Retailers tap AI shopping traffic but fight to keep customer data

As shoppers gravitate towards ChatGPT and Google's Gemini for product suggestions, retailers are scrambling to secure prominent placements in chatbot outcomes while being cautious about relinquishing customer data that fuels online sales. With burgeoning online traffic from AI platforms, companies such as Walmart, Ulta Beauty, and Wayfair are refining their websites to ensure their products top chatbot search results.

However, many retailers are apprehensive about relinquishing control over customer data, which assists in tracking browsing behaviors, basket dimensions, and previous purchases that fuel future sales and loyalty.

Juniper Research anticipates shoppers will spend $8 billion this year following AI agents like Anthropic's Claude and Google's Gemini channeling them to retail websites. According to Adobe Analytics, 41% of U.S. consumers utilized generative AI for online shopping in June, generating 41% higher revenue per visit compared to those arriving via traditional channels.

Unlike search engines that prioritize keywords and links, chatbots respond to intricate queries, compelling retailers to revamp their product descriptions and customer discovery strategies. Jonathan Friedman, Ulta Beauty's head of digital and e-commerce, emphasized the significance of being present where customers are, irrespective of the platform.

Ulta observed double the conversion and intent from clients finding their products via Gemini and ChatGPT. The company is collaborating with Google to integrate shopping carts and its Ulta Beauty Rewards loyalty program into AI-driven shopping within Gemini.

Despite these efforts, retailers strive to retain control over the purchasing process. Ulta's Friedman asserted that the company would prefer customers finalize transactions on its own website, where they can accumulate valuable data about shopping habits. Amazon Web Services (AWS) encourages retail clients, such as Kate Spade, to leverage AI platforms for product marketing while maintaining their websites as the top destination for purchases.

When clients employ AWS-powered search tools on Kate Spade's website to hunt for $380 suede bucket bags, the firm can personalize recommendations based on viewed products, budgets, and style preferences, fostering customer loyalty.

Similarly, The Knot, a wedding-planning platform, is optimizing its website to ensure its vendors surface in ChatGPT results, while encouraging couples to finalize wedding venues and invitations directly through its website. CEO Raina Moskowitz highlighted that LLMs (large language models) offer another avenue for planning, supported by three decades of data to aid in wedding coordination.

Despite the emergence of ChatGPT and Gemini as vital marketing tools, consumers remain more comfortable completing purchases on retailers' websites. In March, OpenAI discontinued Instant Checkout, a feature enabling shoppers to buy products through ChatGPT, and is now concentrating on product discovery and facilitating merchants and marketplaces like Etsy to utilize their own checkout processes.