Latest / Retail Media Breakfast Club / Is Amazon Falling Behind? AI Agents, Rufus, and the Future of Ecommerce
Transcript
- ecommerce braintrust -- snippet === [00:00:00] Kiri: Amazon built its empire by being the disruptor. Now it's playing defense while Walmart, target, Shopify, and Wayfair have joined Google's universal commerce protocol [00:00:15] enabling AI agents to surface and transact their products directly. Amazon remains in its walled garden. Rufuss is still arguably the most sophisticated shopping assistant any retailer has built, but is [00:00:30] best in class within Amazon. Enough when consumers increasingly want tools that work across retailers. [00:00:37] [00:00:39] Kiri: That's the question we started exploring on a recent episode of the E-Commerce Brain Trusts podcast [00:00:45] with Julie Spear and Jordan Ripley from my old agency Acadia. Let's listen in. [00:00:52] Julie: What about Amazon? Amazon's kind of a walled garden still in this realm because they haven't entered into the whole chat, GPT open [00:01:00] ai. So I'm curious how you are thinking about Amazon's approach here and how you see the more closed system, their wall garden with rufuss. [00:01:06] Compared to the broader that we're talking about with these other retailers where the AI agents can transact across retailer and D two C sites. [00:01:15] [00:01:15] Kiri: Yeah, it's so interesting this role reversal with Amazon, right? Where they're now, like they, they look very defensive as opposed to being on the front foot with new technology, which Rufuss really was. [00:01:29] Miles [00:01:30] ahead of any other shopping assistant than any other retailer had, and I'm probably still is. But is that the way that people want to? I'm not sure that is the way that people will want to. Research and [00:01:45] compare for every shopping journey. They might want some technology that is a little more agnostic, right? [00:01:53] And so I think that is what's very interesting about this UCP protocol and the concept of using Chachi [00:02:00] bt or Google Gemini to make comparisons is that it feels a little more ag agnostic than. Going to Amazon and are you gonna end up buying something? But you don't know if that's got the best price. [00:02:11] And just very interesting, the reaction from the public [00:02:15] on Amazon's buy for me agent, which has been around for six to nine months or something like that. And it was a very limited, but recently there's a huge backlash because these small businesses are like. WTFI didn't [00:02:30] agree to sell on Amazon. Now my products are there and they're not being represented correctly, and I didn't sign up for this. [00:02:35] This is really offensive to me as a small business owner. So now actually seeing Amazon [00:02:45] attempted to do the agentic offsite buy for me. And faced a really strong backlash compared to these LLMs who are doing the same thing and maybe not being viewed in the same, in the [00:03:00] same light as what Amazon is. [00:03:02] Jordan: Yeah. The defensiveness that, I think it's like the role reversal here between Amazon and Google, where I was like, Google. Such a dominant player in search for so long, and then the dawn of AI and Google really is like the laggard. Like I [00:03:15] remember using a lot of Google AI products in the early days and they were just terrible. [00:03:18] And now the idea that Google will just happily play with anyone to try to get more folks streaming, [00:03:24] Kiri: bringing everyone together, I happy. Yeah. One big happy family. Yeah. [00:03:29] Jordan: If you had [00:03:30] said that five years ago. What are you talking about? So that has been an interesting development to me too. And then I was looking at last year's responses too, and it inevitably, when we have these sort of look at last year, then look at next year, is there any real threat to Amazon's in the [00:03:45] retail space? [00:03:45] And I feel like there's lots of things that feel like threats and so far Amazon is bad at a thousand in terms of fending off the majority of those threats. I would say. Obviously they're new entrants all the time, but no one has unseated them in terms of retail. That sort of thing. But last year it was [00:04:00] all about team moves and machines and, and Amazon all rolled out and Okay, so that's Amazon trying to catch up here. [00:04:06] And now I feel like you mentioned the price tracker. Price comparison. Right. If I go on Amazon today and I click the price comparison, it immediately bounces me into Rufuss. Right? So there's [00:04:15] a lot of these things too that feel reactionary of Amazon looking around and seeing, okay. More and more I'm gonna make Rufus the default native experience. [00:04:23] Whether the consumer opts into that or not, I feel like we're gonna see an escalation of that pretty quickly here. [00:04:28] Kiri: One really interesting [00:04:30] stat from last year that Salesforce shared is that 30% of shoppers globally when they go to a store, they will pull up an LLM and have a system in their buying journey, which you can [00:04:45] totally see. [00:04:45] And amongst Gen Z and millennials, it's 40%. Okay. If you think of back Julie and Jordan, like early days of this, it was showrooming with Amazon. So you go into a store and then you would check Amazon, can I get a better price on [00:05:00] Amazon? What do the customer reviews say? You would augment the information that you'd get in a store 'cause there's no associates around anymore. [00:05:08] You would augment that by going on the Amazon app. Now people are not going on Amazon. They're going to chat [00:05:15] GPT or increasingly in the future, Gemini. So I think that they're losing ground a little bit with that, that in-store shopping behavior as well, which is still, depending on the category, 70, 80% of all of all retail [00:05:30] sales. [00:05:30] So that's one area where I think the Amazon is on the back foot a little bit as well. [00:05:35] Julie: They're counting on [00:05:36] Kiri: their [00:05:36] Julie: Gen Xers, continuing to look at Amazon. I don't know much about that. [00:05:45] Miracle Ads is the only retail media solution designed for both one P and three P Marketplace brands. Why does that matter? Marketplace sellers demand a seamless advertiser [00:06:00] experience that still offers full funnel ad formats, and retailers need a flexible solution that allows you to scale your media business. [00:06:09] Kiri Masters: Learn more@miracle.com. That's M-I-R-A-K [00:06:15] l.com. [00:06:16] [00:06:17] Jordan: An interesting thing that makes your, your mention of like how Home Depot and Myfa are thinking a bit of, I have my onsite agents that help with this part of the shopper journey. [00:06:25] I, my offsite interactivity with some sort of like universal protocol is. I [00:06:30] think back too of like early days Google where it's, I would have my paid search efforts on Google and then I would try to land people on my site and then I would try to build really relevant landing pages to whatever that search term was. [00:06:39] And to me it's, there also is a universe here where there's not one single dominant player, but there is this sort of [00:06:45] offsite ELLA model that handshakes with an on site agent and those two can interface and you still get that sort of delight of, I'm in a branded environment and I can shop in that world. [00:06:54] And those two will talk. Now I realize there's like a lot of incentives. Not to build that, but I feel like that [00:07:00] could be, if we think about an ultimate shopper experience of like still getting the browsing, but the efficiency with Lll, there's a middle ground here. [00:07:06] Kiri: Yeah, and that's what a number of retailers said at NRF as well is, look, we would rather people transact with us. [00:07:13] And in fact, if we are [00:07:15] building a handshake sort of scenario, as you mentioned, where there is an agent to agent conversation, we wanna be the merchant of record if that transaction. Occurs because then there's all these downstream effects. [00:07:30] Thinking about returns and customer service, thinking about access to that customer's data and the transaction, which is very important for retail media. [00:07:39] Mm-hmm. Mm-hmm. To remain a thing, and their loyalty programs and just the ongoing [00:07:45] relevance. And sustainability of the business of being a retailer. That's really important to remain that merchant of record. I also think Google and OpenAI don't wanna be a merchant of record. That's a whole new business that doesn't make sense for them to [00:08:00] get into. [00:08:00] Even with all of Google's forays into shopping, they've never been a merchant. I think that's a, how far up to the line do you want to get of building a commerce experience without actually being a merchant? [00:08:14] [00:08:15] Kiri: So that's the view from the outside retailers racing to plug into third party AI while protecting their role as merchant of record and Amazon looking uncharacteristically [00:08:30] defensive. But what does Amazon actually have to say about all of this? Last week, Amazon, CEO, Andy Jassy addressed it directly in an interview with the information and I found his comments [00:08:45] really, really interesting. [00:08:46] Not for what he said exactly, but for what he conceded in between the lines. Here's a couple of my highlights from that interview. On third party AI agents, Jassy acknowledged the current experience, [00:09:00] which is that it hasn't been great yet. These agents lack buying history. They lack personalization. They act lack, in some cases, accurate pricing and that is true today. [00:09:12] But he also said Amazon is having [00:09:15] conversations with lots of people, as in other AI companies, and is very bullish on ag, agentic commerce. When pressed on whether Amazon would work with open ai, Jassy framed it as a value exchange problem. He said there [00:09:30] needs to be the right value exchange between the agents and between the retailers themselves. [00:09:35] The translation there is Amazon will play ball, but only when the terms favor them. What I found also interesting was his confidence that [00:09:45] consumers will ultimately choose Amazon's own agent over third party alternatives. He [00:09:49] Jassy is betting that convenience and purchase history outweigh the appeal of cross retailer comparison, and maybe he's right, [00:10:00] but that 30% of shoppers already reaching for chat GBT in store. That stat that I mentioned from Salesforce last year suggest the window for that bet to pay off is narrowing. [00:10:13] So at least in this [00:10:15] conversation, Andy Jasi all but confirmed that Amazon ultimately will integrate with third party ai. But the question is whether they're moving fast enough in that direction or whether they're defensive. Posture lets competitors [00:10:30] establish the new rails of AI powered commerce while Amazon waits for the right value exchange. [00:10:37]