AI shopping agents put Amazon and Walmart’s advertising revenue at risk

The growing use of artificial intelligence to research and purchase products is creating a challenge for major retailers. Amazon and Walmart must decide how to support AI shopping agents on their platforms without weakening their advertising businesses or losing access to valuable customer data.

Amazon and Walmart are the world’s 2 largest retail media businesses. Together, they account for 88% of the estimated $74.4 billion US retail media market, according to projections from Emarketer. However, AI shopping agents could change how consumers discover and buy products.

Tools such as Meta’s recently launched Muse can search for and purchase products on behalf of consumers. This could reduce the value of brands paying retailers to promote products across their websites and apps. Morgan Stanley researchers estimated in July that AI agents could account for 10% to 20% of US e-commerce spending by 2030.

Amazon and Walmart take different routes

Amazon has blocked Meta’s Muse, while Walmart has entered an official partnership with the AI shopping tool.

Amazon CEO Andy Jassy said last week that third-party agents have not yet had a meaningful impact on its advertising business. However, the company’s advertising revenue grew 11% year over year in the 3rd quarter, its slowest growth in nearly 4 years, according to LSEG data. Advertising contributes around 10% of Amazon’s total net sales.

Amazon blocked Muse in September, alleging that it accessed the retailer’s online store without permission and captured and stored customer credentials. The company said third-party agents should operate transparently and respect service providers’ decisions on participation.

Amazon also secured a court order in March to block Perplexity’s Comet shopping agent. The 9th US Circuit Court of Appeals overturned the ban in August. Amazon disagreed with the decision, and the case remains ongoing.

Walmart, meanwhile, introduced infrastructure on October 21 to support third-party AI-led shopping. When an agent browses on behalf of a customer, Walmart creates a profile linked to the shopper’s account. Customers can approve purchases or set spending limits.

Walmart CFO John David Rainey said in August that advertising, including Walmart Connect, along with membership and marketplace operations, contributed 45% of the company’s quarterly operating income growth. Walmart does not separately disclose Walmart Connect’s financial figures.

Retail advertising faces a shift

Footprints AI CEO Dan Marc expects retailers to secure long-term advertising agreements with major brands. He also anticipates more discounts on digital retail media ads as consumers increasingly use AI tools for product discovery.

Morningstar analyst Brett Husslein described the development as “an evolution rather than an existential threat”. Emarketer forecasts that brands will increase retail media spending by 22.6% in 2026 compared with the previous year’s $60.7 billion.

Both Amazon and Walmart have also started testing advertisements within their AI shopping assistants. Walmart is testing ads in Sparky, while Amazon has integrated them into Alexa for Shopping.

As AI-led discovery grows, advertising may depend less on visual appeal and more on accurate product information that matches customer queries. Companies such as Procter & Gamble, Nestle and L’Oreal are working to make their product information easier for AI agents to understand.

Mondelez Vice President of Global Digital Commerce Andrew Lederman said AI agents are bringing brands closer to consumers. However, he noted that retailer media platforms still drive the vast majority of the company’s sales.

Flywheel Chief Client Officer Amie Owen said, “We are not recommending that clients fundamentally shift their retail media budgets overnight,” while advising brands to prepare for changes in product discovery and purchasing decisions.

Kearney senior consultant Katherine Black expects retail media could eventually develop into a “bidding system”, where agents search for products within a consumer’s price range and retailers establish price limits.

“All retailers need to be thinking about how to interact with consumers in new ways,” Black said.