Analysis:AI shopping agents could threaten Amazon and Walmart’s ad business
FILE PHOTO: Amazon’s logo is seen in this illustration created on February 11, 2025. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo
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Nov 4 : The rise of AI-led shopping is posing a conundrum for retailers like Walmart and Amazon: how to enable AI agents to shop on their websites, without threatening their lucrative advertising revenue and the customer data that fuels it.
Retail powerhouses Walmart and Amazon are also the world’s two largest retail media businesses, dominating the estimated $74.4 billion in US retail media spending with a combined 88 per cent share of that market, according to projections from data firm Emarketer. But digital assistants could soon disrupt that business.
AI-powered agents that can research and purchase products on consumers’ behalf — like Meta’s recently released Muse — could erode the highly profitable business of brands paying retailers to promote products on their websites and apps. Morgan Stanley researchers said in July these agents could account for 10 per cent to 20 per cent of US e-commerce spending by 2030.
Amazon and Walmart are taking different approaches to agentic AI shopping. Amazon has blocked Muse, while Walmart is officially partnering with Meta’s agentic tool.
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So far, there is no meaningful effect yet on Amazon ads from third-party agents, Amazon CEO Andy Jassy said last week. However, the company’s 11 per cent year-over-year growth in advertising revenue for the third quarter was its slowest pace of growth in nearly four years, LSEG data show. The segment consistently accounts for about 10 per cent of total net sales.
DIFFERENT APPROACHES
Amazon banned Muse from its website in September, saying it appeared to have accessed its online store without authorization, capturing and storing customer credentials. Meta declined to comment.
The e-commerce leader told Reuters this week that third-party agents should operate openly and respect service providers’ decisions about whether or not to participate.
Amazon also won a court order blocking Perplexity’s shopping agent Comet in March, though the 9th US Circuit Court of Appeals overturned the ban in August, a decision Amazon said it disagreed with. The case is ongoing.
Walmart, conversely, rolled out infrastructure on October 21 to enable third-party agentic commerce. When a shopper uses an agent to browse, Walmart will create a profile for that agent that links to the shopper’s Walmart account. Consumers can approve purchases or set spending limits.
Walmart CFO John David Rainey told analysts and investors in August that advertising, which includes the Walmart Connect retail media business, along with its membership and marketplace operations, accounted for 45 per cent of quarterly operating income growth. Walmart does not separately break out Walmart Connect’s figures in its earnings release.
Dan Marc, CEO of retail media platform Footprints AI, said he expects companies like Amazon and Walmart to start signing their largest advertisers to multiyear ad deals to secure those revenues, and also expects more discounts on digital retail media ads as shoppers turn to large language models and agentic tools.
Walmart declined to comment.
SHIFTING MARKETING LANDSCAPE
Morningstar analyst Brett Husslein said the moment presents “an evolution rather than an existential threat” for retail media. Brands are expected to spend 22.6 per cent more on retail media in 2026 than last year’s $60.7 billion, Emarketer forecasts show.
This year, Walmart started testing ads within Sparky, its AI shopping chatbot, just as Amazon has embedded them in its AI shopping assistant, Alexa for Shopping.
Advertising for bots may rely less on visual flair or emotional resonance and more on specific product data that matches customer queries using AI chatbots, industry practitioners and consultants say.
Companies including Procter & Gamble, Nestle and L’Oreal have said they are trying to make product information digestible for AI agents. Those agents are bringing brands closer to consumers, said Mondelez’s vice president of global digital commerce, Andrew Lederman, on a podcast in April. He said retailer media sites currently still drive the vast majority of volume for the company.
“We are not recommending that clients fundamentally shift their retail media budgets overnight,” said Amie Owen, chief client officer at digital commerce consultancy Flywheel. “But we are advising them to prepare for how discovery and purchase decisions may evolve.”
Katherine Black, a senior consultant at Kearney, envisions a radical shift, in which retail media eventually evolves into a kind of “bidding system” where agents search for a product at a consumer’s price point, and retailers set price ceilings and floors.
“All retailers need to be thinking about how to interact with consumers in new ways,” Black said.
Source: Reuters
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