A weekly podcast with the latest e-commerce news and events. Episode 328 is a discussion of e-commerce news including US Department of Commerce June data. and a recap of the latest Answer Engine news that impacts commerce including Perplexity Commerce, ChatGPT 5.0, and Alexa+.
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EP328 – Navigating E-commerce News and Innovations in AI Answer Engines for Commerce
In this episode of the Jason and Scot Show, recorded on Thursday, July 23rd, Jason and Scot delve into the latest shifts within the e-commerce landscape, emerging consumer trends, and the role of Artificial Intelligence in retail transformation. Jason has been on the road, engaging with industry professionals and moderating discussions around pressing retail topics such as social commerce and consumer behavior, particularly the growing usage of answer engines amid an evolving shopping cycle involving giants like Amazon and Google.
Scot kicks off the episode by teasing insights from Jason’s recent travels and virtual think tank participation, where they investigated consumer trends such as the surge of ethical purchases and the dynamics of social commerce influenced by platforms like TikTok. The duo explores the implications of consumers increasingly relying on answer engines throughout their shopping journeys, particularly in the wake of mounting competition from dedicated AI solutions.
Listeners are treated to an analysis of recent U.S. retail data, highlighting core retail sales growth—a modest 3.8% year-to-date—contrasting the slower pace of e-commerce growth, now at only 6.8%. The conversation turns to the dichotomy between successful retail giants like Amazon and Walmart, against a backdrop of underperforming categories like electronics and home improvement, veering into the impact of macroeconomic factors on consumer spending behavior.
The episode also takes a closer look at notable earnings releases, particularly how tech giants like Google are grappling with a shift towards answer engines like ChatGPT, disrupting traditional search methodologies. Scot shares insights on Google’s recent performance metrics that seem to mask a creeping decline in organic search volume, while Jason echoes concerns about the current retail media landscape and the challenges it poses to user experience on platforms like Amazon.
With light humor and camaraderie peppering deeper analysis, Jason and Scot examine the implications of Walmart’s recent hires in AI technology and strategy, reflecting on how retailers are pivoting to become more like answer engines amidst intensifying competition.
As they look ahead towards the upcoming holiday season, expectations are tempered by economic uncertainties and supply chain disruptions, hinting at an uneven landscape where larger players may gain traction at the expense of smaller retailers.
The pair wraps up the episode by expressing optimism for the future of AI in simplifying shopping experiences while also critiquing the current voice shopping functionality on devices like Amazon’s Alexa+. Join them as they illuminate the complexities shaping today’s e-commerce environment while addressing the pressing questions retailers must answer to thrive in an increasingly competitive landscape.
Don’t miss out on their engaging discussions; be sure to subscribe for the latest insights into retail trends and innovations!
This episode is packed with valuable insights and anecdotes, perfect for retail enthusiasts and industry professionals looking to stay ahead of the curve. Enjoy the show and don’t forget to leave a review!
**Episode 328 of the Jason & Scot Show was recorded on Thursday, July 23rd, 2025.**
Join your hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of ReFiBuy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
Transcript
Jason:
[0:23] Welcome to the Json and Scott show this episode being recorded on Thursday July 23rd I’m your host Jason retailgeek.
Scot:
[0:36] Hey Jason and welcome back Json and Scott show listeners Jason it’s been too long you’ve been a busy traveling person do you have any fun trip reports to share with listeners.
Jason:
[0:49] Uh I have been doing a lot a fair amount of travel it’s mostly been client travel so I won’t share that report until my performance review but. The I did today have kind of a fundament that the interf hosted a virtual think tank so they picked 3 popular topics that, the retailers weren’t interested in talking about and they each got to sign up for a topic and they had kind of 3 moderators 1 of which was myself and I moderated a topic around, emerging consumer Trends which many of which would be familiar to you Scott.
Scot:
[1:23] Yeah let me guessFriendster is coming back.
Jason:
[1:29] It that yeah the big Trend was Friendster and then the that consumers will only buy Purpose Driven ethical organically grown products those are. Those are the 2 Trends if you just focus on those 2 and do nothing else you’ll be totally fine.
Scot:
[1:46] Stated preference and observed preference get some every time.
Jason:
[1:49] It it does it does indeedbut know there was a there was a bunch of good conversation. In our in my breakout 1 of the big topics was social commerce and. You know how Discovery is playing out on the social networks and whether it’s a Commerce platform or it’s a interest generating platform that refers and.
Jason:
[2:09] Kind of the es and flows of the the Chinese platforms like Tik Tok so they’re they’re all kinds of interesting conversations and then that that started to. Kind of swerve into AI topics that you would be particularly interested in but then very predictably the other big consumer Trend was just the answer engines and and consumers increasingly. Using answer in engines at various points in their in their shopping missions and what people are doing to address that and prepare for that and and all those sorts of things and I kind of the, the table setting was you know everyone feels like, like we’re going through the first shopping cycle with the Amazon Prime week and now back to school where you know the biggest 2- e-commerce platforms out there have native answer engines that are available to everyone now in in Rufus and Sparky, and the the third party answer engines have have really ramped up their Commerce capabilities and and of course you know Google has pushed, push Gemini well in front of traditional search so, so lots of reasons that consumers on purpose and and involuntarily are are starting to use answer engines on their path to purchase.
Scot:
[3:25] A topic near and dear to my heart in fact we’re going to talk a little bit about it tonight and probably I don’t know how deep he went on that 1 but I think we’ll go a little deeper probably we’ll see.
Jason:
[3:34] Yes yeah you’ve thought about it a lot more than these folks because these folks have like actual day jobs that they have to.
Scot:
[3:41] This is my day job.
Jason:
[3:42] Yeah exactly that’s what I mean but but it’s your whole day job.
Scot:
[3:45] You make it seem like I don’t have a day job thanks man ouch.
Jason:
[3:47] No no no no yeah apologies.
Scot:
[3:49] Yeah and if you’ve missed a couple pods I do have a new startup called Rey by which stands for research finding by, and I started a new substack and podcasts specifically focusing on this answer engine and the intersection with e-commerce so it’s been a lot of fun to ramp up on a totally new very fast-paced, new trend so it’s been a lot of fun working on that.
Jason:
[4:12] Yeah and you you basically become a Content monster.
Scot:
[4:15] I have yes I thought okay this I’ll start writing a little bit about this and then suddenly like 800 things happened in the span of 4 weeks so it’s been very busybut that’s what we call AI time.
Jason:
[4:29] I like it I like it never be this slow again.
Scot:
[4:32] Yeah it was funny I started Channel advisor with this idea that Marketplace would be big and we had eBay as our first 1 and it took 7 years for the next 1 and.
Jason:
[4:42] I feel like and like 2 podcasts I go you admitted that that trend is kind of played outyeah.
Scot:
[4:46] MarketplacesI think well we’ll see we’ll we’ll we’ll call it a 2.0 a Phoenix Rising From the Ashes.
Jason:
[4:54] Yes I know where you’re going with that.
Scot:
[5:03] I’m back at it and so are you so we’re both going to be super busy this fall your first step with a much more glamorous sounding show that I’m doing where are you going in mid September.
Jason:
[5:14] Yeah so I feel like all of these retail shows decided that the same week in September would be a great window which is annoying because, I I I would have an interest in in attending all 3 shows but faced with going to a show in my hometown of Chicago going to Huntington Beach California or going to Paris France, I chose the smart career move for myself and I’m visiting our our corporate motherland in Paris France, where the national retail Federation is holding their first big show Europe so most listeners of this show would be very familiar with big show us which is the biggest retail show in the United States it’s about 30,000 attendees. And last year they did Big Show Asia for the first time in Singapore I believe, and this year they’re expanding to another continent to Europe in their hosting it in pubs backyard in Paris France so if you’re someone that’s going to attend that show or be in Europe that week anyway, definitely looked me up and in addition to the show we’ll we’ll try to do some some P fun pubis event in my my boss is very well connected in France.
Scot:
[6:23] Yeah and you can meet to the CEO of Google assist I’m sure Jason can connect you.
Jason:
[6:26] Our tourour tour.
Scot:
[6:28] Jason and our tours are tough our tight does even know your name.
Jason:
[6:31] She yes so I I don’t like to Pander so I I I hesitate to say.
Scot:
[6:37] So the guy that wears Walmart socks every day.
Jason:
[6:40] Well I like to Pander to my clients not my employer um.
Scot:
[6:42] Okay okay okay your selective pander.
Jason:
[6:46] That is that is fair uh but I I I will pay like a rare compliment like our tour of the CEO of pubis, is super Hands-On and he he knows most of my clients as well as I do he’s like fostered his own personal relationships with, all the major CEOs like he and Doug McMillan talk all the time and our tour for sure knows me and appreciates, the the random little niche that I know something about.
Scot:
[7:16] Our tour if you’re listening I want to make a plea for Jason to have another title a word added to his title this will come up later.
Jason:
[7:23] Yeah he’s going to want to be in French or something though and I can’t I can’t yeah I can’t uh abide that I don’t think. So where are you going to be well I am having quaison with our Tour on our balcony overlooking the shampoo.
Scot:
[7:37] Yeah well you’re doing that I’m going to be in Surf City United States Huntington Beach at retail. Retail Club so this is a new event from the folks that did shop talk and Neil and team and it’s kind of a series of instead of locking into a format it’s going to be. Changing it’s almost kind of like a what is it when you go on off-site it’s kind of like an off-site kind of thing, so it’ll be a retreat so yes it’ll be Retreat kind of oriented with different themes and this theme is going to be AI so I’m going to be speaking there on Tuesday about aenta Commerce but then we’re going to be a sponsor as well so we’re we’re pretty excited about that it’s going to be our our first show we’re going to as a company so we’re going to go pretty big on it. And then after that I thought I would stop by shop talk Chicago but you just told me you’re going to be in Paris so I’m going to miss you and I’m going to see some of our old good old friends at shop talk as well but I’ll probably miss the a day of that.
Scot:
[8:40] And and come on the second day.
Jason:
[8:42] Yeah well you can you can stay at my house while I’m in Paris and then maybe you could record some re retail Janet episodes from the studio here.
Scot:
[8:50] Yeah hang out with your son and teach him some Star Wars stuff teach him teach him to make fun of your title and stuff this is going to be you’ll come home for 8 weeks of misery.
Jason:
[9:00] I think that’ll be like something he would vibe on is any any way he can make fun of dad he’s in here you you could teach him more detailed Star Wars and he’ll teach you fortnite it’ll be perfect.
Scot:
[9:09] Yeah yeah and then I saw your little animated character there is it a bobblehead but I saw you’re going to be at Shop grocery shop talking about some grocery stuff.
Jason:
[9:19] Let the record show that I have a character character uh, yes I feel like a Neil when he first started his first show which was Monday 2020 like invented this like hired this illustrator to do these characters for all the speakers and then he carried that forward to shop talk and grocery shop and and, I don’t I don’t think you’ll have it for money for for retail Club I assume because I think the event company he sold those previous shows to owns it but, uh so that’s a character jerk you I know for a fact have a retail Scott Wingo bobblehead because I was present when you were awarded it as a retiring board member at shop.org.
Scot:
[9:59] I do have a I have actually several so I have many customers over the years that have sent me bobbleheads I don’t I guess I have a head that was meant to Bobble.
Jason:
[10:07] Yes I’m jealous because I feel like you got the you are the last that was a parting gift that all serving board members got and, and you you got to leave under good terms and all that stuff and then the shop.org kind of dissolved as it got absorbed by the in our reference so I never got you know a proper thank you in boo like you did.
Scot:
[10:28] Oh I’m sorry.
Jason:
[10:29] Yeah I’m okay.
Scot:
[10:31] I’ll find a way to get you a bobblehead at some.
Jason:
[10:33] Hope we all earn it sometime in my career.
Scot:
[10:36] Yep well before we get into show season it’s earning season so we are well into Q3 but this is that kind of, yesterday started this drum beat of earnings that come out which are the Q2 announcements that people have in our universe before we go into that why don’t you set the table because you have some new US Department of Commerce data to walk us through.
Jason:
[11:00] Yeah yeah yeah so is everybody knows the Department of Commerce published retail data every month. For the previous month and so middle of this month I I want last Thursday July 17th, we got the June data so that’s a 6-month look back at retail this year, and so the the Top Line the the number we look at is core retail sales so that’s retail sales minus automobiles gas stations and restaurants, and for June. Core retail sales were up 3.9% over June 2024 but year to date core retail sales are up 3.8% year to date so, 3.8% is basically exactly the 10 year historical average if you take out the coid spike, so that’s kind of the exact rate of growth we would expect and that’s exactly where we are so on the 1 hand you go oh this was a very average year.
Jason:
[11:54] But as soon as you double click if you look at the retailers you’ll see, a handful of retailers are way outperforming that including Amazon and Walmart and Costco and most of the rest of retail is way underperforming that and the categories are also very bifurcated, so personal care and health is vastly outperforming that, and some there have been some real laggers the last couple years Electronics really haven’t grown since Co and they’re I I believe still in negative growth if I recall Sporting Goods are low do-it-yourself Home Improvement is is well below that average, and then kind of a new Evolution, grocery is now underperforming the retail average so grocery year to date has only grown about 2.8% and for the last couple years.
Jason:
[12:41] Groceries been 1 of the the bright spots in the retail store so kind of interesting that that groceries kind of caught up with all of its inflation macroeconomic issues, and interestingly groceries losing share to restaurants, and that is because we’ve all adopted this new behavior in addition to dining out we now are using restaurants for more of our at home consumption via VIA delivery than ever before and so, while restaurants and grocery stores used to compete kind of 50/50 for Sheriff stomach restaurants have opened up a sustained advantage over grocery stores so, all of that’s interesting but what would maybe be most interesting to listeners on this show is e-commerce and you know while retail’s been growing at 3.8%, we’re used to talking about e-commerce growing at like 15% or slowly kind of Dipping down to 12%, last year we were talking about 9% and right now we are talking about e-commerce year to date non-store sales which is kind of an inflated version of of e-commerce, growing at only 6.8% so the law of large numbers is really catching up with e-commerce it’s no longer even growing twice as fast as all of retail.
Scot:
[13:59] Yeah I have thoughts on it let’s talk about that when we talk about a.
Jason:
[14:04] Yeah so to me that just that’s an interesting backdrop for all of this.
Scot:
[14:09] It is and that’s just for the quarter.
Jason:
[14:13] No that so most of the data pretty much every data point I just read you is year to date.
Scot:
[14:18] Year to date okay so probably the first but that doesn’t that’s like the first it doesn’t go all the way to Q2 does it.
Jason:
[14:24] Yeah January through June 6 months of data so half of the yearso so January through June 2025 versus January through June 2024.
Scot:
[14:33] Okay I always thought it took like forever for the e-commerce to come out but again.
Jason:
[14:36] There’s a there’s a better version of the data that’s 60 days in a rears but I’m using the advanced version of the data which is 30 days in reverse.
Scot:
[14:44] That’s what happens when you know the CEO of poop you get the 30-day version.
Jason:
[14:50] Exactly yeah I I said our tour is very good at customer relations he’s a little less Hands-On with data.
Scot:
[14:56] Okay but you just saw his name around I’m sure.
Jason:
[14:59] Wait I actually you mentioned bobbleheads I have a little like our tour doll I travel with and I frequently bring it out at client sites. We we used it for a pitch like 13 years ago and it has lived in my briefcase for the the last 13 years. I did that’s so when we first used them in the pitch that’s exactly what I did I went on a store visits all over the world and I took pictures of our tour and at grocery stores I mostly took pictures of our Tour on the great Pointe shelf because I thought it was, funny that the French dude was on the French product but maybe that was a joke that only I could appreciate.
Scot:
[15:42] Yeah it’s like a what this is just normal. Okay so let’s talk about earnings so first up and we’re recording this kind of at the early part of the cycle and hopefully I can mail Jason down and we can talk a little bit about Amazon if not we’ll post on LinkedIn so yesterday the 23rd, Google was first to go and, I’ve been wondering you can’t look at the data so for example today chat gbt released that they now have 2.5 billion prompts, a day which they’re kind of equivalent to searches and, just in the so that’s in July and then in December so what is that 7 months ago they had 1 billion so they’re growing 150% every, you know half a year basically which is just crazy and at some point this has to show up in the Google data but Google keeps saying everything’s fine and it’s been a really interesting.
Scot:
[16:40] Puzzle for me and same thing this time you know so they have they built this search portraits it’s being attacked by answer engines and at some point we’re going to see cracks in that and I think we may have seen some this timeso. On you know overall it was well received by Wall Street the the their cloud computing Google cloud is doing great the AI everyone’s using it it’s awesome, everything’s good and in fact they announced they’re going to even do even more capex and additional 10 billion for AI because they’re seeing it impact all parts of their business, it’s definitely helping the you know all their ad algorithms YouTube all those things are getting a big Boost from AI. But on the calls they’re increasingly dodging questions about the interior search metrics so these are things like the volume of search queries the click-through rate, and then then at the same time they’re like we’re not we’re not disclosing that and you shouldn’t really pay attention to it and you’re kind of like all right so so it’s almost kind of a little bit of a magician trick of misdirection. And you know 1 of the data points that they do always reveal is paid clicks and that was only up 4% but we know the search business was up 12%, so when your your paid click your your revenue is higher than your volume that means your prices went up it’s pretty simple algebra on this 1 so CPC went up.
Scot:
[18:03] Google CPC is only tend to go up when the search volume flattens or goes down because the you know there’s, there’s just less volume there and people get more competitive for itespecially with your kind of backdrop that you know e-commerce is growing 6.8% and and whatnot so, so it feels like they’re getting pricing going upwhich is interesting so I I think I think that search volume we will discover search volume is flat to down.
Scot:
[18:34] Okay so that’s my first pointand then, you know I think they are seeing erosion from gen Ai and they’re buying themselves time to figure out what to do about it and have other parts of the business to step up and coverthe other thing that’s happening is they have, that they have like 4 different ways you can do AI now so let’s see if I can do this off the top of it there’s AI overviews which are the little box that’s on the standard search results. Then there’s Gemini and all the flavors of Gemini which is like a separate thing and has its own Mas that they disclose, now they have another thing called uh What’s this called AI toolbox, I can’t remember the name of this 1 but it’s like this whole other mode you can put Google search into where now you’re in like this AI mode those are the 3 things so so, it’s always interesting in the CEO of perplexity says if they were so big on AI why don’t they just put all this stuff right in Search and the answer is obvious because it will cannibalize the search Revenue way more fast than they want to.
Scot:
[19:34] And what I’ve noticed is I’ve run a lot of experiments on this and the aios are only primarily showing up on non-commercial searches so any informational searches like.
Scot:
[19:46] Math questions or fact oriented questions things that you would normally get off Wikipedia type stuff, but if you start doing commercial searches especially in our world of retail travel Financial Services those types of things you do not get AI overviews or if you do, they come very very late in the process it’s almost like they’re purposely delayed so you have time to click on a Blue Link before you see an AI overview so. What they say though is would Wall Street ask they keep saying AI or reviews are monetizing the exact same as paid search which doesn’t make any sense because there’s no click so it’s it’s basically impossible and everyone scratching their head like how could this beand.
Scot:
[20:25] What what people are guessing is people see the AI overview and then they still click on a Blue Link but I don’t think that’s happening because the AI overviews are getting pretty good and they answer your question so why would you click on the Blue Link, and and so but I think what’s happening I think it’s a tricky weasly way of, basically saying 0 equals 0 because if it’s non-commercial terms that AI aios are on they’re not really bid for that often those terms tend to be under 20 cents for for clicks and it’s you know usually sites that are, like WebMD or something that are really lowly poorly monetized and not going to be. Paying a lot for that traffic so if you have something that’s basically near zero and you’re replacing it with something near zero you can make that statement that they monetize the same but what if the same is you know pennies pennies per click not dollars or something like thatso so I think you know for listeners I would say go to your own experiments but if you start to see things like. Car insurance or the terms we all know are very robust and highly competitive you know new uh laptop computer these types of things I think you’ll see they don’t have ai overviews and that’s what’s going on there. But anyway that’s my little Soap Box on I think. I think by the end of this year the emperor will have no clothes and Google have to admit that there’s problems with the search for trust that that is coming from these answer engines. What do you think and I totally off base.
Jason:
[21:54] So I don’t I don’t know that you’re off base I think the macro problem you’re describing I totally agree with my personal experience, anecdotal but slightly different than yours so I would say like so I have a handful of commercial searches that I run as test cases all the time and virtually all of those now get a AI overview. So I I can’t say from my firsthand experience that like AI o is disproportionately not showing up in commercial searches. I I I you know it’s all it’s all hard to say because we all have like pretty personalized results also by the way but what I would say is, my AI overviews are surrounded by sponsored product listings and I my suspicion is. If someone clicks on a sponsored product listing which is in no way related to the AI overview right that Google is calling that, a click through on the AI That’s artificially you know trying to claim that.
Scot:
[22:55] The page that shows in yeah.
Jason:
[22:56] Yeah. I I do think I mean just to make this really simple like you know in the in the dawn of Google there were 10 Blue Links when you did a search and you clicked on 1 of those links and it took you to a web page that created that actual content and.
Jason:
[23:09] Way before Google started publishing all these AI things they started rolling out these things they called answer boxes and answer box was, hey maybe we don’t send you to the New York Times or maybe we don’t send you to travel velocity maybe we pop up an answer box with what the best fair is for the for your flight, and let you buy the flight straight from us and that is super controversial because, it arguably is a better customer experience it’s lower friction and it creates an opportunity for Google to make some Commerce revenue and most importantly it creates an opportunity for Google to really know what the outcome of that search was did you end up booking that trip, so there’s a bunch of good things Google gets by having the answer box but the huge problem they had was they were. Therefore no longer sending that traffic to travel velocity or the New York Times and so a, they couldn’t sell ads to those companies and B those those companies were you know trying to sue them and say hey that’s not fair use of our content like, you’re you know when you were using our content to send people to us that was 1 thing but now you’re stealing our content, and not giving us any way to monetize our content and so that was kind of a battle that was fighting and now that they have aios at the top of search.
Jason:
[24:26] I I think Google has just said you know what we can’t even fight this battle like let let them be mad but like we’re not going to win if we don’t have ai results and the AI results can’t be, Advertiser friendly like they have to be consumer-friendly and so I think I think, they recognize that that’s the way search is going and for your point I think they want it to transition as slowly as possible to preserve their legacy business until they’ve, they built a good enough AI infrastructure to replace all that Revenue. The 1 other thing that I do think is happening I I think their revenue is is kind of at this point disconnected from search volume. And so I do I do think there’s a fair amount of anecdotal data that search volume is still going up you would think of all these answer engines were really taking a dent that search volumes would be going down.
Jason:
[25:18] You’re right we don’t have perfect data on that but what has also happened is, remember the largest advertisers on Google and meta in q1 were these Chinese Commerce companies it was, meta it was Teemu and shien and 1 when the threat of tariffs kicked in and the the end of diminum, they all panicked they pulled all their ads off the US platforms and their their visibility in the US dramatically declined that was a significant amount of Revenue that Google and and meta lost, and somewhat surprising it’s all come back, and so there’s there’s kind of a donut where there were a few months of of softer ad revenue from these Chinese companies that I do think meaningfully impacted Google’s earnings.
Scot:
[26:08] That that could be far yeah could be a factor.
Jason:
[26:10] Yeah so yeah I think it’s a it’s a complicated story I wish I wish we could see the real data and know for sure what’s going on but I I definitely agree with you big picture. Answer engines are going to be give our our our more customer Centric they’re going to give customers better results and that’s what customers are going to expect and so if Google tries to, stick with something that’s more Advertiser friendly and less consumer-friendly in the long run they’ll lose the audience.
Scot:
[26:36] Gotcha so coming up next week on the 30th we have a double header with Microsoft and meta announcing where we’ll get some more, talk about Ai and it’s been in the news meta has been hiring people this is where you and I made bad career choices that that are experts on AI for hundred million dollar signing bonuses so we missed out on that I haven’t gotten my call yet at least.
Jason:
[26:58] I assumed you got 1.
Scot:
[27:00] No I’m not the kind of AI person they’re looking for I don’t sit there and work on model design, and then the big 1 for our world is Amazon which comes out Thursday the 31st so it’s going to be interesting to see how they’re doing. That is it and then I was thinking about you because I saw an article come out where Walmart has hired someone from instacart to be an EVP and I knew you would be jealous of their title so it is, EVP of AI acceleration product and design and I checked and I was like oh man finally someone that has a title with more words than Jason’s but I did the comparison and you’re still safe by you have 2 more so you’re good. So what did you make of this Walmart beefing up their AI Talent.
Jason:
[27:43] Yeah well so I I think it’s interesting you know I think. Where and we’ll probably talk about this later but we’re all speculating like what’s the economic model going to be for all these these answer engines and obviously 1 of them is, that they’re gonna try to sell stuff and either make money on the the margin from selling stuff or become a Marketplace and make money on the take rate from, from generating sales.
Jason:
[28:06] And so essentially they’re all trying to become more like a retailer and the retailers are all having to respond by become more like answer engines right and so you see both Amazon and Walmart you know as the 2, largest retailers in the ecosystem both growing much faster than the industry average they’re making the most investments in trying to, compete with these answer engines rather than, like exclusively abdicate these customer experiences to the answer engines and so Walmart has had a bunch of initiatives out there they’ve had a bunch of kind of Standalone things they’ve had Sparky they very early adopters of.
Jason:
[28:45] Answer engines for employees for their 1.6 million Walmart associates and lots of stuff, what I think the announcements this week do is consolidate a lot of those efforts and really put extra weight and resources behind those efforts so they actually, name 2 new EVPs in AI they have sort of a a tech platform role and they they have sort of a business product management strategy role and so they 2 uh EVP is, a very significant role in the leadership team at at Walmart that’s they’re part of the the executive leadership team and, adding 2 2 roles dedicated to AI on that teamfeels like a very big signal that Walmart, thanks this is the most significant thing going on in in Commerce, and then today they announced like 4 new what they’re calling super agents but like dedicated shopping answer engines that they’re rolling out for different missions.
Scot:
[29:46] Are these like Sparky Sidekicks or what what’s their.
Jason:
[29:50] I think so don’t know for sure the you know these are press releases at this point but the the the sense I got is that these are sort of Next Generation Sparky.
Scot:
[30:00] Sparky plus plusthey should have called on the Fantastic 4 and done a Marvel tie-in dang it why did you not Pitch that call me.
Jason:
[30:08] Uh I’m in so much trouble now.
Scot:
[30:10] The so Walmart will be announcing their off cycle so their fiscal and calendar years are are are very different but and sometime I think in mid August is when they drop, q1 next year results which is just kind of how they’ve been doing it for decades on decades so we’ll be watching to see what’s new there hopefully they’ll have some more AI news when they when they do that.
Jason:
[30:33] Yeah I will say we I I mentioned customer trips 1 of those customer trips because it was a public event Walmart has their shareholder what used to be called their shareholder meeting now called their Associates week. In Bentonville 2 weeks ago and so I I was there for that and got to speak with a lot of Walmart associates at different events and things and. Right AI is is definitely a topic that that people in Bentonville are talking about and thinking about.
Scot:
[31:01] Gotcha.
Jason:
[31:03] May or may not have gone to dress up as Willy Wonka for 1 event.
Scot:
[31:06] You’d be a good Willy Wonka.
Jason:
[31:10] Yeah me and timothee chalamet are are basically interchangeable.
Scot:
[31:14] Absolutely you probably it’s the glasses you probably get that all the time.
Scot:
[31:18] The big news in my world is the financial times had a you know basically a scoop where they talked to a bunch of retailers where chat GPT, previewing a hosted checkout and this is not the Shopify checkout this is a chat GPT native checkout. And I was very quick to post on that it went somewhat viral and and that was a fun thing to talk about and I did a long post on this but my my theory all along has been and and you know this was like. November last year and I thought this would take 3 years to play out and here it is not 6 months and it’s it’s kind of happening alreadythe that. The The Dominoes kind of go, the hardest thing to do in our world is get consumer attention and you know think of that as a distribution so so getting the the heart and mind and wallet of a consumer is very hard. Chat GPD is leading that but the gai engines generally are are all growing at crazy Paces as we mentioned, and then if you can get that you are on the high ground and you get to pick where you go next so, they’ve all clearly chosen the monetizable categories like shopping and travel as areas they want to go into some of them have diverged off more into coding Claude anthropic is kind of more over on that side, that is a little lost right now while they try to figure things out but they’re going to come back and I I imagine they’re so tied to our world of Commerce that it’s going to be a top priority what whenever they get their footing.
Scot:
[32:47] So you know why. Why have a comparison shopping engine like experience and then send traffic Downstream and not get the conversion data, and maybe you can have an ad like kind of thing but then now you have to have an agent go check out for you which is kind of a pain why not just have the check out there too and basically become a Marketplace, in my mind a Marketplace is when the transaction happens, off of the brand or Retailer’s website and I think that’s where we’re going to go and once Chad CBT does that then they’ll all do it and they’re going to really love having that closed loop data because these engines really, thrive on data in context and closely data is what they would you and I call it, conversion data they call it AI reinforcement learning with AI feedback so so I think ours is simpler to say.
Scot:
[33:41] They you know the they can start training models on okay you know Google trains on click-through but conversions better and you can really, personalized and hone and it’s going to be better than any personalization we’ve ever seen because a it’s a better technology than B it’s going to be cross brand and retailer so as a consumer it’s going to be very delightful because you know, and you only have 1 account for the whole internet and it’s going to be very powerful so that’s where I think this is going and that’s going to be really interesting to Think Through, who participates what’s your strategy as a brand or retailer, I have seen having the Arc of around 30 years of doing this the companies that tend to lean in on these things tend to. Do better and and win over the long run so that’s what I advocate what do you think about that whole thesis and what are you recommending to clients if this comes up at all.
Jason:
[34:34] Yeah so ah I I generally agree with your thesis I would even say I don’t think you or I were very surprised about that announcement you and I both. Follow openai pretty closely and Sam Altman did an interview like a month ago with Ben Thompson on the strategy and he basically said like when they’re talking about economic models for open AI he said hey, I don’t think I could ever imagine usdoing sponsored ads. Because they’re they’re generally not very customer Centric like we’re never we’re never going to wait the results to who pays for the result we’re going to let the the answer engine pick the result that it thinks is most helpful for their customer.
Jason:
[35:15] But he did say but I sure could imagine us taking a commission on the sale, and you know Sam’s a super smart guy he’s he’s not a Commerce guy and he may or may not have known it but he was basically describing, the marketplace economic modeland then of course he has hired Fiji Sumo who is currently the CEO of instacart in less than a month she’ll be the CEO of product at openai, and if you’re if you’re not aware instacart is also basically a Marketplace. And so like I think it’s it’s very reasonable that they think their long-term monetization strategy at least for a big chunk of their, their their business is is, a Marketplace and I I think this is that this is going to be super fascinating I think the big battle we’re going to see play out is the Battle of the economic models right and you know this is where the Googles of the world and the metis of the world have kind of innovators dilemma that, they they were extraordinarily successful within Advertising based model, and if these big new companies if anthropic and open AI come in and their model is different. You can do different arguably more customer Centric things like I would actually argue Google has a disincentive.
Jason:
[36:32] To give highly relevant personalized results that, if if you want to sell ads you want to sell the ad to as many people as possible so you want as many people as possible the land on the same place. And the the answer engines want to give every person a a super contextually relevant answer that might be very different for each 1 so you can’t. You can’t let people buy the top position in those results.
Scot:
[36:59] Yeah he he said he actually used the word affiliate with you which I thought was interestingyeah soI think this is gonna be really interesting so and also something that kind of.
Jason:
[37:09] What if I said an affiliate model is basically a marketplace where you don’t have a centralized UI.
Scot:
[37:16] Yeah the checkoutusually affiliate is a link-based way of tracking the checkout that still happens Downstream but at at the retailer.
Jason:
[37:26] Yeah but at the abstract level it’s really a yeah.
Scot:
[37:28] Ract absolutely yeah yeah yeah there’s no shopping.
Jason:
[37:31] Said oh a Marketplace is a place where where I collect take rates by having everyone go through 1 choke point which is a URL and and Affiliates are kind of hey I pay a take rate if they generate a a transaction regardless of where the. The transaction is generated but yeah.
Scot:
[37:48] Sure that’s a Marketplace Tik Tok shops as a Marketplace in my mind.
Jason:
[37:52] Yeah 100%.
Scot:
[37:53] And then the other thing to put in your mental calendars is we know chat GPT 5 is done there’s been all these hints it’s amazing and they’re getting rid of the dumb model selector it’ll automatically route you to the right model for what you need and, I think you and I have been to this cycle so many times that if you are interested in Commerce these next between you know August 1 and October 15th and you kind of need it earlier if you’re going to need some. Adoption from retailers or brands, so I think in the next 60 days we’re going to see a a barrage of interesting things going on here and I think something in chat gb5 could be. The this kind of ties to another thing going on which is the what I call the agentic browser Wars so about 3 weeks ago perplexity came out with their agentic browser called comet, and I am a perplexity Max user so I was able to there’s this other Trend in this world where you have to buy yourself off the wait list just you and I are painfully aware of. And the so this is so I’ve been on I’ve been using it for 2 weeks and it’s interesting because I would the Commerce is really good like the way it helps you research if you have something open and you want to like you’re you happen to be it’s kind of like having a browser extension on steroids where you have something open you’re like you know I really like like to learn more about this before I I buy something or.
Scot:
[39:19] I want a product that looks kind of like this anything like that it’s just right there and it’s really good at that kind of top of the funnel what I would call the research part. But then the normal perplexity find and buy with the product cards and all is better than what comet has and they’re actually disparate.
Scot:
[39:35] User experiences so at some point I feel like they’re going to have to marry these back together so the big surprise with me has been. The productivity gains because I can have an email open and I can say like someone sent me an email with like all these different date time I’m sure you’re constantly you’re doing this you probably have an admin but I don’t.
Scot:
[39:55] And you know I could just tell it hey find my open time I need an hour window and go ahead and and send them a calendar appointment and send them an email saying I picked this date and I sent them a calendar and it just does all that, so I I found it’s giving me like maybe a 15% productivity boost on my day-to-day kind of administrative stuff that I do so so that’s pretty amazing. I do think that when Chachi PTA comes out with 5 somewhere, it is very well known they are working on a browser they hired 2 of The Architects of Google Chrome people have seen the browser and talked about it I think maybe they do a mega drop and it comes out 5 comes out with the browser I don’t know we’ll have to kind of see how that goes, and that’s going to be interesting and then you know, I don’t think we’re too far away from meta everyone’s going to come out with the browser because you’re going to really need to do that to really control the experience and get more context, basically if you’re going to do this agentic stuff it creates an unblockable situation because when you’re you’re basically living inside the user session and some things are running on their computer you can’t block it because you’re blocking users so so it becomes a Checkmate for any kind of cloudflare agent blocking or any of this kind of stuff, all that is game over so it’s really fascinating to watch this all play outhave you you probably have not had a chance to play with it at this point I.
Jason:
[41:18] No no no I both I both have comment and I I of course watch I’m a regular Watcher and listener of the reach agentic podcast so I watched the demo you published uh yesterday right. And in fact I have some notes about all the things you got wrong but we’ll we’ll cover that later just kidding yeah no I think it’s super interesting I think a really interesting question is like. In the long run where do people go to use these answer answer engines right and my kind of mental framework at the moment is there’s kind of 4 4 models, the the first place people used to answer engines is they were dedicated URLs so I went to CET gbt openai.com or I went to perplexity.com and you know openai even started claiming very high traffic on their website, I don’t think that’s a a good long-term solution I don’t think it’s very customer friendly and I don’t think that ends up being the place customers are going to go.
Jason:
[42:12] Then we started seeing the the e-commerce sites add answer engines right in the search so so you kind of had rudimentary LMS like built-in instacart search and then you had. The vast majority of all e-commerce traffic in the United States of America are on 2 websites Amazon and Walmart and they both have, always on dedicated answer engines in Rufus and Sparky and you know they’re both pretty excited about those I actually think that that’s way too late in the purchase cycle for the answer engine to start its job so I actually don’t think that’s, the long-term winner. I I think you need the the answer engine to be more ubiquitous and a ac across retailers to solve more complex problems and so you know to me building it into the browser. Makes perfect sense because it it lets you solve more complicated problems it lets you pick the retailer or the destination that could best solve a particular problem and for your point, it solves a lot of the the kind of blocking and and traffic shaping problems that that we’re about to confront with with all the Bots crawling the web.
Jason:
[43:22] And the other thing is that the devices right and so you know you you both have open AI bot Johnny Ives company which everybody thinks is building some kind of, AI device and Amazon announced that they’re buying B which is some kind of AI device so it’s super early days I think it’s risky to bet too much but, to me it makes more sense that you need to answer engine as Upstream as possible in the the path to purchase and that means, in the browser or on the person soI I think these browsers are going to be super interesting whether it it needs to be a native browser can, Microsoft build you know a good,
Jason:
[44:02] answering Jim plug-in gin architecture into Edgewell you know Google embed a good enough version of Gemini into Chrome like these are that these are all the battles that are coming next.
Scot:
[44:13] Absolutelyand this is a good time to Pivot to some Amazon news.
Scot:
[44:29] Yeah the big amazon news is we are past the all-new extra-long Amazon Prime day, this year it was 4 days of 3 which you know made, just by default a record Prime day which Amazon was toutingand but we’re comping with an extra day so a little bit of an unfair comparison, I now I’m back in the game I’m talking to a lot more agencies that manage lots of these Amazon stores for Brands and then sellers themselves and and a bigger, spectrum of folks not Channel advisor scale but but enough where it’s not anecdotal but it’s not challenging for sales so someone in the middle there and the feedback was really interesting so, the things I heard were that the traffic on the individual days, from deals you know they can’t see Amazon’s traffic but just like volume level was pretty muted across those days and that before Prime Day this year Amazon was pushing ads very very hard, it used to be ads were a way to juice things and whatnot then they were kind of like. You know mostly hinted they were a must have and now it’s basically look if you don’t commit to a pretty serious add Buy you’re not going to get this placement in this little doodad and this little badge and all this kind of jazz so so I thought that’s interesting. To meand this kind of goes back to the 6.8% right so so I.
Scot:
[45:52] My hot take is Amazon has become the ad units have tipped over where Amazon has become not very useful anymore it it’s very hard to find anything.
Scot:
[46:03] I was I had an example where I was looking for I my dogs like thisgreeny alternative called veggie dense and I was trying to reorder it and I didn’t even, I should have gone to my orders but I was just like gonna find it and order it real quick and it showed me you know, it had like in a page of a hundred things 1 of them was my product and it was buried everything else was an ad it was like, 90% add saturations for this particular for some reason dog treats is like at the peak maximum of the spectrum and it was just a wake-up call that, they are so focused on this and it’s so misaligned with the user experience I think this, and I know you have strong feel you you’re you’re retail media is big in your world but in my world I think a little bit of it is okay but if it all gets so big it really is counterintuitive to the user. Finding what they want at the criteria they want in ordering it and it it just is I think it’s slowing down all of e-commerce and. You know so I’m kind of excited that they have a little competition now I think it’ll be a wake-up call for Amazon to really shake off and really put the customer first again I think they’ve lost sight of that.
Jason:
[47:11] Yeah so hey I I 100% agree you’ll remember I’m not the retail media Advocate like I think you started a whole Feud.
Scot:
[47:20] I didn’t you did you called her outhey.
Jason:
[47:22] Uh with the fact that like I I think there’s a role for some retail media like but it’s overhyped like in the same way like if you go to a traditional clothing store, the like a few mannequins are helpful like they they inspire you and give you ideas and the stuff on the mannequin sells more but if the whole store is.
Jason:
[47:42] Companies that have crappy products that aren’t selling and are and are paying to put their product in front of the product you actually want. You would never go back to that clothing store and and you know I think we’ve absolutely crossed that that chasm in Amazon I I think there’s, counter now that have them at over a billion skus so you you can’t find anything there they’re the the revenue from ads are way more important to Amazon now than the revenue from from 1 P product margins or 3 Peak rate so so AI, I generally totally agree with you I also think I don’t know if you followed it but there was an actual controversy around if Prime day was, strong or soft right that that, you know it’s 4 days so so there’s no valid comps Amazon’s in the information gathering business not in the information sharing business so we we know they only share. Self-serving data that. Reflect them in the best possible way and so you know day 2 of prime day vendors started coming out that have no earthly idea how Prime day is going.
Jason:
[48:48] And 1 was this company called momentum Commerce that has like you know a they’re small agency that has a handful of clients that buy ads on Amazon and they came out and said oh. Prime day is down 41% from last year and the Amazon all the analysts read it and freaked out and the Amazon stock actually went out and then, Amazon spun up the whole PR engine to attack momentum Commerce and talk about how they absolutely could not possibly have a clue.
Jason:
[49:17] What was happening on Amazon Prime day and side note while all that’s going on you can imagine. Every executive at my company and all my competitors companies sent notes to their clients talking about how Prime days down 41% because they they are and so I’m the guy coming in after them going yeah we probably don’t believe that data by the way right.
Jason:
[49:38] So so that was like a big controversy, I’m more interested in the press releases Amazon issued and not what they say because because I know they’re only going to say things that they care about what I like to do is pop up last year’s press release and this year’s press release and see what bullets they took off, and when you do that on Prime day you you see a lot of the volume bullets and numbers went away and that tells me everything I need to know that like, that Prime day is increasingly diluted I’m sure it was perfectly fine but it was not there was not, like meaningful there certainly was not outsized growth in Prime day and I I you know here over and over again the signal and the noise ratio, on Prime is a day is is increasingly diminished and you know there’s a mountain of worthless deals and so you know you can’t you can’t even stand out by offering a deal on Prime day you’re still you know amongst 100 million skus, when you offer a lightning deal so so yeah I I agree, that like I I think these guys are going to have real innovators dilemma as they face these these new companies that are going to you know enter the Commerce space with, a model much more focused on giving the customers what they want instead of making the customers the product.
Scot:
[50:55] The also on the topic of Amazon and now pivoting to at least on my side a more positive thing is I’ve been pretty negative on wait let me make sure okay I got everything off uh my device whose name is Alexa.
Jason:
[51:08] I I I remembered to mute mine to right before the show too I feel like this is might be the episode 327 for those that are in the pool how many weeks it would takeJason Scott to turn off their Alexis.
Scot:
[51:30] You spotted on Prime day that if you happen to buy and this was a little bit of a sneaky trick but you and I at least I did both fell for it. That if we bought a Amazon show which is the 1 with the little screen on it, that you would be opted into the program so I got that and I’ve really been enjoying it I I’ve actually been pleasantly surprised I kind of thought if it’s this delayed and the Articles I’ve read had a lot of negative things to say. That it would be a problem it’s not, it’s not perfect but I think it’s a solid B+ I I personally find it way better than Rufus um for shopping and then the the real delightful thing is the non-shopping part which is interesting so you can connect it to, let’s see Uber Lyft, there’s a couple open table but not resiThumbtack I don’t know desire to do that and then a couple you probably have the whole list in your head but there’s a list of things you.
Jason:
[52:21] Yeah right ticket Ticket Master is a big 1.
Scot:
[52:23] Ticket Masters supposedly really good where you canI don’t think I would. Yeah but you can you can ask it about upcoming concerts and stuff so so it’s really really good on all those things, have you had much time to play with yours and what’s your your hot take.
Jason:
[52:39] Yeah yeah 100% so a like minor gripe I’m pretty sure both you and I already own the device that we had to rebbe in order to get into the.
Scot:
[52:48] Yeah but what’s nice is they all all my devices flipped over.
Jason:
[52:51] Yes, yes and so and so yes I have it to like you I was very pessimistic they like announced this thing 18 months ago and super delayed in shipping it and we kept hearing internal reports that like, it wasn’t very good and they had to Pivot engines from the in-house 1 to anthropic and there’s all this stuff and it did just made me have low expectations and. Alexa which was revolutionary when it first came out was very long in the tooth so I was kind of embittered on the whole ecosystem and I would say it also has completely turned around, my opinion so first of all the main thing we use Alexis for in our world is home automation I I literally have hundreds of smart devices in my home and I I think I have.
Jason:
[53:35] 14 Alexa devicesand, it was a nightmare like like you would give it the same command and turn on the same light that you did every night for the last like 300 nights and sometimes it would work sometimes it wouldn’t sometimes, the word you use would be accepted sometimes it wouldn’t and under the Alexa plus it is so much smarter and I can give it complicated commands like turn off all the lights in my kitchen except this 1 and I can even tell it like from now on when I say, primary bedroom I mean master bedroom or whatever you know and it it it permanently learns. What I mean in a way more organic way so I feel like as a home automation control thing it got it caught up and got a million times better it has become another legitimate answer engine that we use in our life so we. Alexa’s also always been Mission critical for child rearing because we use it constantly for timers for screen time and things like that and, now you know my my son who’s 9 like ask it all kinds of questions that it had no earthly hope of answering um.
Scot:
[54:40] You’d like to say I’ll have to go to the web.
Jason:
[54:42] What’s the value of this Pokemon card who’s you know who’s the best soccer like all these things and now, it is very helpful credible answers for literally everything he asks and and so it’s game-changing we use it with our son as an answer engine all the time. And I I have tested the shopping and it is better at shopping I do also agree it’s better than Rufus I gotta be honest. It’s always been my opinion that voice is not the most exciting user interface for shopping for for some kinds of replenishment it’s fine. For Discovery shopping it doesn’t make a lot of sense and and I still think that’s true the the screens on the on the sevens and 11s that we have are you know maybe a little more helpful but but, I wouldflat out props to the whole Amazon Plus team like you you did a great job of lowering expectations and then wildly surpassing them.
Scot:
[55:36] Yeah yeah so I’m excited to see how it develops hereI do think. Having the show makes shopping good because you can see the products but it still doesn’t solve the voice voice shopping thing is is hard because you, unless it’s a reorder and you know exactly what you’re getting I’m not really sold on this total voice shopping thing so but maybe they’ll convince me otherwise.
Jason:
[55:58] No yeah I I tend to agree.
Scot:
[56:00] That’s all I had anything else you wanted to chat about any you ready for a holiday prediction or you want to keep that in the in the box for a while.
Jason:
[56:07] No no no we are we’re deep in Holiday planning with most clients at this point and. Yeah I’ll just I’ll be slightly Debbie Downer and say like I think it’s going to be a challenging holiday period I think there’s a lot of um macroeconomic stuff that’s not super favorable there’s a lot of disruptions in the supply chain that happened in, q1 and at the very beginning of Q2 as a result of all the the trade tariff Wars and uncertainty and most retailers just you know were really conservative on, on inventory planning so I I actually think. Will probably end up with an average holiday season but it’s because the biggest retailers have all these intrinsic advantages and I think I think Amazon and Walmart are going to clean up this holiday they’re going to have better inventory than everyone else, and they’re they’re going to get a disproportion you know a way bigger than their fair share of customer traffic which is going to. Put a bunch of other retailers that are already on the edge in in significant distress so I think I think it’s going to be a very bifurcated holiday with a couple big Winners and a lot of people that are really struggling.
Scot:
[57:16] All right well I think we should leave it there.
Jason:
[57:19] Yeah that is perfect place to stop we got in under the hour thank goodness. And as always if you got any benefit out of this this episode we’d love it if you jump on iTunes and leave us a 5-star review and, make sure you subscribe to Scott’s substack and listen or watch because you can you can actually watch the retail Janet podcast on YouTube as well.
Scot:
[57:42] Yeah and until next time.
Jason:
[57:43] Happy Commerce thing.
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