ICYMI, Walmart has partnered with OpenAI to “create AI-first shopping experiences.” This seems like a great deal for Walmart. The same can’t be said for the rest of the retailers, brands, and marketplaces that make up the bulk of the almost $2 trillion consumer ecommerce landscape.
With OpenAI claiming 700 million monthly active users, steering even a fraction of that traffic toward an in-line checkout experience could lead to a windfall for Walmart. (While terms were not disclosed, the monetary benefit to OpenAI will not come close to covering the tens of billions of dollars the company has committed to covering its infrastructure, compute, and power generation needs.) The larger question this raises goes well beyond the potential of agentic commerce. Simply, what does this mean for everyone else?
As generative answering has become more widespread, the prevailing strategy from the leading thinkers in the industry has been to alter content strategies to optimize visibility on third-party AI platforms. So much for conventional wisdom. Businesses may still be able to produce high-quality content that influences visibility for informational or educational LLM queries. When it comes to product-related queries with shopping intent, however, it’s hard to see how any competitor can gain organic visibility when OpenAI has a vested financial interest in steering consumers to Walmart.
This shines a light on a stark distinction between traditional SEO and what many now call GEO (Generative Engine Optimization). Traditional search has long been akin to a choose your own adventure story. While both paid and organic results are based on relevancy, there are myriad opportunities to monetize search results. And as we’ve seen over the years, Google and others search engines have done an amazing job of this. GEO, on the other hand, is like hiking a slot canyon. There is only one route and one destination. What is touted as a feature of generative answering in terms of efficient knowledge acquisition is a bug when it comes to monetization.
For all its flaws, perceived or real, the SEO model democratizes discovery to a degree, enabling smaller merchants to compete with the largest retailers and marketplaces (e.g., sponsored results, organic results, shopping results, maps, and so on). GEO is not currently constructed to offer such opportunities. Unless…
What’s missing from the Walmart-OpenAI announcement is exclusivity. I have not seen anything to indicate OpenAI cannot announce a similar partnership with Target, Amazon, or another major brand tomorrow. That would create a hybrid channel that is part affiliate marketing, part real-time ad auction, and part AI agent for hire. Brands could bid on each user’s query for the opportunity to occupy OpenAI’s hosted checkout…but competition will be fierce for that single, precious spot at the bottom of the generative funnel. That will heavily skew the playing field to the largest merchants. Smaller and mid-size brands could be left out in the cold.
So, for the moment, generative answering platforms have painted themselves into a corner. But here’s the thing about tech companies, for the last 30 years they’ve had a shared mantra: scale fast, figure out profitability later. So, it’s just a matter of time before…well, reach out if you’d like to dive deeper into this evolving topic.