In the whole “AI is eating the world” progression, the latest thing to be swallowed is shopping. The thought is that you can do all your shopping end-to-end within your AI engine of choice – from research to price comparisons to transactions. That last part is the holy grail to truly own the customer.
Or as we recently wrote:
By integrating transactional functionality directly in ChatGPT, OpenAI effectively closes the loop and keeps consumers under its roof for the entire shopping flow. This has lots of implications for its monetization potential. Again, Google has been chasing a version of this principle for years.
That last part is notable because history repeats as AI engines follow the Google playbook. Every AI engine on earth is now in a space race to build these end-to-end shopping flows. And they often require partnerships with retailers, payment processors, and the rest of the eCommerce stack.
Flag in the Sand
The competitive pressure around this land grab ratcheted up a few months ago when ChatGPT made its intentions known. This started with a flag in the sand for AI shopping, and a few partnerships with Shopify, Walmart, and others. These are the product listings that ChatGPT ingests and relays to its users.
This sparked lots of activity since then, as we anticipated:
But for OpenAI, Google, or any agentic AI shopping engine, it’s only as good as the breadth and depth of participating retailers, as noted. Fortunately, they’re motivated to play ball to maximize their own surface area. Given that, and coming full circle to the speed of AI, we expect more integrations to follow quickly.
The Race is On
With that backdrop, what’s been happening in the wide world of AI shopping? Here are a few notable happenings we’ve been collecting and synthesizing over the past few weeks to save you time…
Shopify Gets a Boost
Starting with Shopify’s integration into ChatGPT, noted above, the company came out a few weeks ago to boast some traffic and performance boosts. Specifically, year-over-year traffic from AI engines was up 7x, while the orders from traffic are up 11x. Besides the sheer growth, it says something that the latter outpaces the former. For one, traffic from AI engines is converting better than it used to. Keep this in mind when considering the intent of shoppers who go to AI engines to find what they’re looking for.
Target Joins the Party
Joining Walmart, Shopify, and the growing list of retailers and e-tailers noted above, Target is the latest to partner with OpenAI. This not only opens up Target’s product listings for AI training and ChatGPT results, but also lets users purchase those items without leaving ChatGPT. To that end, Target joins the above players in getting direct integration with ChatGPT’s Instant Checkout function.
AI Mode Gets Transactional
Even though Google is the disrupted party – and the broader shopping model that’s being replicated, as noted – it’s not above disrupting itself. That’s a theme you’ll continue to see in Google’s evolution in the AI era. In this case, Google’s AI mode has gained more transactional capabilities. The latest batch of updates includes the ability to transact for beauty appointments and event tickets. Notably, these have a common thread of time-based events, which could mean that Google is experimenting for broader rollouts in anything appointment-based. Think: reservations, professional services, and home services.
Agentic & Automated
Speaking of Google and experimentation, the company is also rolling out features that let Gemini shop for you. This includes a new feature called Agentic Checkout that will transact on your behalf, given specific parameters and user approvals. In the same vein, it’s offering users the ability for Gemini to call stores for you to ask specific questions about products or services.
Trust Issues
Sticking with the topic of transactions, the more that AI engines can partner with payment gateways and established players, the better off they’d be. Indeed, eCommerce is all about trust… and AI engines are lacking in that department. Having established payment rails will go a long way in alleviating those issues when it comes to users opening their wallets. This is the thinking behind OpenAI’s latest get: PayPal. Now, when users are shopping in all the above ways, including ChatGPT’s Instant Checkout function, they can choose to do so with PayPal. That includes using PayPal as a payment gateway for credit card transactions… not just using your PayPal balance.
Just in Time
Lastly, to bring us to the present, the latest moves include AI shopping updates from both ChatGPT and Perplexity. The former builds from the moves already made by OpenAI, including the Instant Checkout function mentioned a few times above. This week, it adds better contextual and conversational understanding for complex shopping queries, as well as a visual function to upload an image and say something like “find me a less expensive version of this product.” Meanwhile, Perplexity joins the AI shopping mix just in time for Black Friday with its own set of new features. These include integrating its AI memory functions into shopping. For example, shopping results can be refined based on what the AI engine already knows about you (think: dog owner, whiskey enthusiast, etc.).
Heating Up
So there you have it… this is just a representative sample, and the action will continue to heat up. We’ll watch closely and report back with the most notable market developments.
Header image credit: Lucrezia Carnelos on Unsplash
