Latest / Retail Media Breakfast Club / The AI Shopping Agent War Begins
Transcript
- AI SHOPPING AGENTS === [00:00:00] In the classic board game risk players maneuver armies across continents form strategic alliances and attempt to control territory. To today, a similar high stakes game is unfolding in the digital realm as tech giants position their AI shopping agents to capture the most valuable territory of all. The consumer purchase journey and the latest move in this global game is open AI and the news last week of an apparent preparation to integrate Shopify powered native purchasing directly within chat GPT. And all that means that Chache PT would transform from an information tool to an end to end shopping platform. As in you research something, you find where you wanna purchase it, and then the transaction happens [00:01:00] right within Chat GPT. While this development has piqued a lot of interest, it is far from the only shopper agent that we've seen so far. If you've listened to this podcast, you know I've talked a lot about Amazon's various shopping agents. So we're sort of starting to see this new battlefield emerge and this concept of AI shopping agents really take shape. So I want to introduce you to the major powers in this game of risk that's unfolding online. And I will share a, , a chart in the article that accompanies this podcast today, just showing a chart of the monthly active users for each of these players and their retail GMV. The one that I'll just point out verbally to you is [00:02:00] the Shopify and OpenAI combination has an interesting balance between monthly active users and retail. GMV. So open, uh, OpenAI is monthly active users is 600. Million and the retail GMV of Shopify is 300 billion. And then the next sort of player that has both monthly active users and retail GMV is of course Amazon. Amazon has more than double the GMV of Shopify at around 700 billion. And that. Accounts for third party marketplace, top line sales, as well as the um, first party sales, but they're really sort of behind in terms of monthly active users. I wouldn't call a monthly active user in this context and Amazon shopper. I would actually look at what's the closest thing to [00:03:00] an LLM that they have right now, which. I would say is Alexa, although Alexa uses would beg to differ that Alexa is a true LLM. So I just wanted to set that context without the chart. It's a little, you know, it's a little difficult to follow what I'm talking about. But I'll talk through each of these players and their relative strengths, and then what it's going to mean for retailers and brands navigating this new world where consumers are doing end-to-end shopping activities through a. AI agent, right? So the first and most significant with this leak is open AI together with chat GPT. So, as I said, the largest number of active users of any LLM by far, with 600 million monthly active users. The closest is [00:04:00] Microsoft. With its copilot, LLM, that's at three 50, so a little over half of what open AI currently has. So the strength of this player here is massive consumer reach. Shopify, you know, isn't any. Slob when it comes to GMV as well, they're able to contribute a lot and it has a very, it has a long tail as well, so this is, you know, a stable player that's well diversified. Second big power here, of course, is Amazon. Amazon has already outpaced all its retail brethren who are distracted with deploying onsite chatbots right now. Amazon is the only retailer out there I'm aware of that has built an built actual AI agents. One is Alexa, plus this is the bones. Of a true [00:05:00] consumer facing agent, which can perform shopping, research, and perform actions for users. Of course, it's still got a long way to go in terms of how helpful it is. I think we're gonna get there second. Big development from Amazon is Nova Act. Talked about this a couple of weeks ago. This is a new AI model that's designed to take autonomous actions across the web, not just shopping, and it's available right now to developers, but this is, this kind of technology could be underpinning Alexa Plus as well. And then of course, the most recent string in its bow. For Amazon is buy for me, and this is an agent currently in beta that allows Amazon shoppers to purchase non-Amazon products, right within the Amazon shopping app. So Amazon's big strength here is in massive product ca catalog, having its own logistics infrastructure and [00:06:00] its reach with. Prime members and consumers overall. But of course, Amazon, as I mentioned, falls short in the LLM usage department. The other competitors that we're looking at here is Perplexity. So Perplexity Advantage, they were the first one to really launch a consumer shopping agent with Buy With Pro. Uh, so they win the early mo mover card, but it's a much smaller LLM in terms of monthly active users with just 10 million monthly active users. So, but perplexity still is very interesting because they were first to market. They've shown a lot of interest and it could be a really interesting neutral ally for retailers especially who value neutrality. And the two remaining players are Microsoft and Google. So Microsoft has recent, [00:07:00] very recently this month rolled out its official co-pilot merchant program. And so Microsoft big strength here is its existing partnerships with major retailers. And finally, Google is a little later to the AI game, but. They obviously have huge advantages here with search data, a big user base with, um, it's Android user base and it could become a pretty formidable player, um, once they turn their attention here. So how do retailers stay on the board? We've got a huge retailer in Amazon already on the board. How are retailers like a Best Buy or other category retailers or grocery retailers, what's going to happen when this consumer behavior really starts to pick up speed and people really do start researching and [00:08:00] completing their purchases right within their LLM of choice? Will. Retailers are gonna face a critical decision, which alliance is going to help them maintain relevance As AI shopping agents reshape consumer behavior. Most retailers and brands who sell direct are going to. Build an alliance with one of these power blocks, either joining copilot merchant or syndicating their feeds to perplexity or something like that, because that's the quickest way into these consumer conversations. The risk here is channel dependence and lost data. One solution here might be a technology called Model context protocol, or MCP. And so MCP acts kind of like A-U-S-B-C for AI agents as one [00:09:00] standardized connection that exposes products, inventory, loyalty information, coupons, checkout capabilities to any compliant. Model. So this means a retailer can grant access to several LLMs at a time, including open ai, cord Gemini, preserving their data serenity, while still showing up in chat results. So this gives retailers an opportunity to participate in multiple AI marketplaces without surrendering customer data or pricing logic while still being part of the AI shopping revolution. The global conquest continues just like a game of risk that stretches into the early hours. The battle for AI shopping dominance is just beginning. Alliances will form and dissolve. Territories will be contested, and new powers may emerge. We haven't even discussed [00:10:00] what happens to the $65 billion retail media industry. When AI agents become a primary shopping interface, but don't worry, you can bet I'm going to be covering this topic in the near future, so make sure you're subscribed to the podcast for that. The next moves in this high stakes game will likely come rapidly as open AI's shopping integration comes online and Amazon responds with its own consumer facing agent capabilities. In this new battle, the conquest has only just begun.