AI Shopping Agents Challenge Retail Advertising

The expansion of AI-powered shopping agents is creating a strategic challenge for Amazon (NASDAQ: AMZN) and Walmart (NYSE: WMT). These tools can research products and complete purchases on behalf of consumers, potentially reducing the influence of traditional advertising across retailer websites and applications.

The two companies dominate the US retail media market, which is projected to generate US$74.4 billion in spending. According to Emarketer estimates, Amazon and Walmart together account for approximately 88% of that market.

Retail media has become an important source of revenue because brands pay retailers to promote products directly where consumers search and shop. However, AI agents could change how customers discover products, potentially reducing the effectiveness of sponsored placements and the customer data that supports targeted advertising.

Morgan Stanley researchers estimated in July that AI shopping agents could account for 10% to 20% of US e-commerce spending by 2030.

Amazon and Walmart Take Different Approaches

Amazon and Walmart are pursuing different strategies for third-party agentic commerce.

Amazon blocked Meta’s Muse shopping agent from its website in September, citing unauthorized access to its online store and the capture and storage of customer credentials. The company has argued that third-party agents should operate transparently and respect service providers’ decisions about participation.

Amazon has also pursued legal action involving Perplexity’s Comet shopping agent. Although a court order blocking the tool was overturned by the Ninth US Circuit Court of Appeals in August, the dispute remains ongoing.

Walmart has taken a more accommodating approach. On October 21, it introduced infrastructure designed to support third-party agentic commerce. When an AI agent browses on behalf of a shopper, Walmart creates an agent profile linked to the customer’s account. Consumers can then approve purchases or establish spending limits.

The different strategies reflect competing approaches to controlling the customer relationship as AI-assisted shopping develops.

Advertising Remains Important to Both Retailers

The potential disruption matters because retail advertising contributes significantly to the economics of both companies.

Amazon’s advertising revenue increased 11% year over year in the third quarter, its slowest growth rate in nearly four years, according to LSEG data. The segment consistently represents approximately 10% of the company’s total net sales. CEO Andy Jassy said there has not yet been a meaningful impact on Amazon advertising from third-party agents.

At Walmart, advertising, membership and marketplace operations collectively accounted for 45% of quarterly operating income growth, according to CFO John David Rainey. Walmart does not separately disclose Walmart Connect’s financial results in its earnings release.

Retail media platform Footprints AI CEO Dan Marc expects retailers to seek multiyear advertising agreements with major advertisers to protect revenue. He also anticipates greater discounting in digital retail media as consumers increasingly use large language models and shopping agents.

Brands Prepare for an AI-Driven Marketing Landscape

The shift toward AI-assisted discovery could change how companies design digital advertising and product information.

Rather than relying primarily on visual presentation or emotional messaging, brands may need to ensure that product specifications and descriptions are structured in ways that AI agents can interpret and match with consumer queries.

Companies including Procter & Gamble, Nestlé and L’Oréal are already working to make product information more accessible to AI agents.

Retailers are also experimenting with advertising inside their own AI shopping tools. Walmart has tested advertisements within its Sparky chatbot, while Amazon has incorporated advertising into Alexa for Shopping.

Morningstar analyst Brett Husslein describes the development as an evolution rather than an existential threat to retail media. Emarketer forecasts that brands will increase retail media spending by 22.6% in 2026 compared with the previous year’s US$60.7 billion.

However, digital commerce consultancy Flywheel advises advertisers to prepare for changing discovery and purchasing behavior rather than immediately shifting their retail media budgets.

What Investors and Advertisers Should Watch Next

The central question is whether retailers can integrate AI shopping agents without weakening the advertising economics that have become an important source of operating income.

One possible direction is a more data-driven advertising model in which AI agents evaluate products against specific consumer requirements, including price. Kearney consultant Katherine Black has described a potential future system resembling an auction, where agents search for products within a customer’s price range while retailers establish pricing boundaries.

For Amazon and Walmart, the challenge will be to maintain control over customer relationships, product discovery and monetization as shopping behavior evolves. The companies’ ability to adapt their advertising infrastructure could influence the future structure of retail media and digital commerce.