#97: Revisiting AI + Shopping (Part III)

Why marketplaces are best suited to win agentic commerce

Let’s recap what we’ve covered so far in the Revisiting AI + Shopping series.

Part I: Agentic commerce is best suited for routine, monotonous purchases. However, Amazon or DTC websites have already solved this problem through subscription offerings.

Part II: Agentic commerce needs offline, real-world data to attempt to serve as a reasonable alternative to in-store shopping.

Today, we’ll tie a bow on the series by making a clear statement on where agentic commerce fits into a shopper’s journey and where investment in agentic commerce is justified. It’s worth asking: what type of commerce environment is truly compatible with AI agents today?

That’s easy. One with clear rules and low ambiguity. In other words: marketplaces.

Here’s what we know about agentic commerce so far: you can either delegate making a purchase with predefined guardrails to an agent, or you can have an agent help you think through and identify what you’d like to buy. The definition continues to evolve rapidly.

See, commerce exists on a spectrum from deterministic to probabilistic. And agentic commerce realistically only works on the deterministic side of the spectrum.

If you’re buying the same toothpaste every month or replacing the same printer ink you’ve always used, those are deterministic purchases. But if you’re not sure what you want, you’re leaving much more discretion to the AI agent, making the outcome probabilistic.

Think about what data you’d provide an AI agent to make a purchase on your behalf. It may include color, style, price range, as well as any specific constraints. This could range from buying toothpaste to, perhaps one day, purchasing a car (yes, in the distant future). If you said, “Go buy a new t-shirt”, you’ve left your agent an extremely difficult task of figuring out what kind of t-shirt to buy based on the data it can pick up about you. I doubt you’re going to like what arrives in the mail.

By providing requirements to an AI agent (along with a form of payment), you’re establishing a set of rules for the agent to operate within. It’s essentially a dynamic filtering system, like that of a website. To satisfy your request, the agent needs countless data points like inventory availability, size, color, shipping timeline, and return policy to start narrowing down what it is the agent may buy on your behalf. Marketplaces like Amazon or Walmart have the infrastructure to meet these inquiries, which include shipping windows, returns processes, pricing, reviews, and fulfillment expectations. The marketplace has already standardized the rules of commerce. AI agents simply operate within those rules. This level of rigidity exists on a much larger scale than what DTC brands (using Shopify as the reference point) operate within.

Another key reason why marketplaces are better positioned to win agentic commerce than DTC brands is because of economic incentives. Marketplaces (and AI agents) optimize for conversion, while DTC brands look to maximize lifetime value (LTV). Marketplaces make money when transactions happen. Brands make money when customers buy more over time. This comes alive in a few different ways for DTC brands that don’t fit well into how agents operate.

Shipping Thresholds

Another point of confusion (or even failure) for AI agents is free shipping thresholds. When a DTC brand offers “Free shipping above $100”, but you programmed your AI agent to not buy a long-sleeve button-down shirt for more than $80, the agent may check out at that brand’s website and pay the shipping fee (say the shirt is $60, and the shipping fee is $10). There will be ambiguity around if a price includes free shipping and leaves it up to the agent to make the call on whether the price range (if not specified by the user) includes a potential shipping fee or not. If the agent must ask the user, then that is an extra step for the user to have to decide whether it’s worth adding another item from the brand to avoid the shipping charge.

This introduces unnecessary friction and violates the principles of agentic commerce, as it increases the amount of time someone spends shopping (instead of full delegation). It’s a worse experience for the customer, who may look negatively upon the brand for charging for shipping when the customer didn’t think shipping was included in the total price the agent told them.

Cross-Sells and Up-Sells

Think about every time you’ve reached checkout on a DTC website and encounter “shoppers like you also bought”. Or “bundle and save” offers. AI agents are less susceptible to emotional merchandising tactics than humans because they’re optimizing against user-defined objectives rather than impulse. They are provided with clear instructions on what can be bought, and for what price range. Purchasing a commonly added item to a cart goes against the ethos of a hyper-efficient agent. Also, say that you put in a trigger to your agent to alert you of any cross-sell or up-sell offers. I would argue that there should not be any human-in-the-loop steps for a shopping agent (unless it fails to execute the transaction), otherwise, it would be more efficient for you to check out on your own. Brands are likely to lose out on increasing their average order value (AOV) thanks to agents.

Because of these reasons, agentic commerce is a better fit for those that own the marketplace infrastructure already. I believe Amazon will continue to lead in agentic commerce, establishing what frontier can look like in this space. They have decades of commerce-specific data, hundreds of billions of gross merchandise value (GMV) each year, and capital to invest in building the AI necessary to turn Amazon.com into an agentic marketplace.

My bet is that the home page of Amazon.com looks very different a year from now. I believe Amazon’s homepage will primarily become a conversational search experience, where conversations become a first-class interface alongside browsing and search. Alexa will be your personal shopper assistant, regardless of the category you are looking for (previously a role reserved for in-store associates at luxury brands).

It’s time to bring us home. See, agentic commerce doesn’t replace marketplaces; it amplifies them. Marketplaces transformed shopping into a rules-based system decades ago. Now it’s time for a new phase of marketplaces. One that will increasingly be operated by AI agents.