Latest / Retail Media Breakfast Club / Agentic Shopping Poses An Existential Threat To Retail Media (Part 2)
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- Agentic Shopping Poses An Existential Threat To Retail Media (Part 2) === [00:00:00] Kiri Masters: Welcome back to the Retail Media Breakfast Club. This is part two of my conversation with Scott Wino, where we are breaking down the ripple effects of AI and agentic shopping on the retail media ecosystem. I shared in part one of [00:00:15] this discussion how in a future scenario where an AI agent is transacting on behalf of a customer. [00:00:22] That the value prop of a retailer's ad business is under threat, and that's true whether we're talking about [00:00:30] onsite sponsored product ads or offsite display ads. In this episode, part two of that conversation, we explore the real world consequences of that situation. Are retailers going to lose [00:00:45] their data edge and their retail media cash cow. [00:00:49] Where will brands want to be spending their ad dollars when AI becomes the surface, not the retailer.com, and much more. This discussion first aired on [00:01:00] the Retail Gentech Podcast with Scott Wino, which is another great podcast I think you'll like. I'll link up to it in the show notes. Now let's jump back into the conversation. [00:01:10] [00:01:12] Scot Wingo: Sam Altman has said pretty publicly, he doesn't [00:01:15] want to do ads. [00:01:15] Kiri Masters: Yeah, so that, yeah. Mark. Interesting. Mark Zuckerberg said the same thing. And Sam Altman just went and hired Fiji CMO from Instacart, who built a very successful ads business over there to lead applications. So I'm sorry I don't buy [00:01:30] it for a second that there won't be ads in chat. [00:01:33] GBD. [00:01:34] Scot Wingo: Yeah. [00:01:34] Kiri Masters: I, [00:01:34] Scot Wingo: I think you're probably right. I think they have a lot of flexibility of making revenue to cover them up. Sure. [00:01:39] Kiri Masters: This is it, it's such a no brainer for them to do it. So then what's left [00:01:45] from those three buckets of income that I mentioned to you? [00:01:50] You've still got the physical environment. You can still do end caps, you can still do, this is not my world. So I don't know all the, all the, all the terms, but all this trade [00:02:00] budget that's currently at risk from the hot new thing, which is retail media, ironically, I think that's actually very safe 'cause people still will go to stores and some people, if they disagree with me, they're like, oh, but. [00:02:13] You think you're [00:02:15] gonna allow an agent to buy everything for you? And it's like, well, no, there's, it will still be one of several modalities that we use to go buy things. Mm-hmm. There'll still be stores. So that sort of [00:02:30] what, how I see things shifting and then what retailers do with that and what brands do with that evolution is, um. [00:02:39] Yeah, something else, something else that we can talk about. I have some ideas, but I'll, I'll just, I'll just stop there and see if [00:02:45] you have any holes to poke in my, in my outlook there. [00:02:49] Scot Wingo: No, I think that's right. Let's say, and it's easy, it's a good thought experiment to kind of paint these things as black and white. [00:02:55] It's kind of like you, you see, the edge cases and you can kind of see what's going on. But [00:03:00] you know, you've been at this for 10 years. I've been at it. Probably like 30. And you know, I'm always surprised e-commerce is only like, depending on which number you look at, 16 to 20% of overall sales. [00:03:10] So, I do think to your point, I think this is just gonna be another modality of how [00:03:15] people are shopping. I saw PayPal CEO said 25% of e-commerce will be ENT by 2030. That feels right. But it's 25% of 20%. Which is 4% of commerce. So it'll probably be a percentage. [00:03:29] [00:03:30] And you know that that itself isn't material for commerce, but 25% is right material being defined anything over 10%. But what happens if 25% of the traffic goes away, you know this world better than I do. [00:03:45] Certainly. So Amazon would feel it, right? Because that's a $60 million line item for them. [00:03:49] That's, I think, pure margin. So that would go down by 25% naturally but then who else? Do you think that's cataclysmic for your world? Or people would be like, oh, it just [00:04:00] makes inventory more valuable and people will pay more for it. Like, is there a counterbalance to that? [00:04:04] Kiri Masters: Yeah, it's, it is a really great point about it being a percentage of a percentage. [00:04:10] And ironically, I think you're right, that the retailers that have the biggest exposure to [00:04:15] e-commerce will have the biggest hit. I mean, there's not so many. I shop online a lot regardless of the category, but a, for a grocery retailer like a Albertsons or an HEB or someone like that, people aren't doing, [00:04:30] they're not so much going to the website and checking out or using the app unless. [00:04:37] They're, a chronically online, shopper. So really the onsite environment for them is probably [00:04:45] less of a revenue stream than the offsite in terms of volume that they're bringing in with their network. So, yeah, I think you're right. [00:04:52] The ones that are more exposed to e-commerce probably stand to lose the most. [00:05:00] When your time, budget and team are already maxed out. Keeping up with retailer platforms and media requirements can feel like a never ending labyrinth. That's why even the best [00:05:15] brands bring in an execution partner. [00:05:17] Acosta Group makes retail media execution simpler. They stay ahead of every platform. Update tech shift. And media spec, so your campaigns actually show up and [00:05:30] perform without draining your team. [00:05:32] Let Acosta group handle the chaos behind the scenes so you can keep building the brand. Check out Acosta Group and tell them Retail Media Breakfast Club sent you. That's A-C-O-S-T [00:05:45] group. [00:05:48] Scot Wingo: I think this just occurred to me, but I think another big loser in this could be Instacart because, um, you know, that's where having an agent is super helpful because it's such a drag to press all the buttons to get like [00:06:00] the avocado added to your car at Instacart. [00:06:02] So I wonder, and then if it's like an agent kind of pressing those buttons, then the ad efficacy could go way down because that's a huge part of Instacart's revenue, right. Is, is ads. Last I looked at was it was almost all the margin and pretty material [00:06:15] part of revenue. So that's understandable. [00:06:16] And a lot of people have been leaving Instacart. I don't know if you've followed this or not, but, uh, so you mentioned Fiji left. [00:06:22] Kiri Masters: Oh, right. [00:06:22] Scot Wingo: Chief product officer just got, went to Walmart, uh, perplexity hired previous Chief product Officer. Wow. And I [00:06:30] think there's like three or four people underneath those folks that have left. [00:06:33] So I wonder if there's a little bit of writing on the wallet at Instacart that maybe. The gin thing is, is somewhat risky for them. [00:06:40] Kiri Masters: Interesting. Yeah, and I think that there is still a lot for [00:06:45] retailers to do here as well. I actually think, that there's a very significant opportunity for loyalty programs. [00:06:53] If you think about what kind of preferences am I gonna feed to my [00:07:00] AI as a sidekick, it's. Dietary preferences, budget preferences, but it's also, if a retailer has a really strong loyalty program, that's potentially gonna factor [00:07:15] into my criteria as well. So I might say like a grocery shopping, build a basket scenario, [00:07:22] i'm making these five meals this week. Build a basket and tell me which retailer is gonna be cheaper for all these things that I need on my [00:07:30] list, I might come back with. Retailer A is cheaper than retailer B, but I just remembered I have my loyalty tier with retailer B, and even though a little bit more expensive, let's go with them. [00:07:41] 'cause I really wanna get this perk that they offer when I get to the [00:07:45] next tier. Or they always give me samples in my order or whatever it is for a retailer gas point, [00:07:50] Scot Wingo: me it's gas points. [00:07:51] Kiri Masters: There you go. [00:07:52] Scot Wingo: Yeah, yeah, yeah. Gotta get our Harris Teeter gas discount. [00:07:56] Kiri Masters: Harris Teeter, you're listening. [00:07:58] They're part of the Kroger group. Yeah. [00:07:59] Scot Wingo: [00:08:00] Mm-hmm. Yeah. Kroger part of, [00:08:01] Kiri Masters: yeah. So that is, I think that's a really big opportunity that could come back. Um, and then other differentiators, and these are not new concepts, but. You can differentiate on [00:08:15] fulfillment speed, you can differentiate on ease of returns. [00:08:18] You can differentiate like a Sprouts farmer's market or something like that on unique selection and having more homegrown brands or whatever it is. So there's still many things that [00:08:30] retailers can do. And then we get into this topic of gating the agents, and this is where I find it super interesting, this philosophical divide between Walmart, who is. [00:08:41] By comparison to Amazon, like flinging the doors [00:08:45] open and saying, welcome, welcome. We welcome, our robot overlords, like at some point in the future, they actually want Sparky to integrate with external agents, whereas Amazon's building their closed ecosystem. Like, [00:09:00] Alexa, you need to use Alexa plus for everything. [00:09:02] So that'll be super interesting to see how that plays out. [00:09:06] Scot Wingo: Yeah, if you're number one, you wanna protect your position, you're king of the hill. So you build a wall and if you're number two and you've been trying to catch number one for [00:09:15] 30 years and, and frustratingly you've never gotten close, this is your opportunity to lean in and finally catch up to them. [00:09:21] So it is interesting to, it's gonna be very fascinating the next three or four years to see which of those decisions, right? [00:09:27] [00:09:28] Kiri Masters: I hope you enjoyed [00:09:30] this conversation with me and Scott Wino from the Retail Gentech Podcast. Just a reminder, you can go check out that full episode on retail gentech.com and I'll link up to it in the show notes. Thanks for listening, and I'll catch you tomorrow.