As shoppers increasingly turn to ChatGPT and Google\u2019s Gemini for product recommendations, retailers are racing to appear in chatbot results while resisting efforts to cede customer data that underpins online sales.<\/p>\n
Growing online traffic from AI platforms has pushed retailers including Walmart, Ulta Beauty and Wayfair to update their websites so their products rank highly in chatbot searches. Yet many want purchases to remain on their own websites, where they can collect data on browsing habits, basket sizes and past purchases that help drive future sales and customer loyalty.<\/p>\n
Shoppers are expected to spend US$8 billion this year after AI agents such as Anthropic\u2019s Claude and Gemini direct them to retail sites, according to Juniper Research. Adobe Analytics said 41 per cent of US consumers used generative AI for online shopping in June and visitors referred by AI services generated 41 per cent higher revenue per visit than shoppers arriving through traditional channels.<\/p>\n
Unlike search engines that rank pages based on keywords and links, chatbots respond to detailed questions, prompting retailers to rethink how they describe products online and how customers find brands.<\/p>\n
\u201cWe always want to be wherever our guest is,\u201d Ulta Beauty\u2019s head of digital and e-commerce, Josh Friedman, said. \u201cWhether it\u2019s Google search, affiliate marketing (or) Facebook, there\u2019s always a tax for engaging customers on other people\u2019s platforms. I don\u2019t think this is any different.\u201d<\/p>\n
Ulta is seeing \u201cdouble the conversion and intent\u201d from shoppers finding its products through Gemini and ChatGPT. The company is working with Google to incorporate shopping carts and its Ulta Beauty Rewards loyalty program into AI-powered shopping within Gemini.<\/p>\n
But Friedman said the retailer would prefer customers complete transactions on Ulta\u2019s website.<\/p>\n
Retailers defend their turf<\/p>\n
Executives argue that retailers retain an edge because they know far more about customer preferences than general-purpose AI tools do.<\/p>\n
\u201cWhen a shopper completes a purchase on a brand\u2019s own site \u2026 the retailer maintains a direct relationship with that customer,\u201d said Vince Koh, global head of digital commerce at Amazon Web Services.<\/p>\n
AWS is encouraging retail clients, including Tapestry\u2019s Kate Spade, to use AI platforms to market products while ensuring their own websites remain \u201cthe best place to buy.\u201d<\/p>\n
When shoppers use AWS-powered search tools on Kate Spade\u2019s website to look for US$380 suede bucket bags, the company can use information on products viewed, budgets and style preferences to personalise recommendations and build loyalty, Koh said.<\/p>\n
Retailers know more about their products and customers than \u201cgeneral-purpose\u201d AI tools, Koh said, giving them an edge in recommendations and customer loyalty.<\/p>\n
Wedding-planning platform The Knot said it is taking a similar approach. The company is optimising its website so its vendors appear in ChatGPT results, but it is trying to convince couples to book their wedding venues and invitations directly through the company\u2019s website.<\/p>\n
\u201cLLMs are another place to start, another place to search, another place to plan, but we have three decades of data to help\u201d people coordinate weddings, CEO Raina Moskowitz said, referring to AI large language models.<\/p>\n
Retailers keep the upper hand, for now<\/p>\n
While ChatGPT and Gemini are emerging as important ways to market products, consumers still appear more comfortable completing purchases on retailers\u2019 own websites.<\/p>\n
In March, OpenAI ended Instant Checkout, a tool that let shoppers buy clothes and other items through ChatGPT. The company is now focused on product discovery and helping merchants and marketplaces such as Etsy to use their own checkouts.<\/p>\n
Etsy has seen a similar pattern. Users who find products through ChatGPT typically return to Etsy\u2019s website to complete purchases, Chief Product and Technology Officer Rafe Colburn said.<\/p>\n
\u201cIt\u2019s the start of a deeper relationship, and not just one that\u2019s always intermediated by ChatGPT,\u201d Colburn said.<\/p>\n