Add to Google Preferred Sources
A new frontier in e-commerce is emerging as AI platforms like ChatGPT and Google Gemini are projected to drive $8 billion in retail spending in 2026. Retailers including Walmart, Ulta Beauty, and Wayfair are racing to optimize their websites for AI recommendations, with AI-referred traffic now converting at rates 42% higher than traditional channels. However, a strategic battle is intensifying over customer data ownership. While companies embrace AI for product discovery, they are fighting to keep transactions on their own websites to preserve first-party data and loyalty relationships. OpenAI’s March 2026 decision to terminate Instant Checkout marked a significant retreat, reinforcing retailers’ control over the final purchase. The tension between open AI ecosystems and walled-garden approaches, exemplified by Amazon’s Rufus assistant, is reshaping the digital commerce landscape as retailers build their own AI tools and deepen loyalty programs to defend their customer relationships.
Key Elements
A fierce tug-of-war is unfolding across the retail industry as companies rush to capture a new wave of shoppers guided by artificial intelligence, while simultaneously fighting to prevent the technology’s creators from seizing their most valuable asset: direct customer relationships.
With AI agents such as ChatGPT, Google’s Gemini, and Anthropic’s Claude expected to influence $8 billion in retail spending this year, according to Juniper Research, the battle lines are being drawn between retailers and the tech platforms that are rapidly becoming the internet’s new gatekeepers. Adobe Analytics reported that 41% of U.S. consumers used generative AI for online shopping in June, and visitors arriving via AI services generated 41% higher revenue per visit than those coming through traditional channels.
The surge represents a dramatic shift in e-commerce. Bain & Company’s Smart Commerce report from May 2026 found that ChatGPT’s shopping recommendation volume in the U.S., U.K., Germany, and France more than doubled year-over-year. Some retailers now report that AI accounts for 25% of their referral traffic. Between 30% and 45% of U.S. consumers have used AI tools during their shopping journey, and 64% have either used or expressed willingness to use AI to complete purchases.
Adobe’s data paints an even more striking picture. AI-driven online shopping traffic surged 393% in the first quarter of 2026 compared to a year earlier, and the momentum held well beyond the holiday season. The conversion rate for AI-referred traffic is now 42% higher than non-AI traffic—a stunning reversal from March 2025, when it was 38% lower. Shopify echoed this trend, reporting that AI-referred orders on its platform grew nearly 13-fold in the first quarter of 2026, with conversion rates nearly 50% higher and average order values 14% higher.
Ulta Beauty has emerged as a case study in how retailers are adapting. Josh Friedman, the company’s head of digital and e-commerce, said shoppers arriving through Gemini and ChatGPT exhibit “double the conversion and intent.” The beauty retailer is working with Google to integrate its shopping cart and Ulta Beauty Rewards loyalty program into Gemini’s AI shopping experience. Yet Friedman made clear that the company’s preference is for customers to finalize purchases on Ulta’s own website.
“Whether it’s Google search, affiliate marketing or Facebook, there’s always a tax for engaging customers on other people’s platforms,” Friedman said. “I don’t think this is any different.”
The strategic divergence between open and closed ecosystems is becoming increasingly pronounced. ChatGPT currently sends roughly 20% of its recommendation traffic to Etsy, 15% to Target, and 10% to eBay, illustrating how AI platforms are dispersing shoppers across the web. Amazon, by contrast, has taken a more defensive posture, using technical measures to limit ChatGPT and Gemini from scraping its product data while accelerating development of its own AI shopping assistant, Rufus.
Rufus has been used by more than 300 million customers as of early 2026. Shoppers who use the assistant are about 60% more likely to convert, and Rufus-assisted sales have grown by nearly $12 billion over the past year. Sensor Tower data shows that heavy Amazon users now employ Rufus in approximately 60% of their shopping sessions, and those who use the assistant are 2.74 times more likely to make a purchase.
Amazon Web Services is urging its retail clients to follow a similar playbook. “When a shopper completes a purchase on a brand’s own site, the retailer maintains a direct relationship with that customer,” said Vince Koh, global head of digital commerce at AWS. The cloud giant is encouraging brands such as Tapestry’s Kate Spade to use AI platforms for product discovery while ensuring their own websites remain “the best place to buy.”
When a shopper searches for a $380 suede bucket bag on Kate Spade’s website using AWS-powered tools, the company can draw on browsing history, budget signals, and style preferences to personalize recommendations and build loyalty—data that would be lost if the transaction occurred entirely within a third-party AI platform.
Retailers are fortifying their defenses on two fronts. First, they are building their own AI shopping assistants. Walmart has integrated a generative AI-powered assistant called Sparky into its app, with users showing average basket sizes roughly 35% higher than non-users. Weekly active users doubled in the most recent quarter. Walmart has also pursued an embedded strategy, placing Sparky inside ChatGPT and Gemini to serve consumers directly within AI chat sessions.
Second, retailers are deepening their data moats. Wedding planning platform The Knot is optimizing its website so vendors appear in ChatGPT results, but it works to ensure couples book venues and invitations directly through its own platform. “LLMs are another place to start, another place to search, another place to plan, but we have three decades of data to help” coordinate weddings, said CEO Raina Moskowitz.
The most significant inflection point came in March 2026, when OpenAI terminated ChatGPT’s Instant Checkout feature, which had allowed shoppers to buy items directly within the AI conversation. The decision marked a major strategic retreat. Walmart executives had disclosed that the conversion rate for Instant Checkout embedded in ChatGPT was only one-third of what the retailer achieved when shoppers clicked through to its own site—a 66% drop.
OpenAI framed the move as a strategic shift. “Instant Checkout is moving to apps, where purchasing can happen more seamlessly,” a spokesperson said. The company is now focused on product discovery and helping merchants and marketplaces use their own checkout systems.
Etsy’s experience validated the logic. As one of the first partners to integrate with ChatGPT’s Instant Checkout, Etsy found that the AI platform excelled at product discovery but not transaction completion. Rafe Colburn, Etsy’s chief product and technology officer, said users who find products through ChatGPT typically return to Etsy’s website to complete purchases. “It’s the start of a deeper relationship, and not just one that’s always intermediated by ChatGPT,” Colburn said. In May, Etsy launched a native app within ChatGPT, reinforcing its positioning as a discovery layer rather than a checkout destination.
Loyalty programs are emerging as retailers’ most powerful moat in this data war. Ulta Beauty has more than 47 million loyalty members, and 95% of its sales flow through its rewards program. Even when shoppers discover products through AI platforms, loyalty points and personalized experiences pull them back to the retailer’s own channels to complete transactions.
Yet the battle is far from settled. Bain & Company forecasts that AI could influence 25% of U.S. e-commerce by 2030. NielsenIQ has warned that AI agents are evolving from recommenders into decision-makers, evaluating products on behalf of consumers and often comparing options across multiple retailers simultaneously. When AI agents become the actual decision-makers, brand premiums and customer loyalty will face an unprecedented test.
Once added, BigGo Finance appears first in Google Search Top Stories, so you get the broadest, most up-to-the-minute, and most comprehensive global financial news first.
