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Shopping was once a bricks-and-mortar experience. Then came the web, smartphones and social media. Now it is coming to a chatbot near you. For retailers, that’s both good and bad.
Agentic commerce, or artificial intelligence-powered shopping, is the hot new trend. Over the past month, Etsy, Shopify, Walmart and PayPal have announced plans to make their products and services available within OpenAI’s ChatGPT. As a result, shoppers who today challenge the app with such questions as “What are the best shoes for under $100?” will also be able to buy them directly through ChatGPT instead of being redirected to a retailer’s website.
The financial market, at least, is buying into this. Walmart added about $40bn to its market capitalisation on the day it announced its OpenAI partnership, while Shopify and Etsy tacked on $11bn and $1bn, respectively.
And, indeed, the potential pay-offs are huge. More people are using generative AI apps such as ChatGPT, Perplexity or Google Gemini to do their online searches and shopping. Traffic to US retail sites from GenAI browsers and chat services increased 4,700 per cent year on year in July, according to Adobe. McKinsey declared in a report this month that, by 2030, agentic AI could drive up to $1tn in US retail revenue and $3tn to $5tn globally.
But agentic AI also has downsides for retailers. For one thing, shops risk missing out on spur-of-the-moment, add-on purchases, when shoppers who visit a website for one thing end up buying other items as well.
Most seriously, retailers are giving away valuable data by allowing transactions to take place in AI apps instead of their own websites. That’s a problem, given they have been using sought-after insights on consumers’ shopping habits to build up their own digital advertising businesses. This is a booming area with revenue expected to grow by almost two-thirds to $97.5bn by 2029, according to Emarketer, and a market that OpenAI — armed with reams of new data — could potentially make inroads in.
One reason why retailers may be embracing agentic shopping so enthusiastically is that their current situation isn’t free from trade-offs. Today, they have to pay search engines such as Google and ecommerce heavyweights such as Amazon for the privilege of appearing higher up on their pages. Often, they find the marketplace competes with them directly as well. So far, OpenAI is not employing similar tactics. Its search results are organic and unsponsored. Merchants just pay a small fee on completed purchases. That could, of course, change in the future. Retailers must hope they are not trading one set of gatekeepers for another.