Doug McMillon, CEO of Walmart, left, and Satya Nadella, CEO of Microsoft, during the CES 2024 event in Las Vegas, Nevada, US, on Tuesday, January 9, 2024.
Bloomberg | Bloomberg | Getty Images
Planning purchases for a special occasion like recent Super Bowl parties or Valentine's Day celebrations would typically require consulting more than one online source — or Google's primary source — but if Walmart succeeds in achieving its goal, that will change in the future.
Walmart talks about its ability to use generative AI as a one-stop shop for research when you need to plan an event, rather than an online destination to search for individual items. During a call with analysts after February's earnings, Walmart CEO Doug McMillon talked about the research capabilities of AI in his app.
“The thing that we're very excited about that has already happened is the way search has improved, the way generative AI has helped us improve the solution-oriented search experience for customers and members,” McMillon said on the earnings call. “It happened very quickly.”
It also adds to questions about the future use of a search engine like Google.
Walmart It has long established itself as a major player in the technology space, successfully overcoming years of anxiety Amazon It remains a leader in the retail space whose shares are now trading at all-time highs. It's the technology narrative that the company has been pivoting to since it bought Jet.com, which was started by former Amazon executive Marc Lore, noted Forrester vice president and principal analyst Sucharita Kodali. As a technology company, Walmart has to experiment a lot, she said, and if it adds AI-generated search capabilities, the cost of failure is very low.
“It makes them innovators in the space,” Kodali said. “It is better for them to be leaders than to be followers in their place. They operate from a position of strength.”
However, experiences can go wrong, as they did the alphabet Recently when Gemini gen AI launched in the market before it was ready. In a rare public appearance, Google co-founder Sergey Brin said the company “messed up” the launch, but dismissed concerns about the company's future.
“I expect business models will evolve over time,” Breen said. “And it will probably still be about advertising because advertising can work better, and AI can design it better. … I personally feel that as long as there is significant value being generated, we will figure out business models.”
Artificial Intelligence, Search, and Shopping Business Model Shifts
It's not just in the retail sector that Walmart is investing in this type of research. Instacart's AI-powered “Ask Instacart” feature allows customers to search based on a topic like dinner or date night instead of by item. Amazon's AI-powered shopping assistant, Rufus, allows people to have a conversation with the platform about what they need instead of just searching for direct items. Shopify's AI-powered Semantic Search helps sellers find the right items to sell to potential customers, and ensures their search results are more accurate.
“We'll see this become a standard for online retailers,” said Jacob Born, an analyst at Insider Intelligence. “Google is concerned about search in general, and the question this raises is will this be the death of Google search with thousands of cuts?” Bourne said.
Kodály sees the threat in less existential terms. The world still relies heavily on Alphabet's core search business for many things, and some of retailers' early AI successes won't change that.
“I got used to using Google because you use it for everything,” Kodali said. “You use it for everything else (outside of shopping), and everything else is 90 percent of your searches. So, unless Amazon and Walmart are going to get into the business of the other 90 percent of your searches, it's not going to happen.” “
Alphabet continues to invest heavily in Gemini, as well as more specific AI tools to integrate itself within other retail ecosystems, such as Google Cloud's Vertex AI Search for retail, and conversational commerce tools that allow businesses to offer virtual customer service powered by AI. Agents on their websites and apps. Customers of Google Cloud AI products include Victoria's Secret, Macy's Ikea, Lowe's, and Rainbow Shops.
Alphabet points to more than 35 billion product listings from retailers globally on Google, and its own AI-powered tools make it easy to find the right product. “People shop with Google more than a billion times a day, and we're investing in improving shopping journeys on Google as well as giving retailers AI tools to create great experiences for their customers,” a company spokesperson said.
Traditional search engines are set to change. They suggest thousands of results based on the prompt, which people have to sort through to find the correct answer. With content production at an all-time high, there is more information available than ever before, and not everything is accurate or relevant. Advertising, especially on search products, is the main way companies like Google make money.
Instead of searching for what to buy on a search engine like Google and then heading to the retailer's website in search of those items, generative AI for retailers can find specific answers, narrow them down to a few options and save people time, while allowing businesses to own Experience and build direct loyalty, rather than having to appear at the top of search results.
“Creating great customer and member experiences is our top priority, and AI-powered search makes online shopping easier and more convenient,” a Walmart spokesperson told CNBC. “A single query for a themed party can deliver relevant recommendations across categories, replacing the need for individual searches for each item. This can save significant time resulting in a more positive experience.”
It's something Google should at least be concerned about, said Stefano Pontoni, a marketing professor at Wharton School, who is also academic co-director of an executive education course on generative AI and business transformation. “Maybe when a retailer has a strong AI engine on its platform, customers don't feel the need to use Google at all,” Pontoni said. “They may be able to find out what they need directly on the retailer’s platform.”
This also gives companies a chance to propose more products. Brands like L'Oreal are using AI to have people try on makeup virtually, potentially showing shoppers items they may not have been in the market for. Digital celebrities could theoretically sell products to customers through personalized AI-powered customer conversations rather than a pre-programmed chatbot.
“What generative AI research does is it democratizes a lot of opportunities now for brands and companies, who can now also create those opportunities,” said Elaf Horowitz, McCann Worldgroup's executive vice president and head of applied innovation.
Alphabet also has a lot of brands that people rely on every day, and a lot of valuable advertising real estate where results will matter more than ever.
“Technology companies continue to experiment with new features every day,” Horowitz said. “Google is talking about it publicly. The SEO and SEO model will change. But I think we'll probably see a lot of general searches or recommendations in other Google products like Gmail, Google Drive, Google Photos, and YouTube.”
