The Dangerous Economist: ChatGPT Should Make Retailers Nervous

Retail companies risk losing control of the online shopping experience

"ChatGPT’s Instant Checkout feature allows shoppers to go from asking something like “find me the lightest strollers under $300,” browse, and proceed to checkout without leaving the chat. OpenAI has said that merchants pay it a small fee on completed purchases. The product results that come out of ChatGPT inquiries will be “organic and unsponsored,” OpenAI says.
The retailers’ reasoning is pretty straightforward: If people are going to chatbots for shopping recommendations, it only makes sense to be there and get the first-mover advantage. “You want to be closest to the place of discovery,” notes Oliver Chen, analyst at TD Cowen."
"Roughly 38% of U.S. consumers surveyed by Adobe earlier this year said they have used generative AI for online shopping"
"letting shoppers skip retailers’ websites and apps could come at a cost. Airline companies, for example, haven’t had the best relationship with third-party booking sites. Some have pulled their fare information from those websites to avoid paying a fee and to improve sales of add-on products such as extra legroom and frequent-flier points through their own websites."
"easy comparisons and direct checkout could hurt retailers’ customer loyalty and take away add-on sale opportunities. It could also dent retailers’ important ad revenue. Of the roughly $59 billion that companies are expected to spend on U.S. retailers’ ad business this year, more than 60% is tied to search placements on those retailers’ sites and apps, according to a report from Emarketer. “If discovery moves upstream to universal AI assistants, ad budgets could follow,” according to the firm’s report. Losing ad revenue would be bad news for retailers, especially Walmart"
"While OpenAI doesn’t run ads yet, it has been looking for ways to monetize the platform"
"Amazon . . . has reportedly blocked GenAI platforms from scraping information from its website"
"Amazon is working on a handful of its own shopping AI features"
"For retailers, the best-case scenario might be a future where consumers use universal AI platforms such as ChatGPT only for certain types of purchases. Perhaps these are purchases that are higher budget or require more complex decisions, such as sofas or washing machines."
"Consumers might use universal chatbots to shop for a wide range of things—from household staples to season-appropriate clothing—without clicking on a single link to a retailer’s website."