Artificial intelligence is reshaping shopping experiences and fueling a surge in retail holiday revenues. According to Salesforce projections, AI will drive global online sales to $263 billion this holiday season, accounting for 21% of all holiday orders. This trend has prompted retail giants like Wal-Mart and Target to accelerate deployment of AI shopping assistants, competing for new consumer attention gateways.
Multiple surveys indicate that 40% to 83% of consumers plan to use AI for holiday shopping this year. Adobe data shows AI-driven traffic to U.S. retail websites surged 760% between November 1 and December 1. Shoppers arriving from generative AI platforms show 30% higher purchase likelihood and 14% greater engagement compared to non-AI channels.
These AI-powered shopping visits generate 8% higher revenue per session than traditional channels. AI tools not only help shoppers discover deals but also provide smaller brands with discovery opportunities, transforming conventional search engine optimization strategies.
Retailers are pivoting digital marketing strategies from Search Engine Optimization (SEO) to Answer Engine Optimization (AEO). While Wal-Mart and Amazon have launched proprietary AI shopping assistants, Wal-Mart, Target, and Etsy are partnering with OpenAI to enable direct product searches and purchases within ChatGPT.
Retail Giants Accelerate AI Deployment Race Wal-Mart announced an October partnership with OpenAI allowing shoppers to find and purchase items without leaving ChatGPT. The retailer also introduced an AI assistant called Sparky in its app, capable of answering questions and recommending products.
Target unveiled a collaboration last month enabling customers to shop via its app within ChatGPT. The test feature supports multi-item purchases including groceries in single transactions, with delivery or curbside pickup options.
Etsy and numerous Shopify merchants including Glossier have signed on for OpenAI's instant checkout feature, initially allowing U.S. customers to purchase single items. An OpenAI spokesperson confirmed the feature launched on Etsy in late September.
In contrast, Amazon has adopted an opposing strategy. The e-commerce giant has blocked external AI chatbots from scraping its site, including those from OpenAI, Google, and Meta, while sending cease-and-desist letters to Perplexity AI to prevent purchases through its Comet browser.
Marketing Shift from SEO to AEO Traditional SEO strategies primarily focus on backend keyword implantation in product listings. However, with rapid AI platform development, retailers face pressure to overhaul overall content and e-commerce strategies.
OpenAI's spokesperson explained that platforms like ChatGPT present results based on query-product relevance, with ranking mechanisms unaffected by advertising, paid placements, or commercial partnerships. These platforms evaluate multiple factors including user reviews, authoritative media coverage, and product descriptions beyond keywords.
Michael Wieder, co-founder of U.S. baby products retailer Lalo, revealed his team is actively studying potential consumer questions on AI platforms to optimize product information, ensuring listings directly and clearly address these queries.
Room for Improvement in AI Shopping While AI platforms guide many shoppers effectively, not every tool hits the mark. When CNBC asked Target's Gift Finder for personalized scenario recommendations, the chatbot provided gift guide links and repetitive content rather than specific product suggestions.
Some consumers report ongoing AI shopping frustrations. Seattle startup founder Diana Tan earlier this year asked ChatGPT to help build a capsule wardrobe, providing extensive information about body type, preferences, and budget. Instead of curated selections, she received repetitive basics like black shirts, gray pants, and black turtlenecks, ultimately abandoning AI shopping. Tan described the experience as "like talking to a grandmother with dementia—you keep reminding it 'I really want items within this price range. No, that's too expensive, please stop showing me that.'"