Planning purchases for a special occasion, such as recent Super Bowl parties or Valentine’s Day celebrations, may generally necessitate examining more than one web source — or the primary source, Google — but if Walmart has its way, this will alter in the future.
Walmart is promoting its capacity to employ generative AI as a one-stop shop for event planning, as opposed to an online destination for searching for individual things. Walmart CEO Doug McMillon discussed the app’s next-generation AI search capabilities on an analyst call following its February earnings.
“The thing we’re most excited about that’s already happened is the way search has improved, and the way generative AI helped us really improve a solution-oriented search experience for customers and members,” McMillon said during the conference call to discuss the results. “And it happened pretty quickly.”
It also raises doubts about the future utility of search engines such as Google.
Walmart has long established itself as a big IT company, effectively fending off years of fear about Amazon and remaining a leader in the retail market, with shares trading at an all-time high. According to Forrester vice president and principal analyst Sucharita Kodali, the corporation has been constructing a tech narrative since it acquired Jet.com, which was founded by former Amazon executive Marc Lore. Walmart, as a technology firm, must experiment frequently, and adding generative AI search capabilities has a very low cost of failure, she explained.
“It establishes them as an innovator in the space,” he added. “They’d rather be a leader than a follower in their shoes.” They are acting from a position of power.”
Alphabet recently introduced the Gemini gen AI into the market before it was fully ready, demonstrating the potential for mistakes in experimentation. In a rare public appearance, Google co-founder Sergey Brin admitted the business “messed up” with the launch, but downplayed fears about the company’s future.
“I expect business models are going to evolve over time,” Brin was quoted as saying. “And perhaps it will continue to be advertising because AI can better customize it. I personally believe that as long as there is significant value being generated, we will find out the business models.
AI and Search, Shopping Business Model Shifts
Walmart is not the only company investing in this type of search in the retail sector. Instacart’s AI-enabled “Ask Instacart” feature allows consumers to search by theme, such as supper or date night, rather than item. Instead of searching for specific things, Amazon’s AI shopping assistant Rufus allows users to converse with the platform about their needs. Shopify’s AI-powered “Semantic Search” helps sellers identify the correct things to sell to potential buyers, ensuring more accurate search results.
“We’re going to see this become the norm for online retailers,” said Insider Intelligence analyst Jacob Bourne. “Google is anxious is about search in general, and the question this raises is will it be a death by a thousand cuts for Google Search?” Bourne said.
Kodali sees the threat as less existential. The world continues to rely heavily on Alphabet’s main search business for many things, and certain early-stage AI triumphs from retailers will not change this.
“You get in the habit of using Google because you use it for everything,” he remarked. “You use it for everything else (apart from shopping), which accounts for roughly 90% of your searches. So, unless Amazon and Walmart enter the market for the remaining 90 percent of searches, it won’t happen.
Alphabet is still investing heavily in Gemini, as well as more specific AI tools to embed itself within other retail ecosystems, such as Google Cloud’s Vertex AI Search for retail and Conversational Commerce tools, which enable businesses to embed virtual AI-powered customer service agents on their websites and apps. Customers for Google Cloud AI products include Victoria’s Secret, Macy’s, Ikea, Lowe’s, and Rainbow Shops.
Alphabet cites to approximately 35 billion product listings from stores across the world on Google, as well as its own AI-powered tools that make it simple to discover the appropriate one. “People shop with Google more than a billion times a day, and we’re invested in improving shopping journeys across Google as well as giving retailers generative AI tools to create great experiences for their customers,” said a spokesperson for Google.
Traditional search engines are about to change. They provide thousands of results depending on a prompt, which users must sort through to discover the correct answer. With content production at an all-time high, there is more information available than ever, but not all of it is reliable or appropriate. Advertising, particularly on search products, is the primary source of revenue for corporations such as Google.
Instead of researching what to buy on a search engine like Google and then going to a retailer’s website for those items, retailers’ generative AI can find specific answers, narrowing it down to a few options and saving people time, while also allowing companies to own the 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 gen AI powered search makes online shopping even more intuitive and convenient,” a spokeswoman for Walmart told CNBC. “A single query for a themed party can generate appropriate, cross-category recommendations, eliminating the need for separate searches for each item. This can save you a lot of time and make your trip more enjoyable.”
Stefano Puntoni, professor of marketing at The Wharton School and co-director of an executive education course on generative AI and business change, believes Google should be concerned about this. “Maybe when a retailer has a powerful generative AI engine on their platform, customers don’t feel the need to go on Google at all,” Puntoni said in an interview. “Maybe they’re able to get to learn about what they need directly on the retailer’s platform.”
This also allows companies to suggest more products. Brands such as L’Oreal are utilizing AI to allow customers to digitally put on makeup, which can show them goods they were not previously interested in purchasing. In theory, digital celebrities can offer things to customers via individualized AI-enabled chats rather than a pre-programmed chatbot.
“Generative AI search democratizes a lot of the opportunities that brands and companies can now create,” said Elav Horwitz, McCann Worldgroup executive vice president and head of applied innovation.
Alphabet also controls numerous brands on which consumers rely every day, as well as a large amount of valuable advertising real estate where the results will be more relevant than ever before.
“The tech companies keep on experimenting with new features every day,” he remarked. “Google is publicly discussing it. The SEO and SEM models are about to alter. But I believe we’ll see a lot of generative search and suggestions in other Google products, such as Gmail, Google Drive, Google Photos, and YouTube.”
