Retailers tap AI shopping traffic but fight to keep customer data

As more individuals rely on AI-powered chatbots like ChatGPT and Google's Gemini for shopping assistance, retailers are scrambling to secure prominent positions in these virtual storefronts while guarding against the surrender of precious customer data. Major retailers like Walmart, Ulta Beauty, and Wayfair are enhancing their websites to ensure their products rank highly in chatbot searches.

However, many companies are adamant about retaining control over customer purchases, as this data enables them to drive future sales and foster customer loyalty.

Juniper Research projects that consumers will spend $8 billion this year, thanks to AI agents like Anthropic's Claude and Gemini directing them to retail websites. According to Adobe Analytics, 41% of U.S. consumers utilized generative AI for online shopping in June, with visitors referred by AI services generating 41% higher revenue per visit compared to those arriving through conventional channels.

Retailers face the challenge of adapting their product descriptions and marketing strategies to cater to the nuanced queries posed by AI chatbots. Unlike traditional search engines, which prioritize keywords and hyperlinks, chatbots provide detailed responses, necessitating a shift in how retailers present their offerings online.

Ulta Beauty's head of digital and e-commerce, Josh Friedman, emphasized the company's commitment to being present wherever its customers are, whether it's Google search, affiliate marketing, or AI platforms like Gemini and ChatGPT. Ulta has observed double the conversion and intent rates from shoppers discovering its products through these AI channels.

The company is collaborating with Google to integrate shopping carts and its loyalty program into AI-powered shopping experiences within Gemini. However, Friedman expressed a preference for customers to finalize their purchases on Ulta's website to maintain a direct relationship with the brand.

Executives from Amazon Web Services (AWS) argue that retailers hold a distinct advantage over general-purpose AI tools, as they possess a deeper understanding of customer preferences. When a shopper completes a purchase on a brand's own website, AWS asserts that the retailer maintains a direct relationship with the customer. Vince Koh, AWS's global head of digital commerce, highlighted that AWS is encouraging retail clients, including Kate Spade, to utilize AI platforms for product marketing while ensuring their websites remain the preferred destination for purchases.

Retailers like The Knot, a wedding-planning platform, are also leveraging AI to enhance customer experiences. The Knot is optimizing its website to appear in ChatGPT results while actively encouraging couples to complete their wedding-related purchases, such as venues and invitations, directly through the company's website. CEO Raina Moskowitz emphasized that large language models (LLMs) like AI represent another avenue for planning and searching, but the company's extensive data will guide customers through the process.