Latest / Retail Media Breakfast Club / Will LLMS Monetize With Ads or Marketplaces? [Retailgentic Crossover]
Transcript
- Will LLMS Prioritize Ads or Marketplaces? (Retailgentic Crossover) === [00:00:00] Kiri intro: On today's episode, I'm gonna do something a little bit different. Instead of me sharing some trends or analysis, I'm going to share a clip from a recent appearance on Scott Winos podcast Retail Gentech Scott is the host [00:00:15] of that podcast, but he invited me on to turn the tables on him and ask for a bit of his career background and some of his perspective on where retail is headed. [00:00:27] What you're about to hear is part of a [00:00:30] conversation where we went back and forth on one of the big questions that people in e-commerce are thinking about today, which is how will LLMs like chat GBT make most of their money in the future? Will it be through ads or will it [00:00:45] be through retail sales and taking a cut of that marketplace revenue that they're starting to spin up with? Announcements from Walmart, Instacart, DoorDash, and the like. Let's jump in. [00:00:59] [00:01:01] kiri: And another one of your thesises the just shared was the LMS aren't going to monetize through ads. [00:01:09] They're gonna monetize through marketplaces, which certainly appears to be happening at, at least as the first [00:01:15] priority. Do you think that they will and what would, if Yes, what kind of timeline would you be looking at there? [00:01:22] Scot: So chat GT is, so, I, I view what checkout is, is they're built a marketplace. Um, now it's a very unique marketplace. [00:01:29] [00:01:30] Um, Sam Altman calls it an affiliate, and I think it's just a nomenclature thing In my, my purest e-commerce view of, of affiliate, the transaction happens on the retailer site. I, I think he's calling it an affiliate because it, the, the retailer is still merchant of record. Um, [00:01:45] but they don't leave chatt pt. [00:01:46] So, so in my mind, that's a marketplace. When you don't leave the, the, the site that the retailer is, the, the retailer is not on that site and you check out a peer, that's a marketplace. I'm, I'm not married to that definition, marketplace slash affiliate. [00:02:00] Uh, I just, I affiliate I think confuses it. Like I've got all this history of affiliate. [00:02:04] Um, sure. It's its own [00:02:06] kiri: industry. It's its own thing, yeah. For people like you and me. Yeah. Yeah, yeah, [00:02:09] Scot: yeah, [00:02:09] kiri: yeah. [00:02:10] Scot: Uh, and again, I think we're gonna see. Everyone follow [00:02:15] this pretty quickly, and I think there's gonna be several modes of this. So the one that Google's doing is more, what a lot of people wanna argue is what Chat Chippie is doing at Gentech or not. [00:02:24] We, that's like a silly argument. I, I don't really care. Uh, it's just a great buyer experience. But I [00:02:30] think what Google's gonna do is gonna be interesting where they're actually gonna have an agent go fill out the checkout. And, you know, that's gonna be a different mode, but it's gonna be a, in my mind, it's still a marketplace. [00:02:39] It's syngen tech marketplace because you never leave the merchant site as a human. The human never leaves the merchant site. [00:02:45] The agent goes to it for you. It, it feels like you're still on Google. [00:02:50] kiri: You know, I, I think a concern that retailers had initially is that the traffic is dropping off. There's now an intermediary sitting [00:03:00] between us and the consumer. [00:03:02] Is this, um, is this gonna challenge our business model? And is this gonna cause sort of. Radical commoditization amongst retailers. I personally have a [00:03:15] number of arguments as to, I don't think it will cause commoditization, but, um, I'm curious what you think. [00:03:22] Scot: I think you can't take, I think a lot of that is colored by our experiences with kind of the duopoly of, or [00:03:30] tri opoly of Facebook, um, Amazon and Google, uh, where, where merchants, uh, that you and I talked to have been of all size, especially Amazon sellers. [00:03:40] I, you and I know a lot of Amazon sellers, they're like, uh. You know, they, they, [00:03:45] they're, they have, they get punched in the face like five times a day. That's a rough living. And I think we have a new competitor that realizes they're not gonna win by doing that. And the way they win is by not doing that. And, and by changing the game a lot [00:04:00] and not doing ads, not punching their partner in the face. [00:04:04] And that's how they're gonna win. When your time, budget and team are already maxed out. [00:04:15] Keeping up with retailer platforms and media requirements can feel like a never ending labyrinth. That's why even the best brands bring in an execution partner. [00:04:26] Acosta Group makes retail media execution simpler. [00:04:30] They stay ahead of every platform. Update tech shift. And media spec, so your campaigns actually show up and perform without draining your team. [00:04:40] Let Acosta group handle the chaos behind the scenes so you can keep building [00:04:45] the brand. Check out Acosta Group and tell them Retail Media Breakfast Club sent you. That's A-C-O-S-T group. [00:04:56] Scot: Now everyone can point, everyone says Facebook said that too, and then they [00:05:00] changed. Yes. Um, but again, I think the people have learned from that. And, you know, Sam Altman has been, he's, he, he, he's got a very long history of this and watching it, and he's very, you know, uh, he's probably one of the [00:05:15] smarter people that's ever tackled this problem. [00:05:17] So I think it's be really interesting. I think there's a good shot that it doesn't happen like that. And even if it does, wouldn't you rather have four bullies instead of three? [00:05:28] kiri: Yeah. No, I, I think so. [00:05:30] I mean, every, every revolution in retail has been a reaction to a set of issues that someone knew was looking to solve. [00:05:40] So Amazon being a great example of just creating a [00:05:45] completely different experience that solve for, for problems that people like didn't necessarily immediately understand were problems. But over the last 20 years, like the, there has an, [00:06:00] there's no grand plan at Amazon. Like, let's make merchants lives as difficult as possible, or let's, like, let's make this experience for consumers super opaque so they don't know that they got a good deal on, on prime big deal days or whatever. [00:06:13] I don't, there's no evil master [00:06:15] plan, but it is compounding decisions that are made o off of a, um, a way of doing business that ultimately. There is a, there is a opposite response out there in the market. And, and that [00:06:30] is, you know, the, the free the free market. [00:06:33] Scot: Yeah. I'd rather have four people fighting for my business. [00:06:36] The, the other signal, the merchant of record signal is very unique. Um, so, so being the merchant of record now makes it infinitely easier [00:06:45] to do loyalty programs. Yes. I love that. This is, this is so another way to kind of get at, to, you know, let's pretend we're in this debate, you know, well, how do you all, so I would say to you, Mr. [00:06:57] Retailer, how do you avoid, um, [00:07:00] you know, commoditization in, in, in physical retail? And one of the answers is loyalty, right? The loyalty program. So, so building a relationship with your customer. So number one, by being merchant of record, it is for the first time your customer. And, which is [00:07:15] very powerful in, in our marketplace world. [00:07:17] You know, I can point to 200 marketplaces where you're not, you're not the merchant of record and you're just borrowing that customer and you can't remarket to 'em. So, so this is super unique. I think Jet did it, but I can't, it no longer exists. I can't double a hundred percent [00:07:30] verify that. I think they came close to it. [00:07:31] They, they would give it to you, but you weren't technically merchant of record. They were more merchant friendly. They were the most merchant friendly. And, uh, so I think we'll see by next year, this checkout will be enhanced to have a loyalty [00:07:45] thing and a bunch of other stuff that merchants want. And, and that's how you fight commoditization. [00:07:49] kiri: Absolutely. Yes. I, I, I completely agree. I think that the loyalty programs are gonna have a real moment and come back and be more exciting and dynamic than ever. And it will [00:08:00] be a significant way for retailers to add value beyond, like, lowest priced leather boot is one thing, but like if I'm, if I'm loyal to a certain retailer because of a, a program or because of [00:08:15] other, other factors as well, like delivery time, ease of returns, um, there, there, there's so many non-price factors that I think that retailers can differentiate on. [00:08:25] I don't, I, I think that there's, um, just a, just a [00:08:30] need for retailers to, to go back to their reason for being and understand like, what, what, what are we offering that's unique? It doesn't have to be price. [00:08:39] Scot: You know, the store experience, you know, a lot of people like having the ability to return to the store and, [00:08:45] you know, and that, that harmonized or omnichannel or whatever you wanna call it, I, I think you'll be able to, because you're gonna get that customer, you're gonna be able to tie it to those things. [00:08:53] Whereas in the non-merchant of record, you, you have to go through all this weird, you know, reading of tea leaves to figure out [00:09:00] is this a new customer and what's going on? [00:09:01] Kiri - editoria;: Well, I just love this conversation with Scott because it gets to the heart of the uncertainty in e-commerce right now. [00:09:09] On one hand, AI is reshaping how discovery and transactions [00:09:15] happen. On the other, the fundamentals still matter. Loyalty, differentiation as a brand or as a retailer, and being the merchant of record. If you wanna hear the full episode, [00:09:30] check out Scott's podcast, retail Gentech. I'll drop a link in the show notes, thanks for listening, and I'll catch you tomorrow. [00:09:37]