Episode 14: Retail vs. AMZN in an Agentic World; Deep Dives into the AMZN/WMT Battle

Research evidence excerpt

Episode 14: Retail vs. AMZN in an Agentic World; Deep Dives into the AMZN/WMT Battle

Retail vs. AMZN: Our Observations

• Agentic is more of an opportunity at this point with puts/takes. With AI platforms driving <1% of web

traffic across key e-commerce sites, consumers are primarily using LLMs for product discovery with the

long-term risk of delegated automated replenishment. That said, LLMs don’t control the distribution

process (a la AMZN/WMT) and many brands are reluctant to go DTC. Grocery/CPG face higher price

discovery while disintermediation risk exists for sought-after brands with an established DTC mechanism.

On the other hand, retailers in highly emotive categories (e.g,. beauty, pet/Chewy) and where

browsing/basket building is important (e.g., home decor), remain in the low-risk bucket.

• Retailers need to partner with LLMs and invest. Retailers will need to both engage through/with

the major LLMs and use their own agents on their owned platforms to drive customer

acquisition/retention/satisfaction, product discovery, basket building, and proprietary data collection.

WMT is generally ahead of the retail pack with TGT and then the rest of retailers we discuss chasing.

• Team Internet: We believe there are three key layers of agentic opportunity for e-commerce

platforms — Traffic Channels, On-Platform, & Infrastructure. Within Channels, we believe shoppers

on AI platforms have higher intent vs. other traffic sources, even though the platforms overall are lower

commercial intent in nature. On-platform remains critical to driving Buyer acquisition, frequency, and

retention. Agentic infrastructure & merchant solutions remain key to scaling agentic commerce.

• E-comm penetration continues to rise with ~10%e sales growth; medium term e-commerce