose not to integrate with it but own a lot of the GMV on the internet are ceding a very important strategic moment that a new wave of firms could come [00:10:45] into. [00:10:45] [00:10:46] Kiri: Now I'm gonna preview something that I've been working on that I'm really excited to share next week on the show. I have been experimenting with exporting all of my Amazon purchase [00:11:00] history into an LLM and seeing how that changes and seeing what those mechanisms look like. So stay tuned next week. [00:11:07] There is more to come here. But I do encourage you to go and listen to the full conversation on the Watson [00:11:15] Weekly. It's one of my favorite podcasts, and this was an excellent interview. I'm hoping to get ahold of the research that Holden mentioned. And that is it from me today. I hope you have a great Thursday and I'll catch you next week [00:11:28]