Why Walmart’s quick success in generative AI search should have Google worried

Planning
purchases
for
a
special
occasion
like
recent
Super
Bowl
parties
or
Valentine’s
Day
celebrations
might
typically
require
consulting
more
than
one
online
source
—
or
the
primary
source
of
Google
—
but
if
Walmart
has
its
way,
that
is
going
to
change
in
the
future.

Walmart
is
talking
up
its
ability
to
use
generative
AI
as
a
one-stop
shop
to
search
when
you
need
to
plan
an
event,
rather
than
online
destination
to
search
for
individual
items.
During
a
call
with
analysts
after
its

February
earnings,
Walmart
CEO
Doug
McMillon
talked
about
the
gen
AI
search
capabilities
in
its
app.

“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
on
the
earnings
call.
“And
it
happened
pretty
quickly.”

It
also
adds
to
the
questions
about
future
use
of
a
search
engine
like
Google.

Walmart
long
ago
established
itself
as
a
major
tech
player,
successfully
fending
off
years
of
anxiety
over


Amazon
and
remaining
a
leader
in
the
retail
space
whose
shares
are
now
trading
at
an
all-time
high.
The
tech
narrative
is
one
the
company
has
been
spinning
since
it
bought
Jet.com,
started
by
a
former
Amazon
executive
Marc
Lore,
noted
Forrester
vice
president,
principal
analyst
Sucharita
Kodali.
As
a
technology
company,
Walmart
has
to
experiment
a
lot,
and
in
the
case
of
adding
generative
AI
search
capabilities,
there’s
a
very
low
cost
for
failure,
she
said.

“It
establishes
them
as
an
innovator
in
the
space,”
Kodali
said.
“They’re
better
to
be
a
leader
than
a
follower
in
their
shoes.
They’re
operating
from
a
position
of
strength.”

Experiments
can
go
wrong,
though,
as
happened
to


Alphabet
recently
when
it
launched
the
Gemini
gen
AI
into
the
market
before
it
was
ready.
In
a
rare
public
appearance,
Google
co-founder
Sergey
Brin
said

the
company
“messed
up”
with
the
launch,
but
he
dismissed
concerns
about
the
company’s
outlook.

“I
expect
business
models
are
going
to
evolve
over
time,”
Brin
said.
“And
maybe
it
will
still
be
advertising
because
advertising
could
work
better,
the
AI
is
able
to
better
tailor
it.
…
I
personally
feel
as
long
as
there’s
huge
value
being
generated,
we’ll
figure
out
the
business
models.”

AI
and
search,
shopping
business
model
shifts

It’s
not
only
Walmart
investing
in
this
type
of
search
in
the
retail
sector.
Instacart’s
AI-enabled

“Ask
Instacart”
allows
customers
to
search
based
on
theme
like
dinner
or
date
night
rather
than
by
item.
Amazon’s

AI
shopping
assistant
Rufus
lets
people
have
a
conversation
with
the
platform
about
what
they
need
rather
than
just
looking
for
direct
items.
Shopify’s
AI-powered

“Semantic
Search”
helps
sellers
find
the
right
items
to
sell
potential
customers,
making
sure
their
search
results
are
more
accurate.

“We’re
going
to
see
this
become
a
norm
for
online
retailers,”
said
Jacob
Bourne,
analyst
at
Insider
Intelligence.
“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
in
terms
that
are
less
existential.
The
world
still
relies
heavily
on
Alphabet’s
core
search
business
for
many
things,
and
some
early
gen
AI
successes
from
retailers
won’t
change
that.

“You
get
in
the
habit
of
using
Google
because
you
use
it
for
everything,”
Kodali
said.
“You
use
it
for
everything
else
(outside
of
shopping),
and
everything
else
is
like
90
percent
of
the
searches
you
do.
So,
unless
Amazon
and
Walmart
are
going
to
get
into
the
business
of
the
other
90
percent
of
the
searches,
it’s
not
going
to
happen.”

Alphabet
is
continuing
to
invest
heavily
in
Gemini,
as
well
as
more
specific
AI
tools
to
embed
itself
inside
other
retail
ecosystems,
such
as
Google
Cloud’s
Vertex
AI
Search
for
retail,
and
its
Conversational
Commerce
tools
which
allow
companies
to
put
virtual
AI-powered
customer
service
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
over
35
billion
product
listings
from
retailers
on
a
global
basis
on
Google,
and
its
own
AI-powered
tools
that
make
it
easy
to
find
the
right
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,”
a
spokeperson
said.

Traditional
search
engines
are
due
for
change.
They
suggest
thousands
of
results
based
on
a
prompt,
which
people
have
to
sort
through
to
find
the
right
answer.
With
content
production
at
an
all
time
high,
there’s
more
information
out
there
than
ever,
and
not
everything
is
accurate
or
appropriate.
Advertising,
especially
on
search
products,
is
also
the
main
way
that

companies
like
Google
make
money.

Instead
of
researching
what
to
buy
on
a
search
engine
like
Google
and
then
heading
to
a
retailers’
website
for
those
items,
retailers’
generative
AI
can
find
specific
answers,
narrowing
it
down
to
a
few
choices
and
saving
people
time,
while
allowing
companies
to
own
the
experience
and
build
direct
loyalty,
rather
than
having
to
show
up
on
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
Walmart
spokesperson
told
CNBC.
“A
single
query
for
a
themed
party
can
serve
up
relevant,
cross-category
recommendations,
replacing
the
need
for
individual
searches
for
each
and
every
item.
This
can
be
a
significant
time
saver
which
leads
to
a
more
positive
experience.”

It’s
something
Google
at
least
should
be
concerned
about,
said
Stefano
Puntoni,
professor
of
marketing
at
The
Wharton
School,
who
is
also
co-academic
director
of
an
executive
education
course
on
generative
AI
and
business
transformation.
“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.
“Maybe
they’re
able
to
get
to
learn
about
what
they
need
directly
on
the
retailer’s
platform.”

This
also
gives
companies
a
chance
to
suggest
more
products.
Brands
like
L’Oreal
are
using
AI
to
have
people
try
on
makeup
virtually,
which
can
show
the
shopper
items
they
may
not
have
been
in
the
market
for.
Digital
celebrities
can
theoretically
sell
products
to
customers
through
personalized
AI-enabled
conversations
to
customers
instead
of
a
pre-programmed
chatbot.

“What
generative
AI
search
does
is
it
democratizes
a
lot
of
the
opportunities
now
for
brands
and
companies,
who
now
can
also
create
those,”
said
Elav
Horwitz,
McCann
Worldgroup
executive
vice
president
and
head
of
applied
innovation.

Alphabet
also
owns
a
lot
of
brands
that
people
rely
on
every
day,
and
plenty
of
valuable
advertising
real
estate
where
the
results
will
be
more
relevant
than
ever. 

“The
tech
companies
keep
on
experimenting
with
new
features
every
day,”
Horwitz
said.
“Google
is
openly
speaking
about
it.
The
SEO
and
SEM
model
is
going
to
change.
But
I
think
we’ll
probably
see
a
lot
of
generative
search
or
recommendations
in
other
Google
products
like
in
Gmail,
Google
Drive, Google
Photos,
and
YouTube.”