AI Wants to Shop for You. What Could Go Wrong?

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0:39Peter Kafka:Get started today. It seems super obvious that if any of what you're talking about comes to pass, it hurts Amazon. And the worst case scenario is it turns Amazon into like a dumb pipe, just logistics center. And as a consumer, maybe you're 100 % okay with that. But if you're Amazon, you're freaking out.

1:03Peter Kafka:From the Vox Media Podcast Network, this is Channels with Peter Kafka. That's me. I'm also chief correspondent at Business Insider. And today, of course, we're talking about AI. But not, is AI going to end the world? And do you think maybe we should do something about that before that happens? That's a pretty good conversation to have, but that's not what's on the agenda here. Instead, we're going to go with before AI maybe ends the world, is it going to change shopping? And actually, I think these two things are related. Okay, bear with me. AI shopping bots aren't going to end the world. But the idea of telling a bot to go buy you a plane ticket or groceries or land you a great restaurant reservation has gone from pipe dream AI guys talk about to actually maybe this is going to work quite quickly.

1:54Peter Kafka:Perhaps you heard of Instinct or Meta's Muse, which are very new AI agents that specifically promise they can do that kind of stuff. And if that really does work, it's going to have all kinds of knock-on effects. But also, AI in the real world isn't just about AI. It's not just about how powerful the LLMs are. It's about how people and companies and systems all fit together, how sometimes they are quite resistant to change, and how plopping new tech in there isn't necessarily enough to change things. All kinds of stuff has to get rethought. Shorter, AI is getting much better, much faster than some of us thought, but we still don't really know what kind of effect it's going to have.

2:37Okay, enough theorizing.

2:39Peter Kafka:Let's get to reality. Which is why I brought my pal Jason Del Rey on to tell us what's actually happening. Jason is an expert on what we used to call e-commerce, and now we just call shopping. I worked with Jason for years at what was called All Things D and Recode and Vox. Then he went to Fortune. Last year, he went off on his own and launched the Aisle newsletter. Get it? AI. Dedicated entirely to the way AI is and isn't changing retail for businesses and consumers. So listen to our chat and then go sign up. That's what I ask. Okay, here's me talking to Jason Del Rey.

3:25Peter Kafka:I'm with my old friend, Jason Del Rey. Jason, I do not understand how AI is going to affect shopping. Luckily, you are literally spending all of your time writing, reporting, talking about this over at The Aisle, your great newsletter. More on that later. For now, you're going to make me smarter about all of this for free. Thank you, Jason. Pleasure, as always, Peter. You say you're covering AI commerce? I call it the AI era of commerce. That's right. And the phrase that you hear all the time now is agentic shopping? That's the sort of equivalent Now, I mean, they're different things, but that's the thing that has everyone excited.

4:06Right. The phrase a lot of people in the industry use is agentic commerce. But yes.

4:12Peter Kafka:We'll call it agentic shopping. We can do that. What do they mean when they say agentic shopping? Well, that's funny you ask that, because I would say nine months ago, 10 months ago, when I started my newsletter, they meant, you're going to tell some AI agent, I want this thing below this price, and it's going to go out on the internet and buy it for you. Well, they realized that wasn't going to happen very easily for a variety of reasons we'll get into. And so now when people say agentic commerce, they typically mean at some point in the shopping journey, an online shopper went to an AI chat and mentioned something about a product or asked it a question about a product or to compare two products.

4:59Peter Kafka:So that exists today, right? And I understand why that might be interesting and important in your world, in the tech world, in normal person world, that first version. That's the thing some people think is very exciting. But we're nowhere near there yet. Well, it's a good time to have me on because just in the last couple of weeks, I think we're starting to see what at least people in the tech industry and in retail could consider the beginning of what could become like real agentic commerce. The bots go do the thing for me. Correct. Now, do people want the bots to do the thing is a much bigger question.

5:37Peter Kafka:If we get to that future where a bot goes and buys something for you instead of you going on to Amazon or wherever and doing it, other than the novelty, why is that a big deal? Is that better for us, the consumer? Is it because it generates new opportunity for new companies? Is it because it screws over Amazon? We'll break it all down, but what is supposed to be exciting about this? Well, I think you hear a lot of people who are building these things, both at big tech companies and startups, saying, we're going to take the mundane stuff. You hate to shop. You may not hate to shop, but you hate to do the boring shopping.

6:23You hate grocery shopping, even if it's online. You hate clicking 37 times to make your shopping cart on Instacart. Or you want to go really deep. You're a hobbyist in photography, and you want to go really deep and find the absolute best camera with these specs. And you don't want to browse 20 different sites or product reviews or read everything. You want to just ask a super intelligent being to do all that comparison shopping for you and lay out on a plate the best option.

7:01Peter Kafka:It's supposed to be a better experience for you and me, the average consumer. Yes. You're skeptical. All right, we'll talk about why that might not be a good thing. But what is holding it back today? You said it doesn't really exist today. There's some edge cases people are excited about. You said nine months ago they thought this was the future. Now I'm like, not so much. Is that technical on the part of AI? Is it technical on the part of everything outside of AI? Is it biz dev stuff where different companies have different ideas about how this should work, if at all? Yes. Okay. Let me try to unpack that a little.

7:36I referenced nine or 10 months ago when I started writing this newsletter. And at the time or shortly after, OpenAI and ChatGPT had launched something called Instant Checkout, which was basically the ability for you to buy something without leaving ChatGPT. So you're researching and it becomes a shopping site. essentially. Well, a couple of big companies integrated, Walmart being one of them. And then Walmart came out a few months later and was like, the conversion on this on ChatGPT was awful. People don't want to buy one item at a time. They want to build a shopping cart. So that part's technical.

8:11Another piece of this has been access to pricing and product data that's really detailed. And real time, right? In real time. Which is one of the things AI is particularly bad at at the moment. Correct. And in some cases, you have retailers who don't want to make it easy to get access to that data, Amazon. In other cases, they may check, you know, a bot may check every 15 minutes or a thing goes out of stock. So there are all these ways it may break. And I think the other piece of it is companies have been building stuff without really knowing what problem they're solving. Which we could go back, I mean...

8:53Seen this one before.

8:54Peter Kafka:Yeah. I mean, Metaverse is like one a couple years ago that comes up a lot in this space. I mean, they know that shopping and commerce is a big, big, big, right? Correct. Jeff Bezos can buy super yachts and rocket ships in the Washington Post because of that, right? So I understand why that would just be an attractive place if you're a builder. Like, oh, let's go attack that space. The problem has been technical on one hand, business deals. Amazon has not, you know, biggest online store on the planet, has not agreed to really do business with any of the LLMs. They want to build it all internally on their own site.

9:31And then the other piece is what are the use cases? I named a couple, but if it was really valuable to the masses, I should be able to rattle off.

9:40Peter Kafka:Well, every LLM that pitches ever says, and you are going to one-click and we're going to plan and buy your trip for you. That's the one they always go with. That one seems the farthest away just because I'm the least likely to entrust an AI to book me something that involves my money and my travel. I guess my question is because I've been testing out some of these messaging agents, and I'm trying to plan this complex trip with my wife's family where people are coming from different airports, different budgets, and we're trying to find something that works for everyone. That part's great, right?

10:15The planning, just any version of better Google, I'm all for.

10:20Peter Kafka:And you still got to fact check it. We're going to keep talking about these without talking about it. But I was playing with Muse. This is Meta's version of it. I had Muse make me a sample trip for something the other day, big expensive one, about someplace I don't know anything about. And I said, oh, I'm making a lot of money on this podcast. And then I just moved it over to ChatGPT and said, fact check Muse's work. And it found some problems. Which gets me to one core question I have. is separate from the limitations outside the AI. Do we think that the LLMs are just good enough at this, that the error rate is low enough, again, leaving aside trust, that they can be counted on to do this right most of the time?

11:00I mean, I think there is a small percentage of early adopters that will tell you, yes. And they like to be excited by living on the edge of whatever transformation they're foreseeing. I can name drop a couple of VCs, some well-known, some not, who are out there telling you everything that they're using.

11:22Peter Kafka:Yeah, and these guys were the first buyers of Tesla, too. So that doesn't mean they were wrong, just that they were buying stuff that was not ready for prime time. Right. I am not handing over my credit card or my email inbox, for that matter, to an AI agent right now. Now, at the same time, you have companies like Stripe, big payments company, a lot of trust there, at least on the merchant side, and some of the card networks that are out there signing up to help make these agents' purchases possible. So you can, using Stripe authentication, make a purchase today with this Instinct app or Muse.

12:00Peter Kafka:Of course you would if you're the payments company, right? All you want is to make the payment happen. I mean, if it becomes very problematic for the consumer side, then maybe you don't want to. But I think there are points on both sides. We're going this direction. Our job is to make payments happen. Of course, we're going to set this up. So we've been talking around this. Let's talk about a couple examples that seem like they're promising to do what you said doesn't really exist yet. One is called instinct. No normal people have heard of it. But if you live in San Francisco, if you live on Twitter and that kind of AI world, people are over the moon about it.

12:41Peter Kafka:And then Meta just released something called Muse a couple days ago, which basically is promising to do the same thing. I'm going to go book your travel. I'm going to go shop for you. I played a little bit with Muse, and I do not trust it to – I'm not giving Mark Zuckerberg any more information yet. So I'm not going to let it do that. Is there any left? You know, it's funny, because as soon as I started using Muse, and I'm just using it as a chat GPT competitor, all of a sudden, like, well, here I've got a difficult problem to solve with my finances or some paperwork. And it's not doing it for me, but I'm like, I'm giving it a lot of information.

13:13Peter Kafka:So maybe I'm just being... The difference is I'm okay sort of like showing it my ass a little bit, but handing it my credit card seems way scarier. So first of all, tell me about Instinct and Muse and what they can do and what they can't. Yeah, so Instinct, to me, maybe not to people really, really building the stuff in Silicon Valley, seemed to come out of nowhere a couple of weeks ago. And apparently, the parent company, it's a startup. It's raised hundreds of millions of dollars. And you can either WhatsApp it, you text or WhatsApp it or send it voice messages. And you basically say, give it access to your inbox and tell it, go through and highlight, you know, action items or answer, you know, every, unless I flag this email as I want it to come from me, the response, I want you to draft something and then give me a second look and then send it away.

14:13to I can't get into Chisiyama in Manhattan, and I want you to check for the first opening you can find at 6 p.m. Just hammer the reservation site over and over. I mean, we'll talk about that in a second. Yes. To what I was talking about earlier, which is I have this pretty complex travel planning I'm trying to do, and I'm going to give you all the details, and I want you during this 10-day period to return to me the cheapest options on each day. And I think I also maybe let it log into my United to show me miles too. I know, living on the edge.

14:55Peter Kafka:You're not having it buy a ticket though yet. But it says it could. And theoretically it can, right? Well, that is the big question. Theoretically it can, But a lot of sites have said a lot of retailers and other sites. I mean, they've long had sort of bot fighting technologies. Now, there are ways to get around it. We can get into Amazon, you know, has a lawsuit going on about this. But theoretically, if you give login information to a site that needs to be logged in instinct, a muse is saying we can go ahead and do this for you. Yes. and Muse, I don't know if there's a Muse horror story yet that's circulating on social media, but there were a bunch for instinct.

15:43Peter Kafka:And it's funny, depending on how you look at them, they're either a horror story, like look how exciting it is and it's the bot actually not doing what it's supposed to do. But imagine when this works the right way. And one was someone complaining that the bot had actually screwed up a refund and said they lost hundreds of dollars. Another was someone using it to get into a hard restaurant and they were using Resi, the reservation site. And Resi, after at some point, said, actually, we're cutting you off because you've been hammering our accounts over and over. And it turned out to be a temporary ban, but banned the account.

16:18Peter Kafka:And so when you see those, are you like, yeah, this is why this stuff isn't working, can't work, it's a long way from working, or are you in the boat of like, oh, this stuff's really close to being working for real people? You know, all these commerce companies, and that can mean a retailer or it can mean a resi, a lot of them now have teams. It may be two people. It may be 50 or 100 that are paying attention to everything we're talking about and no one wants to be left behind. And so trying to plan ahead for what this world looks like. So I'll give you an example. Resi is owned by American Express.

16:55I forget when that acquisition happened, but it happened at some point. And I did an interview with the chief innovation officer or something at American Express months ago. And they were planning for shopping agents at the time. And the announcement was, if you're making an AI agent and you register with us and we approve of you, we will back our cardholders if they use your agent.

17:21Peter Kafka:We're going to allow that internet fast lane. We're going to allow it to happen and we're going to actually cover the cardholder. So my only point here is whether it's happening or not right now, there are a lot of smart people at big companies planning for it. When you see these stories where it's not working today, do you go, yeah, it's not going to work, or it's actually one problem to solve, and then this does work? So I have two thoughts the last two weeks when I've seen Instinct and Muse. One is, wow, they're getting the attention of all these people at all these companies. Do those companies, when and if do Muse and Instinct have enough leverage to get those people to the table to actually kind of make this easy?

18:06But the part I'm leaning toward is actually a lot of these companies are just going to try building this stuff essentially internally and making their sites smarter and be able to do complex things more easily. Right. And because there is the disintermediation question. Yeah, so that leads us to Amazon.

18:27Peter Kafka:We'll be right back with Jason Del Rey, but first this.

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19:59Peter Kafka:and we're back you wrote a whole book about amazon and walmart you tracking all this stuff it seems like most of the big companies target walmart lots of big retailers have at least said we are open to this idea of the future where people come from somewhere else using a bot to shop us. And Amazon has been saying, basically, no. We want you or your bot, whatever, to come to Amazon and interact with us in the way we want to interact, which makes plenty of sense, right? Amazon owns this space. It seems super obvious that if any of what you're talking about comes to pass, it hurts Amazon. And the worst case scenario is it turns Amazon into a dumb pipe, just logistics center.

20:41Peter Kafka:And they can't do any of the things Amazon is good at, which is showing you other stuff that maybe you want to buy, any of the ads. In advertising or whatever that revenue number is. And all that goes away, and they're just a warehouse, and they're the same as somebody else's warehouse. And even worse for them, maybe you have no idea you bought through Amazon, you bought through ChatGPT or Instinct or Muse. And as a consumer, maybe you're 100 % okay with that. But if you're Amazon, you're freaking out. Yeah, it's becoming harder and harder to envision them completely getting disintermediated. And one reason is, as you said, they've basically said, so Andy Jassy repeatedly has asked about this.

21:23I think every earnings call the last six quarters. What's going to happen when the bots come for your business? And he actually has been saying, we will eventually do business with some of the third-party AI companies. But right now, the experience they give shoppers for shopping is shit. And he may use a different term, but that's what he's trying to get across. And I don't think he's been wrong.

21:50Peter Kafka:But let's say it's really good. Let's say they get really good. Isn't the core problem that if it works, it's bad for Amazon? If I say, go buy me a dishwasher, and it may end up buying through Amazon, but it may go through Target or may go through Walmart, and Amazon doesn't own that interaction with me, the consumer, that's just undeniably bad for them, right? That would be bad, and that's why I think they're doing a couple of things. They're not cooperating, really, in terms of letting a bot or these AI, the apps, easily crawl their sites. They're not giving up up-to-date pricing info. They're suing a company like Perplexity.