AI shopping agents could threaten Amazon and Walmart's ad business

The rise of AI-led shopping is posing a challenge for retailers such as Walmart and Amazon: how to allow AI agents to shop on their websites without threatening their lucrative advertising revenue and the customer data that supports it.

Retail giants Walmart and Amazon are also the world's two largest retail media businesses, dominating the estimated $74.4 billion in US retail media spending with a combined 88% share of the market, according to projections from data firm Emarketer. However, digital assistants could soon disrupt this business.

AI-powered agents that can research and purchase products on consumers' behalf, such as Meta's recently released Muse, could erode the highly profitable business of brands paying retailers to promote products on their websites and apps. Morgan Stanley researchers said in July that these agents could account for 10% to 20% of US e-commerce spending by 2030.

Amazon and Walmart are taking different approaches to agentic AI shopping. Amazon has blocked Muse, while Walmart is officially partnering with Meta's agentic tool.

So far, third-party agents have had no meaningful effect on Amazon's advertising business, CEO Andy Jassy said last week. However, the company's advertising revenue grew 11% year-on-year in the third quarter, its slowest pace of growth in nearly four years, according to LSEG data. The segment consistently accounts for about 10% of total net sales.

Different approaches

Amazon banned Muse from its website in September, saying it appeared to have accessed its online store without authorisation and captured and stored customer credentials. Meta declined to comment.

The e-commerce leader told Reuters this week that third-party agents should operate openly and respect service providers' decisions about whether to participate.

Amazon also secured a court order blocking Perplexity's shopping agent Comet in March. However, the 9th US Circuit Court of Appeals overturned the ban in August, a decision Amazon said it disagreed with. The case is ongoing.

Walmart, conversely, rolled out infrastructure on October 21 to enable third-party agentic commerce. When a shopper uses an agent to browse, Walmart will create a profile for that agent linked to the shopper's Walmart account. Consumers can approve purchases or set spending limits.

Walmart CFO John David Rainey told analysts and investors in August that advertising, which includes the Walmart Connect retail media business, along with its membership and marketplace operations, accounted for 45% of quarterly operating income growth. Walmart does not separately disclose Walmart Connect's figures in its earnings release.

Dan Marc, CEO of retail media platform Footprints AI, said he expects companies such as Amazon and Walmart to start signing their largest advertisers to multi-year advertising deals to secure revenue. He also expects more discounts on digital retail media ads as shoppers turn to large language models and agentic tools. Walmart declined to comment.

Shifting marketing landscape

Morningstar analyst Brett Husslein said the moment presents “an evolution rather than an existential threat” for retail media. Brands are expected to spend 22.6% more on retail media in 2026 than the $60.7 billion spent last year, according to Emarketer forecasts.

This year, Walmart started testing ads within Sparky, its AI shopping chatbot, while Amazon has embedded them in its AI shopping assistant, Alexa for Shopping.

Companies including Procter & Gamble, Nestle and L'Oreal have said they are working to make product information easier for AI agents to process. These agents are bringing brands closer to consumers, said Mondelez's vice president of global digital commerce, Andrew Lederman, on a podcast in April. He added that retailer media sites still drive the vast majority of the company's sales volume.

“We are not recommending that clients fundamentally shift their retail media budgets overnight,” said Amie Owen, chief client officer at digital commerce consultancy Flywheel. “But we are advising them to prepare for how discovery and purchase decisions may evolve.”

Katherine Black, a senior consultant at Kearney, envisions a radical shift in which retail media eventually evolves into a kind of “bidding system”, where agents search for products at a consumer's preferred price point and retailers set price ceilings and floors.

“All retailers need to be thinking about how to interact with consumers in new ways,” Black said.