What's shaping the e-commerce landscape?

Walmart’s recent announcement that it has started delivering groceries in a half hour in dozens of markets might look like just another move by the retailer to keep up with Amazon, which said it was expanding its own 30-minute grocery delivery service.

Look beneath the surface, however, and the race between the two retail giants to satisfy consumers' desire for speed exposes an emerging trend that could eventually have profound implications across the grocery sector, according to industry analysts.

Amazon and Walmart have long posed a threat to brick-and-mortar grocers online because of their vast reach and deep pockets. But as they build out their 30-minute offerings, they are taking away perhaps the top benefit grocery chains provide customers — convenience — said David Bishop, partner at grocery e-commerce consultancy Brick Meets Click.

Rapid delivery is “undercutting one of the core strategic advantages that regional grocers or supermarkets have historically enjoyed in the physical world, which is proximity to the customer,” Bishop said.

Amazon’s 30-minute delivery service, Amazon Now, already serves several major markets, including Atlanta, the Dallas-Fort Worth area, Philadelphia and Seattle. The company plans to bring the service to dozens more cities by the end of 2026.

Walmart, meanwhile, currently offers its 30-minute service in 33 markets, noting that its network of stores gives it “significant opportunity to continue expanding delivery capabilities to more communities over time.” While Walmart formally announced the 30-minute service on May 28, it has been fulfilling orders that fast for more than a year, according to the retailer.

In another example of how Walmart is flexing its delivery muscles, the retailer announced that it would begin providing 30-minute restaurant delivery, starting with Subway locations in select stores.

Bishop pointed out that Amazon and Walmart pose an especially potent threat because they can quickly deliver basic goods that people are highly familiar with and buy often.

“If Amazon is able to demonstrate to households the ability to consistently and reliably deliver a quality product that’s a banana, to say the least, that’s concerning, because that has traditionally been one of the main trip drivers for supermarkets,” he said.

Michael Infranco, assistant vice president of RetailStat, observed that the recent steps by Walmart and Amazon to make grocery delivery more accessible are key reasons why traditional retailers are working with third-party providers to quickly scale up their e-commerce capabilities.

“They’re definitely putting pressure on [grocers], and you would expect them to keep running with that as long as they can,” Infranco said. “Anything that they can do to get a leg up on somebody else, they’re going to do via their size.”

In an example of how supermarket operators have looked outside for assistance in building up their delivery services, Kroger over the past year stepped up its partnerships with providers including Instacart, Uber and DoorDash. Kroger also works with those companies to provide 30-minute convenience delivery.

Albertsons and Ahold Delhaize have also looked to third-party providers to help them establish 30-minute delivery services.

Bishop noted that with its 30-minute service, Walmart is putting its stake in the ground as a “quick-trip” destination — a moniker the retailer has never had before.

Amazon, meanwhile, is gaining momentum by pivoting to better meet shopper expectations by putting groceries into the same category as its overall e-commerce business, Bishop said.

“They’ve realized, ’Hey, you know what? We’re creating friction, so let’s bring the products to the customer and put them where the customers are shopping, instead of putting it in the Whole Foods tab or the grocery tab.’ It’s now in the same-day tab or the Prime Now tab,” he said.

What’s in store for Amazon and Walmart in high-speed grocery delivery?

Bishop said he thinks that while Amazon’s dominant online presence gives it a powerful lever to expand its grocery business, its relatively small brick-and-mortar presence is a liability that it eventually will need to address.

The company’s decision in January to shutter its entire fleet of Amazon Fresh supermarkets left it with only Whole Foods Market as a foothold in the physical grocery store space.

On the other hand, Amazon’s ability to bring fresh foods into its enormous online fulfillment operations was a “seminal moment” for Amazon because it allowed the company to build momentum in the grocery space on turf it knows best, Bishop said.

“What’s clear is now, after 20 years of learning, Amazon has identified and aligned with its core shoppers currently, and that’s going to drive strong growth for them over the next year or two,” he said. “But eventually they’ve got to figure out the physical in-store presence, because without that they’re missing the pick-up segment.”

Pickup also presents an opportunity for Walmart to improve, Bishop added, noting that the company faces strong competition from Target — another mass retailer with a large physical store presence — in the pickup space. That could change if Walmart is able to speed up its pickup operations, including its efficiency in getting orders to people when they show up to collect them, he said.

“That’s helped Target compete against Walmart, because it has a point of competitive differentiation, which is the speed of its cycle times for drive up and its speed of service. It's still gold standard,” Bishop said.

Infranco said Amazon’s massive scale in e-commerce doesn’t guarantee it a leading spot in the 30-minute grocery-delivery space.

“Just because Amazon says they’re going to do it doesn’t mean they’re going to do it well or do it forever,” he said. “Grocery has been very hard for Amazon … they’ve been in that game for a while, and it seems like they’ve had just as many setbacks as they had victories.”

Infranco pointed to Amazon’s purchase of Whole Foods almost a decade ago as a development that didn’t turn out to be as disruptive as many in the grocery industry had anticipated.

“Amazon goes and buys Whole Foods, and everybody’s saying, ’Oh my god, the grocery business has changed forever.’ Well, you’re almost 10 years later [and] from the Amazon owning Whole Foods standpoint, the sector hasn’t changed all that much,” he said.

TikTok has drawn droves of marketers for its ability to turn products of all stripes, from Stanley tumblers to cranberry juice, into viral sensations. Since the social platform launched its Shop e-commerce marketplace in the U.S. a little over two years ago, brands have gotten better at quantifying just how much video crazes are translating into sales.

TikTok Shop’s stature is growing enough to influence how retailers think about product mix, demand forecasting and content strategy, according to speakers at the National Retail Federation’s Big Show.   

“It’s a place for us to learn what’s working versus not,” said Richard Cox, chief merchandising officer of the Gen Z-focused retailer Pacsun, during a panel at the trade conference. 

At the same time, Shop has gotten more crowded and competitive. It acts as a “bonafide retailer,” one NRF speaker said, hosting its own Prime Day-like deals bonanzas called Super Brand Days. Shop is robust enough at this point that TikTok no longer offers brands some of the incentives it once did to use the feature. A fresh level of maturity comes as the retail industry is beset by challenges related to tariffs and pullbacks in discretionary spending.

“Our main operational challenge is around profitability,” said Jenna Manula Linares, vice president of digital marketing at Tarte Cosmetics, during the panel. “As their platform has scaled, they started pulling back in what they’d been funding for us.

“We also know that the TikTok customer is value-driven,” added Linares. “So now we are at this intersection where we’re trying to find the balance between how much value [we can] offer a customer while still being conscious of our bottom line.”

Sales follow virality

TikTok Shop increasingly seems like one of the first major success stories for social commerce in the U.S. The marketplace accounted for about one-fifth of the social commerce segment in 2025 and is forecast by eMarketer to exceed $20 billion in sales this year.

Pacsun’s first pop on TikTok Shop came as something of a surprise. Around Black Friday in 2023, a smaller influencer posted a video about the retailer’s Casey jeans, a low-rise, baggy cut of denim. The availability of the item on TikTok Shop dovetailing with a key holiday sales window resulted in 11,000 pairs sold on Black Friday alone, along with a long tail of popularity.  

“We’ve sold over 100,000 pairs of that jean. In terms of halo effect, it’s helped our entire denim business,” said Cox. 

Other brands on the panel shared similar case studies that speak to how Shop can link buzzy content to business results, sometimes in a chaotic fashion. Last year, Tarte — among the early adopters of Shop — noticed that creators were participating in a strange trend: They would draw under their eyes with a permanent black Sharpie and then cover up the markings with the brand’s CC under-eye color corrector, a testament to the concealer’s efficacy. Tarte has sold nearly 600,000 units of the product on TikTok Shop in the U.S., according to Linares, while noticing stronger demand in international markets through direct-to-consumer channels.    

That said, Shop requires a different approach than a traditional DTC or e-commerce site. Tarte promotes a smaller assortment on Shop because the brand “can’t control the algorithm,” Linares explained. Speakers noted that TikTok’s unpredictable nature is disrupting some of the fundamentals of retail, increasing a reliance on social listening, media mix modeling and “analytics horsepower.”

“It kind of turns everything we all know about demand planning on its head,” said Feliz Papich, senior vice president of digital technology, experience and insights at Crocs. 

Go with the flow

By that same token, marketers are adjusting some of their brand content to feed the Shop pipeline. Tarte, for instance, has introduced a mascot named Shapey, based on its shape-tape concealer, to attract viewers organically to its profile. 

“If you come to our page, you’re actually not going to see a ton of tutorials or before and afters,” said Linares. “We’re doing a lot around humor.”

The discussion also touched on co-creation, the idea of enlisting everyday customers to create content on behalf of a brand. Some retailers may not like relinquishing that degree of control but ultra-polished ads don’t perform as well in TikTok environments, according to Cox. Additionally, high-performing organic content is becoming valuable fodder to convert into paid media or material for other social platforms.

A willingness to roll the dice on such marketing experiments is just one piece of the Wild West mindset needed to succeed on TikTok, an app that is still in the process of figuring out its future in the U.S. following a ban threat.

“TikTok wants to partner with brands that are willing to take smart risks and to move fast. They’re not going to read your legal red lines,” said Linares. “Just say yes and go with the flow.”

Sponsored content

By Cloudinary

Video used to make commerce feel premium. Now it is table stakes – and, for many retailers, a liability. The rush to add product clips, hero loops, creator content and how-to videos solved one problem while creating another: video debt. Video debt is what happens when media libraries grow faster than the workflows, metadata, delivery systems and governance needed to make them useful. To put it bluntly, no shopper becomes more loyal because of buried, bloated video on a slow product page.

The video debt problem

Many retailers rushed to add video experiences during the pandemic without building the infrastructure and workflows needed to support them efficiently. This created video debt in the form of poorly optimized video files, slower pages, increased hosting and delivery costs and penalized search visibility. The scale of this challenge is clearly reflected in recent data: the 2025 Web Almanac notes an aggressive push toward video-first site designs that rely heavily on embedded clips, background hero visuals and looping product previews.

As a result of these heavy assets, the amount of video data transferred on a median web page swelled by 28% in a single year. Now, as AI-mediated commerce changes how products are discovered, compared and recommended, that same infrastructure has to make video fast, adaptable, searchable and AI-readable. Video has become commerce infrastructure, but many brands still manage it like campaign collateral.

Creation got easier. Scaling got meaner. 

Producing high-quality video has become much easier thanks to modern creative tools, AI and mobile phones. Making that video perform across every channel, market device and context has not. Today, a single product video may need to behave like ten assets at once: product-page explainer, marketplace clip, mobile-first short, connected TV asset, in-store display, localized campaign assets and source material for AI systems. Each environment introduces different technical requirements around aspect ratios, file formats, autoplay behavior, localization, accessibility and bandwidth optimization. The complexity grows when retailers manage thousands of SKUs across multiple regions.

AI-powered video workflows are helping retailers deal with this video debt. Instead of rebuilding creative assets manually for every device type, campaign, language, geography or distribution channel, retailers rely on automation to generate video variants dynamically.

Case study: Paul Smith's 45% conversion boost

Automated, scalable video solutions are driving significant results for major brands. Fashion retailer Paul Smith demonstrates how treating video as part of the commerce stack rather than a one-off creative asset pays off. Rather than relying on static images or navigating the costly, time-consuming post-production hurdles of traditional video workflows, Paul Smith uses Cloudinary to automatically deliver dynamically optimized videos directly on their product detail pages. The result? 45% rise in video-enabled sales conversions.

Global campaigns die in local workflows

Global retailers usually don’t lose time because the hero asset doesn’t exist. They lose time because every market needs its own captions, approvals, accessibility checks and publishing steps. For large commerce organizations operating across dozens of markets, those delays hurt most when timing matters: product drops, seasonal campaigns, influencer windows and limited-inventory launches.

AI-assisted workflows can compress these cycles by generating subtitles, translations, metadata and chapter markers within seconds, instead of relying entirely on manual editing cycles. The goal is not to remove local judgment, but to stop making local teams rebuild the plumbing every time a campaign ships. That not only reduces operational overhead, but also allows retailers to launch campaigns more consistently across regions and seasonal windows. Localized video content also improves accessibility compliance, expands discoverability in regional search environments and helps retailers maintain more consistent customer experiences.

Optimizing for the agentic shopper

Agentic AI is radically shaking up the shopping ‘journey’. Increasingly, shoppers find products through AI-mediated experiences, including conversational search tools, recommendation engines, AI shopping assistants and multimodal search platforms that summarize products before a customer ever visits a retailer’s website. In this new world, video content must not only be visually engaging, but also be machine-readable.

A beautiful product video that cannot be parsed, tagged, indexed, or connected to a SKU may persuade a human who sees it, but it may never be surfaced by these systems. That means metadata quality becomes strategically important. Titles, captions, transcripts, chapter markers, product references and structured tags help AI systems understand what a video contains and when it should surface during discovery. Retailers are increasingly relying on automated metadata generation to improve discoverability across both traditional search engines and emerging AI-driven commerce experiences.

Authenticity and brand safety can coexist

If that wasn’t enough, retailers face yet another challenge: maintaining authenticity while protecting brand integrity. User-generated content (UGC) often outperforms highly polished brand creative because consumers view it as more trustworthy and relatable. But scaling UGC introduces significant normalization, moderation and compliance challenges, especially for retailers managing large creator ecosystems or community-driven campaigns. Manual review queues were not built for modern social commerce velocity.

AI-assisted moderation is emerging as a way to reduce that operational burden. Retailers can use automated review systems to identify policy violations, inappropriate content, copyright risks, low-quality submissions, or inconsistent branding before assets are published. The point is not to sanitize UGC until it looks “corporate” which would defeat the purpose.

Return on video comes from operational discipline

In the midst of so much change, retailers naturally want to figure out how to get the highest possible return on video. The winners will not be the ones producing the most videos, but the ones that operationalize it most effectively. That means video that not only delights and engages shoppers, but is also engineered for discoverability, adaptability, machine readability, and global scale. AI is a big part of the answer, but only when it is attached to a real operating model. Sprinkling AI on broken workflows will just make the mess faster. Instead of asking “How do we make more video?” ask “Can our video operation scale without making the site slower, the team busier, and the customer journey less shoppable?”

Retail is in yet another period of upheaval: A trade war is roiling consumers, enabling inflation and fueling speculation about a recession. Yet in many ways the industry has also entered a period of stability, according to a report from commercial real estate firm Colliers.

This is because e-commerce is no longer the destablizing force it once was.

In the last 15 years, the value of in-store sales declined just once, in 2020, amid pandemic lockdowns, according to research from two U.S. Colliers analysts, Anjee Solanki, national director of retail services and practice groups, and Nicole Larson, manager of national retail research. Physical stores still account for over 76% of core retail sales and, while e-commerce’s share continues to grow, the once-torrid pace of that growth has eased, they said.

“The real retail reality is that while headwinds like tariffs and store closures persist, the disruption from e-commerce appears largely behind us,” Solanki said by email.

One reason for this is the realization on the part of direct-to-consumer brands — including some that at one point achieved unicorn-levels of investment — that stores are a critical channel, whether they run them or sell via wholesale to other retailers. Even some established brands like Nike have had to relearn the value of partnering with legacy retailers.

Another is that many traditional retailers knocked off balance by the rise of Amazon, and online commerce in general, long ago established their own e-commerce. In fact, with consumers expecting to be able to make purchases and returns on or offline, retailers running stores are often at an advantage, according to Colliers. In 2024, stores were integral to about a third of online retail sales via fulfillment like pickup or ship-from-store — a milestone reached a year earlier than those researchers predicted — and in five years that is set to rise to over 36%.

Stores have also emerged as an important channel for returns, which have increased due to e-commerce. Returns were projected to land at $890 billion in 2024, equal to roughly 17% of retailers’ annual sales, according to a report from the National Retail Federation. Whether to handle returns in stores, outsource to a third party or offer a hybrid of the two “depends on a retailer’s format and priorities,” Solanki said.

“Returns are a key part of the omnichannel experience but handling them in-store requires balancing customer engagement with operational efficiency,” she said. “While in-store returns can drive additional sales and reinforce brand control, they also take up valuable space, potentially limiting revenue per square foot. Outsourcing to third party logistics providers may reduce costs and free up store resources, though it sacrifices direct customer touchpoints.”

Plenty of retailers have shrunk their store fleets in recent years, especially during and after bankruptcies. In 2024, Big Lots expected to close its remaining 870 stores, after closing several hundred earlier in the year. Due to their bankruptcies this year, Joann is closing its roughly 800 stores and Party City is closing its 700 or so.

“Although store closures are happening, they’re tied mainly to operational challenges or oversaturation, rather than displacement by e-commerce,” Solanki said.

Others, including international brands new to the U.S. market, are also keen to sign new leases. A couple hundred Big Lots stores have reopened under new ownership, and Burlington alone, which aims to add about 100 stores to its fleet each year, has snapped up 45 Joann leases. In Q1, the national vacancy rate was just 4.2%, and “shopping center occupancy hit a decade-high peak,” according to Colliers. 

In the U.S., between 2018 and 2023, more than 18,900 stores opened, more than 5,000 of them by foreign companies, Colliers said.

Opening a store is just the beginning, however, as the customer experience remains essential, Solanki said.

“The role of brick-and-mortar has evolved beyond transactions,” she said, adding that retailers investing in experiential elements, store design and digital tools are better able to drive loyalty and conversion. “To stay competitive, brands must continuously reimagine the in-store experience as part of a seamless omnichannel strategy that meets rising consumer expectations across every touchpoint.”

Neither stores nor e-commerce may be enough in the era of tariffs, though, given the higher cost of goods combined with the price sensitivity of consumers, per Colliers’ report. “Retailers will look to bolster revenue streams from outside of retail to help support both the top and bottom lines,” the researchers said.

If tariffs continue or a recession hits, some retailers “may face sustained margin pressure,” but today’s low vacancy rates mean that fewer landlords may be amenable to revisiting leases, as many were during the pandemic, Solanki said.

“Still, selective requests may emerge from smaller or discretionary-based tenants, who are most exposed to cost increases,” she said. “As market conditions evolve, new developments may occur every day, requiring both retailers and consumers to pivot. Landlords must remain attentive and responsive to these shifts to stay aligned as they negotiate and manage leases.”

Costco’s digital experience enhancements were a significant sales driver for the second consecutive quarter,  CFO Gary Millerchip said. Personalized product recommendations carousels contributed just under $500 million in digital sales, following $470 million the quarter prior. 

The digital carousels drove conversion rates three times higher than Costco’s typical conversion rate, according to Millerchip.

“Delivering a more personalized experience for our members is a key focus, and we continue to make progress in this area,” Millerchip said.

Costco’s digital growth was a highlight for the warehouse club, and the leaders have put an emphasis on increasing membership renewals from digitally focused customers.

Traffic to Costco’s website and app was up 37% during the third quarter, according to Millerchip. Multiple product categories saw double-digit digital growth, including pharmacy, home furnishings and housewares. 

However, members who sign up online renew at a slightly lower rate than members who join at a physical location, according to Millerchip. As a result, the growing share of digital-first members has applied downward pressure on Costco’s overall renewal rate.

Costco responded by implementing targeted digital communication and retention strategies aimed at these customers, Millerchip said. In the third quarter, this effort “more than offset the negative impact from this mix change in our membership base.”

The company is investing in multiple forms of technology to continue improving its experience both online and in-store.

AI “has the potential to be a significant sales opportunity for Costco,” Millerchip said. Volume from AI search remains low, but the retailer saw triple-digit AI search traffic growth in the third quarter, and this activity has the highest conversion rate of all website traffic.

The retailer’s other recent improvements include quick access to digital membership cards in the Costco app and improvements to the digital wallet, according to President and CEO Ron Vachris.

“In digital, we're making meaningful strides to deliver a more seamless and convenient experience for our members across the warehouse and online,” Vachris said.

In the U.S., e-commerce sales will reach $1.8 trillion by 2030, according to a new report from Forrester. 

Though U.S. e-commerce sales will comprise 29% of all retail sales, the remaining 71%, about $4.4 trillion, will come from stores, according to Forrester’s projections. 

Forrester attributes e-commerce sales growth to several trends, including more Gen Zers entering the workforce, improvements in logistics and order fulfillment, and the rise of agentic commerce. However, consumers will continue to shop in stores, because physical retail offers tangible experiences, in-person comparison shopping, social interaction and personalized assistance, the report said. 

Though online shopping is on the rise, brick-and-mortar stores have become critical not only for transactions, but also for creating unique in-person experiences and building loyalty. In the last 15 years, the value of in-store sales declined just once, in 2020 amid pandemic lockdowns, according to research last spring from Colliers. 

Still, online shopping remains a key channel for retailers, particularly during the holiday season. Between Nov. 1 and Dec. 31 last year, U.S. consumers spent $257.8 billion online, up 6.8% year over year, according to Adobe Analytics. Furthermore, traffic directed to retailers via generative AI tools skyrocketed over 693% year over year, Adobe found.

While Forrester projects that physical stores will continue to dominate retail, other research finds that the share of people who shop online every day has dropped from 21% to 9%, according to a recent Salsify survey.

With the exception of automotive and gas sales, total retail sales in the U.S. are forecast to grow from $5.2 trillion in 2025 to $6.2 trillion by 2030.

As Walmart’s Doug McMillon moved toward the end of his tenure as CEO, the retailer’s third quarter earnings show he achieved some of the goals he set out over a decade ago.

When McMillon became the chief of Walmart in February of 2014, a main focus of his was e-commerce and global growth.

"We'll invest aggressively in e-commerce and increase our small store rollout in the U.S., as we've done in several other countries, to deliver value and convenience,” McMillon said in a February 2014 earnings report statement. "We will continue to grow our global business by focusing on customers and serving them how they want to be served."

The retailer in April revealed it expects its U.S. online sales to turn a profit this year — and e-commerce is still on the rise.

“The notable thing about our e-commerce growth is the consistency of it across our markets,” Walmart CFO John David Rainey said on a call with analysts, who added that U.S. e-commerce sales grew 28%. “This was the seventh consecutive quarter of e-commerce growth above 20%.”

Walmart’s total revenue in Q3 grew 5.8% year over year to $179.5 billion, with global e-commerce net sales up 27%, the mass retailer reported Thursday. The online growth was fueled by store-fulfilled pickup and delivery, as well as the company’s third-party marketplace. Meanwhile, Walmart U.S. comparable sales increased 4.5%.

Much of the company’s omnichannel success is due to McMillon, according to analysts.

“McMillon spent a ~decade investing in digital, supply chain, and omnichannel capabilities,” Jefferies analysts led by Corey Tarlowe said in an emailed note on Friday, shortly after McMillon’s departure was announced. “His tenure was transformative, prioritizing investments in associates, digital and eCommerce capabilities, and supply chain modernization. These deliberate and technology-focused initiatives have driven robust financial performance and positioned Walmart as a leader in omnichannel retail.”

Walmart's U.S. lead John Furner was named as McMillon's successor. Both executives worked at the company for decades, starting off as hourly store associates.

Looking to the future, incoming CEO Furner will maintain a focus on digital and e-commerce, but the lens has now shifted to AI. McMillon expressed optimism that Furner can shepherd the company through the “next AI-driven transformation” and agentic AI — an area in which Walmart has pursued bullish investment.

Furner touted the company’s consumer-facing Sparky AI agent. He expressed excitement about new capabilities to come with Sparky over the next several months that will aim to “take more action” on behalf of shoppers.

“We're using agentic AI to help people think about the things that they may want to reorder, or, in other words, give them nudges about staying in stock,” Furner told analysts.

The retailer is able to use its international segment to test new technological capabilities in different markets, president and CEO of Walmart International Kathryn McLay said.

An example of that is the company’s “Carrito Listo “capability launched in Chile. 

“We actually create customers’ orders for them, send them a WhatsApp prompt to ask them if they're interested in buying that basket,” McLay said. “They go onto the app, and they can see we've created a basket for them that actually has all the brands that they normally buy in the kind of intervals that they like to buy it, and they have full agency over whether they want to accept that basket, whether they want to add to the basket, whether they want to take from the basket.”

The lion’s share of e-commerce retailers have invested in agentic commerce in some form, most often to boost revenue growth and customer experience, according to a LogicBroker survey of over 600 enterprise e-commerce leaders. Nearly 96% have invested in AI capabilities.

Notably, the top applications are customer-facing, including Al-powered product discovery, Al chatbots, and personalized recommendations. 

Nearly half — 47% — plan to invest $1 million or more into agentic commerce in the next 12 months.

The days of businesses only deploying AI solutions on the backend and always keeping a human in the loop are over. Most retailers are comfortable bringing AI solutions directly to the customer.

“Keeping humans in the loop with AI is still sound advice, but the application has shifted,” Julie Geller, principal research director at Info-Tech Research Group, said in an email. “The question isn't about whether to keep humans involved; it is where in the customer journey that involvement matters most and how you design for it.”

Beyond revenue growth and improving the customer experience, e-commerce decisionmakers cited investing in AI for cost reduction and operational efficiency, according to the LogicBroker survey.

AI chatbots have a mixed impact on customer experience. While customers appreciate being able to access help 24/7 and fast responses; AI chatbots consistently fail to handle complex inquiries and customers often are frustrated by what they see as a roadblock to speaking with a human representative. 

“Many of these agents sit in an uncomfortable middle ground, neither convincingly human nor comfortably machine,” Geller said. “Responses can be hollow, nonsensical, or arrive too late to matter, and either way, the experience actively damages the brand it was meant to serve.”

With such experiences, it’s no surprise that two-thirds of consumers prefer talking to a human, according to a survey conducted by YouGov on behalf of Pegasystems Inc.

The problem is most companies are underinvesting in the handoff, Geller says. 

“When a customer reaches a live agent after an AI interaction, the burden of continuity should never fall on them,” Geller said. “They should not have to repeat themselves or wait while an agent catches up. The transition needs to be invisible, with the agent arriving fully informed and ready. Right now it rarely is.”

Meanwhile, the ROI of AI can be elusive. Gartner predicts that costs per resolution for generative AI will exceed $3 by 2030 — more expensive than many offshore agents. Rising data center costs, AI vendors pivoting from subsidized growth to seeking profitability, and complex use cases all may contribute to rising AI costs. 

That’s not to say companies shouldn’t invest in AI. Geller says the strongest use cases of AI is when it “is operating quietly in the background.”

Retailers are also investing in operational capabilities on the back-end: 44% are investing in pricing optimization, and 43% in automated inventory management, according to LogicBroker.

“Pricing optimization and demand forecasting work well because the variables are quantifiable, the feedback is immediate, and there is no direct customer relationship at stake if the model gets it wrong,” Geller said. 

AI can also be useful for product discovery, and consumers have signaled their comfort using the technology for research.

“On the customer-facing side, product discovery has real merit when trained on behavioral signals and context rather than just search terms,” Geller said. “A shopper who looks at something three times and never buys is communicating something, and AI reads that better than any keyword logic.”

Walmart hasn’t been shy about its AI ambitions. The retail giant recently announced an AI framework centered around four super agents, enabled purchases within ChatGPT and announced a new partnership with Google’s Gemini.

If it sounds like Walmart is moving fast, that’s intentional.

“For the last year or two, we’ve been tinkering with it,” Daniel Danker, executive vice president of AI acceleration, product and design at Walmart, said at the ICR Conference at the start of the year. “This is the year where tinkering becomes transformation. This is the year where we’ve built a level of mastery around that and we’ll start building things that deeply address customer problems.”

Danker has many examples of how AI could improve the Walmart shopping experience. For one thing, he sees repeat grocery purchases transitioning to a more automated model, with AI understanding how frequently to replenish items. For another, he envisions customers scrolling through AI-generated photos of themselves wearing the clothes they’re considering buying, or asking AI for recommendations based on what’s already in their closet. 

“I think of us all as carpenters, and we’ve all been using screwdrivers and suddenly someone shows up with a drill,” Danker said. “There are things you couldn’t build without power tools that you can with power tools. AI is a power tool for us.”

Danker also envisions shoppers doing a lot less scrolling across the board, thanks to the new level of personalization AI offers. That shift includes Walmart learning which products a customer wants to splurge on and which they prefer value offerings for; it includes narrowing a shopper’s search results to a specific product that might best fit their needs and suggesting others that complement their purchases.

“By the time you have the tomato paste and the ground beef and mozzarella, we're pretty sure you're making lasagna — and we don't need you to search eight times and scroll through many, many pages just to add the basil and the tomato sauce and the ricotta,” Danker said. “Those experiences are going to become more human, more connected. They'll understand your intent, and they'll serve it up to you much more easily.”

Walmart’s customer AI agent, Sparky, can already recognize if a specific shopper buys the same items every week and suggest a new order to that customer when they enter the app. It can field customer service questions and answer questions like, “What do I use to get this wine stain out of my carpet?” It can remind shoppers that they have an appointment at Walmart’s auto care center and also a prescription to pick up. 

Long-term, Danker believes that the Sparky chat interface and Walmart’s traditional search bar will collapse into one search system. But for now, the two exist separately.

“It's not going to happen overnight. It's also not going to happen all at once, but I do think this is a year where we will be delivering transformative experiences in commerce,” Danker said. “So you will definitely look back a year from now and say ‘Gosh, that's quite different than how I used to use Walmart. That's quite different than the expectations I used to bring when I opened an app.’”

What Danker is most excited about is the potential for Walmart to enter the chat as shoppers ask services like Chat GPT and Gemini questions that aren’t directly related to shopping. Customers who are unsure of their needs may ask these services about what type of TV would fit in their space, how to get that wine stain out or how to handle a new challenge that’s emerged with their newborn baby. Those, Danker argues, are questions that may not start with the intent to purchase, but could end up that way if Walmart is showing up in those spaces.

The big-box retailer’s integration with Gemini allows users to benefit from their membership perks with Walmart even if they order through the AI platform and it can also add items ordered with Gemini to a customer’s live Walmart shopping cart online, so they don’t have to place orders from multiple locations.

Of course, Walmart doesn’t have direct control over whether its product offerings show up in a Chat GPT or Gemini search, but Danker sees the big-box retailer as well-positioned for the algorithms. Specifically, Walmart’s focus on price and speed will give it a leg up if AI agents are making selections for shoppers, according to Danker.

Walmart’s stores will also see benefits from AI. Over time, the retailer plans to digitize the in-store experience and integrate some of those same AI-driven experiences into a physical environment. Associates are already using their own AI agent on the backend to assist with restocking shelves efficiently and prioritizing when things like spills happen. Walmart’s fulfillment centers are also using the technology to better predict what products they should store.

Not everything Walmart tries will be successful, but Danker is OK with that.

“The risk is that we build a few things that don't stick. I'd say there's a much bigger risk to not being out front,” Danker said. “We're going to lead because we think that it can do things for customers that we genuinely couldn't do before … the only way we'll get to the thing that works really well is by trying a lot of things along the way. And we're very lucky to be able to do that.”

In 2026, retailers are placing bigger bets on agentic AI commerce — even at the risk of losing direct access to customers and control over their data.

Recently Etsy, Target and Walmart have continued their move to bring merchandise offerings onto external platforms by partnering with Google’s Gemini and Microsoft’s Copilot.

All three companies joined forces with OpenAI's ChatGPT last year to make products available for purchase on the platform. That's on top of the efforts by Amazon and Walmart to popularize the AI consumer-facing assistants they built, named Rufus (which later became Alexa for Shopping) and Sparky respectively.

The rapid evolution of agentic AI — and the shift it poses to direct consumer access — is likely game changing for the retail industry.

“I kind of think that this is going to shake up retail just like the internet did,” Kartik Hosanagar, marketing professor at the Wharton School of the University of Pennsylvania, told Retail Dive.

Retail executives agree, as many took to the stage at the National Retail Federation’s 2026 Big Show in New York City to discuss the impact of AI.

Industry leaders like Ulta Beauty CEO Kecia Steelman and REI CEO Mary Beth Laughton told audiences at the event that AI will likely impact every aspect of the business.

The argument for joining forces with the likes of ChatGPT and Gemini is that retailers want to meet their customers where they are. Walmart's incoming CEO John Furner emphasized the sentiment while speaking at NRF.

AI-driven U.S. e-commerce traffic grew 758% year over year between Nov. 1 and Dec. 1, according to Adobe’s 2025 Holiday Shopping report. AI traffic to U.S. retail sites specifically on Cyber Monday increased 670%.

“What we expect is that consumers will deepen their engagement,” Katherine Black, a partner at Kearney leading food, drug and mass market retail, told Retail Dive via email. “More consumers will use it for shopping and for more types of shopping. As retailer capabilities become more prominent, that will encourage more usage as well.”

Meeting your customer where they’re at doesn’t necessarily come without a price, according to some industry experts.

Data ownership and the potential disintermediation of retailers are chief among the risks that external AI commerce poses to the industry in 2026.

Data and disintermediation

When a customer makes a purchase or casually peruses a retailer’s e-commerce site, a series of data points can be collected about their journey. Retailers can learn more about the needs and wants of a shopper by seeing what they searched for, which products they clicked to learn more about, how long they viewed each listing and more.

But what if that journey starts and ends within an external AI platform?

“It also shifts the locus of power,” Wharton’s Hosanagar told Retail Dive. “Whoever controls the agents now has the power.”

Deloitte’s 2026 Retail Industry Global Outlook found that 81% of surveyed retail executives think generative AI will weaken brand loyalty by 2027.

On stage at the NRF conference, Google and Alphabet CEO Sundar Pichai showcased a new suite of retailer commerce tools for its AI chatbot Gemini. 

The executive outlined how Gemini can take part in the customer journey, from discovery to decision and final purchase.

“He's talking about Google owning and collecting all of the data that happens around all three of those touch points,” Nikki Baird, vice president of strategy and product at retail technology provider Aptos, told Retail Dive. “And even if they share … if they're not sharing everything that happened that led to the discovery, that led to the decision, that led to the delivery, then the retailer loses so much context because it's outside of their realm.”

Pichai, however, insisted on stage that collaboration between Gemini and retailers was key.

“What we have learned from the last 27 years of working with retailers is that we only succeed together,” Pichai told the conference audience. “We want to use our full stack approach to help you shape this next chapter of retail.”

Risk goes beyond the potential loss of data about consumers, however. 

“The risk is that as these systems start to offer instant checkout and so on, I am doing all of my product research, discovery, understanding, including purchase not on Walmart's website, but on OpenAI's website,” Hosanagar said. “You're giving away the customer interactions, the brand experience, all of that, and then you become like a fulfillment company.”

This may be why Amazon has put so much effort into its own agent initiatives, Hosanagar added. 

The e-commerce giant debuted a dedicated website for its generative AI-powered Alexa+ assistant meant to help users research and plan out purchases conversationally. 

Still, participation in external AI platforms’ commerce initiatives may be a necessity and less of a choice moving forward. 

When OpenAI debuted its Instant Checkout shopping feature on ChatGPT in September, the company noted that the functionality could impact result rankings for queries. The tech company said it considers several factors — including the enablement of Instant Checkout, quality and price — when ranking merchants that sell the same product.

Looking at Walmart’s decisions, the company is hedging its bets by hopping onto external agentic commerce and aiming to become the retailer of choice on the new channel, according to Hosanager. 

“I don't see a retailer building their own agentic platform as a way to avoid participating in the agentic platforms,” Kearney’s Black added. “And of course, they would love for consumers to go to their brand directly and shop. But in reality, I think most retailers realize that there's a trend moving to these multi-retailer agents and so they have to be relevant in that space.”

Bringing product catalogs to AI chat platforms is just the beginning of the potential change to come in a customer’s shopping journey.

Early innings

About half of retail executives anticipate the collapse of the current multistep customer shopping journey by 2027 as the process shifts to a singular single AI-driven interaction, per Deloitte’s report.

The industry is just in the early stages of seeing e-commerce evolve with agentic AI, according to Hosanager.

“Where it gets interesting is where the buyer is actually using an agent to do the shopping, versus going to Gemini or going to ChatGPT and interacting with that system,” he said. 

For a frequent flyer who travels regularly for work, as an example, the future of agentic commerce may become more streamlined. An AI agent could learn the users preferences — such as preferred airlines and times of day — and proactively research the available flights that fit those needs. The AI agent could make the flight purchase on a customer’s behalf automatically, book applicable hotel accommodations and check the weather to help inform packing decisions — all without the user even opening the AI chat platform to get this process started. 

In the future, this scenario could play out between AI agents, where the user’s agent is interacting with an AI agent from the airline, for example.

A similar situation could play out in the world of retail, Hosanagar noted, and that could mean a drastic shift in how businesses interact with customers.

“For the retailer, you are increasingly going to interact with the end customer less and less, and you're interacting with their representative, which is the AI agent, which is now a new class of customer,” he said. “ It evaluates information differently. It needs information presented in a different format in order to understand it well. It can be persuaded, but it's persuaded differently than how you persuade humans.”

AI agents can also play a role in how customers shop in stores, according to Aptos’ Baird.

When Apple first launched the iPhone in 2007, retailers dealt with a massive change in how customers shopped in stores, Baird said. Consumers were searching online to check product reviews and competitors pricing while standing in store aisles.

Customers are now able to access the intelligence of ChatGPT right from their phones, which is providing more researched and instantaneous insights to them.

“It's not that you have the whole world wide web at your disposal while you're standing in the store,” Baird said. “It's that you have a store associate who's an expert in all stores.”

The moment may call for equipping employees with their own AI technology in stores so they can get instant insights about a customer they’re interacting with, such as their clothing preferences or whether or not they’re a frequent product returner. 

Or a retailer’s own AI agent could proactively reach out to customers on behalf of a store associate to inform the consumer when a product they like is back in stock at the location, encouraging a sale.

“The point is to let the store associates shine,” Baird added.

A little more than two years after TikTok Shop launched in the U.S., the social commerce hub has become a major e-commerce player.

TikTok is driving social commerce growth, with TikTok Shop making up nearly 20% of social commerce in 2025, according to a new report from Emarketer.

TikTok Shop’s sales are forecast to exceed $20 billion in 2026 and surpass $30 billion in 2028. In 2026, half of U.S. social shoppers are projected to make purchases on TikTok.

U.S. shoppers under the age of 60 spent $708 on average on TikTok Shop in 2024, according to a report by PartnerCentric. The most popular product categories for TikTok shoppers are personal accessories, followed closely by household items, per that study.

Overall, TikTok Shop’s sales are expected to comprise nearly a quarter of all U.S. social commerce sales by 2027. The remaining 75% of the market remains dominated by other social platforms, chiefly Facebook Marketplace and Instagram, Emarketer noted in its report.  

As TikTok Shop continues to rise, so will the entire social commerce market. More than half of U.S. online shoppers will have made a purchase via a social media platform by 2028, the report notes. The trend stems in part from the proliferation of shoppable content on social media, making consumers more comfortable with social commerce, Rachel Wolff, retail and e-commerce analyst at Emarketer, said in a press release.

“TikTok’s ability to blend shopping and entertainment is turning the platform into an e-commerce powerhouse,” Wolff said in the release. “While price concerns and value are top of mind for consumers this holiday season, so too is the desire to shop for fun — an itch that TikTok Shop is perfectly placed to scratch.” 

As TikTok has risen to prominence, the social media giant has shaped how brands reach potential customers. Major brands and retailers, including Amazon, Maybelline, E.l.f. Cosmetics and Gap, have harnessed the platform to engage shoppers. To attract more shoppers, the company has even taken a page from retailers like Amazon, Walmart and Target by launching its own sales events.

Though TikTok has become a go-to destination for browsing and shopping, the company aspires to venture beyond consumers’ mobile devices. In July, the company partnered with Westfield Malls to bring its ads and content to screens within the high-end shopping centers. The company has also collaborated with other partners to reach screens in vehicles, fitness centers, airports and malls.