How Amazon and Walmart’s retail dominance could be disrupted by ChatGPT and Perplexity

AI·AmazonHow Amazon and Walmart’s retail dominance could be disrupted by ChatGPT and PerplexityBY Jason Del ReyBY Jason Del Rey CorrespondentJason Del Rey CorrespondentJason Del Rey is a nology correspondent at Fortune and a co-chair of the Fortune Brainstorm and Fortune Brainstorm AI conferences

SEE FULL BIOSerial entrepreneur, and ReFiBuy founder, Scot Wingo, envisions AI shopping disruption happening faster than anyone is ready for

Courtesy of ReFiBuyScot Wingo knows a thing or two e-commerce disruption

A dozen years ago, the longtime entrepreneur rode an earlier online shopping boom to an IPO for one of his previous software companies, ChannelAdvisor

Now, he’s onto another e-commerce bet for the AI age after spending much of the past decade launching and running an on-demand car service

His new company, ReFiBuy (an abbreviation of re, find, buy), aims to build software that helps consumer brands and retailers navigate a new online world where AI shopping agents make purchases as frequently as human customers do

Fortune recently caught up with Wingo to discuss how generative AI and AI agents are disrupting online shopping, and how e-commerce powerhouses may be impacted by this moment

Not surprisingly, as someone attempting to build a big new in the space, Wingo is perhaps more bullish than many how soon and severely new AI shopping tools may disrupt existing e-commerce giants and legacy retailers a

The interview has been edited for length and clarity

Fortune: What did you see going on in e-commerce that made you want to get back into it

Scott Wingo: The LLM companies [ ChatGPT, or Perplexity] are getting consumer attention, so they’re getting consumer distribution

And when you get that consumer distribution, you have to figure out, how do I monetize it

It’s become pretty apparent to me – especially when Perplexity launched their first [shopping feature] – that this was going to be the next big wave of e-commerce, and I couldn’t miss that

I feel my team and I have a unique view being subject matter experts and seeing how e-commerce has been done so far – the good and the bad of it

What’s the “bad” you are referencing

If you look at e-commerce in the U. , the growth level has really slowed down, right

But if you look at other countries, that number feels wrong

You look at Europe and that number is way higher

And Asia is way off the charts higher

And I think it’s because our user experiences have really stalemated or gone stagnant

You’re a big Amazon er, as am I, but something has happened where they have totally stopped innovating on retail and have just started cash-cowing it

Since you mentioned Amazon, how do you see it being affected in this new world

So they’ve got the retail , a [third-party seller] marketplace, and ads

The ad layer in my mind doesn’t add value to the consumer experience

So imagine a world where someone builds [an AI experience] on top of Amazon and no one’s using the Amazon front end anymore – they’re starting with an AI chat or agent

Amazon’s just a backend now, so humans aren’t seeing those duct ads on Amazon

That’s blem No. blem No. 2 is now you’re just the backend for a different front end [ ChatGPT or Perplexity], and at some point you’re gonna have to pay a tax [to the AI company], because you could get switched out

So Amazon hates paying a tax

They are the tax collector, right

So there’s gonna be a fight for who’s the tax collector

So that’s gonna be interesting

And since we’re cheaper, would you consider offering a lower price. ” A brand Dyson [might] not take that deal, but the small seller is maybe going to take that offer

So there’s a way you could really attack Amazon by getting rid of the ad quickly, which would be pretty detrimental

And then I think you could chew away at a big chunk of the marketplace

And those are the two – AWS aside – fit centers of the company

When you talk someone building on top of Amazon, you’re talking AI engines or shopping agents that become the starting point for more customers for online shopping

How will you or I for ducts or shop differently through AI shopping agents than we do today

So first, it’ll be multimedia – it could be voice, typed, or whatever you want it to be

I think we’ll gravitate to voice because it’s gonna get really good

You’ll have this conversation with what will be your personal assistant, and it’s gonna be doing everything for you

So you’ll be having a conversation with it your calendar, and it’s going to tell you, “Remember you got this dinner tonight, and Bob’s going to be sitting to your left, and he’s the CTO of this company and remember you have this story coming up his company. ” It’s basically going to become an advanced assistant for you

And then it’ll say, “By the way, can I have a quick conversation with you the things you need to replenish. ” And you’ll say, “Sure. ” It’s , “Well, I got the toilet paper coming in on this day, the milk on this day, do you apve. ” And you’ll say, “Sure. ” Or you’ll just trust it so much it’ll just order it

That’s how the basics will happen

It’ll just be a quick conversation or you just set it to autopilot

And on the back end, who’s involved there

The agent or assistant will decide that for you

You’ll give it parameters, maybe on value or convenience

And it will know the right questions to ask you and suggest the attributes you need to find

And maybe you’re , “I need it in two days, and I need to pay with [the Buy Now, Pay Later option] Affirm. ” How much can Amazon’s new AI features its Rufus AI shopping assistant help its battle

They’re good efforts, but I believe ChatGPT is going to be better

Part of it is that Rufus can’t be so good that you don’t need [Amazon’s duct ] advertising

For Rufus to imve dramatically, it almost has to replace the existing experience on Amazon

Do you get any sense from the conversations you’re having that Amazon or Walmart are aware of the size of the threat, at least as you see it

I haven’t had conversations with Amazon, but Walmart people have very publicly said we’re going to take a very open apach to shopping agents and welcome them

In a way, that’s smart because they’re a challenger to Amazon, and I don’t think they have anything to lose

This is a chance for them to level the playing field and kind of catch up to Amazon

They’re okay if they’re not the front end for all these transactions, because they also have the stores and a lot of their online orders get picked up in the store, so at least they’ll have consumer interaction at that layer

What are your top one or two messages to retailers or brands on how their operations need to change, or what they need to be doing differently than they’re doing now

So the honest answer is, we think this is just the start, and it’s going to be bad, and what you have to do is embrace these agentic systems, and your data is not ready for it

There’s a couple pools of data that we have in the retail world, and they’re all not really ready for agents

So there’s no standard for duct catalogs

This is what I d at ChannelAdvisor – everyone would send us their duct catalog, and they were a hot mess

Pick any category and everyone has different attributes (characteristics or details describing a piece of merchandise) for every duct, and they use different terminology

Any given retailer may only have 20 of those

Maybe if you’re Amazon and Walmart, you have 50 of those attributes

But the agentic engines need more content and context

The average duct may include four terms, but AI queries or chats are 15 to 20 words

To bridge these things, we want to help retailers look at their data, evaluate it, and kind of say, here’s where you’re doing okay, and here’s where you’re not, here’s where you’re prepared, and here’s where you’re super unprepared

And then we’ll have capabilities to go and help

How fast is this all going to happen in your view

There’s a lot of that

But what they’re really seeing is the distribution of inbound traffic is changing very dramatically, very quickly

In May, it started in e-commerce and people are behind the scenes, hair on fire, freaking out it

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