Artificial Intelligence & Machine Learning,
Next-Generation Technologies & Secure Development
E-Commerce Faces Existential Threat as Autonomous Shoppers Shift Away from Ads
The online retail sector has long perfected strategies to drive consumers towards making purchases. However, it now contends with a new player: the artificial intelligence shopping agent, which may undermine these well-honed tactics.
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Recently, Amazon filed a lawsuit against Perplexity in a federal court in San Francisco, alleging that the company’s Comet AI agent illicitly accessed customer accounts while masquerading as Google Chrome. This accusation is noteworthy given concerns that AI agents can assimilate, process, and disseminate sensitive customer information. With API access, these agents can extract purchasing histories, transaction capabilities, and even personal shipping information.
Perplexity countered by arguing that Amazon prioritizes advertising over customer experience. This dispute raises critical questions for online platforms like Amazon regarding the future of e-commerce. How will the fundamentals of online shopping shift when customers rarely interact with digital storefronts?
Digital storefronts function as curated environments for transactions, where sponsored items often take precedence over organic listings. Amazon’s revenue from advertising reached $56.2 billion in 2024, accounting for around 10% of its total revenue, excluding its AWS cloud services. This figure likely underrepresents the actual advertising income, as many sellers are encouraged to use Amazon’s logistics services.
Nikhil Lai, a performance monitoring analyst at Forrester, noted that advertising serves as the vital profit source for e-commerce platforms, realizing margins exceeding 50%, significantly higher than the typical 10% for external advertising. Yet AI agents can weaken the effectiveness of these advertising strategies.
A Forrester survey highlighted that half of the Gen Z and millennial respondents in the U.S., U.K., and Canada are open to completing transactions via platforms like ChatGPT or Perplexity. Lai predicts this trend could diminish retail media ad sales by 20%.
On a recent earnings call, Amazon CEO Andy Jassy acknowledged the inadequate customer experience presented by AI shopping agents, citing issues with personalization and inaccurate delivery predictions. Nonetheless, Jassy expressed a willingness to collaborate with third-party agents, signaling Amazon’s recognition of a broader trend.
Collaborations may dictate control over product selection processes. Quentin Montalto, COO of ShipperHQ, observed partnerships like Shopify’s integration with OpenAI and BigCommerce’s alliance with Perplexity, indicating a shift towards platforms where shopping decisions might centralize.
This new landscape could shift e-commerce dynamics, moving sellers from competing for placement on screens to strategically embedding themselves within AI decision-making. Andy Ash, CISO at Netacea, noted that agents would rely heavily on structured product data, thereby opening opportunities for revenue models centered around API fees and commissions.
To adapt, Amazon may need to become a go-to data provider for AI agents instead of resisting their presence. VTEX Commerce’s Prakash Gurumoorthy suggested that a shift to transaction-based fee structures could become standard, which might not fully compensate for lost advertising revenue.
The impact of AI on pricing competition will hinge on ranking algorithms. If agents emphasize cost or reviews, this could concentrate consumer demand with a few key sellers, eroding brand loyalty. This commoditization threatens Amazon’s ability to charge premium prices for visibility.
In a rapidly changing environment, retailers must consider collaborations to amplify audience reach while mitigating competitive risks. Nearly half of business-to-consumer marketing executives report challenges in managing multiple retail media networks.
Ultimately, the ongoing legal battle between Amazon and Perplexity may define the legal framework for the inclusion or exclusion of AI agents. Even a favorable ruling for Amazon would not eliminate the strategic challenges posed by the rise of AI in retail. The company that transformed online shopping is now grappling with innovations that could make the shopping experience too seamless, threatening the traditional revenue models that sustain it.
