Retailers Strive for AI Traffic Boosts without Sacrificing Customer Data Security

As customers are increasingly leveraging ChatGPT and Google’s Gemini for product recommendations, retailers are looking to capitalize on the opportunity by making their products appear prominently in chatbot search results. However, they are wary of relinquishing customer data, which forms the basis of online sales and customer loyalty.

Leading retailers like Walmart, Ulta Beauty, and Wayfair are revamping their websites in response to the upsurge in online traffic from AI platforms. They aim to ensure their products rank high in chatbot searches, but want transactions to continue happening on their platforms. This allows them to gather crucial data on browsing behavior, basket sizes, and previous purchases, which is instrumental in future sales and maintaining customer loyalty.

The Rising Influence of AI in Retail

AI agents, including Anthropic’s Claude and Gemini, are leading customers to retail websites, with a projection of up to $8 billion in spending this year. According to Adobe Analytics, 41% of US consumers utilized generative AI for online shopping in June, with AI-referred visitors generating 41% higher revenue per visit than those arriving via traditional means.

Unlike search engines, which rank pages based on keywords and links, chatbots answer detailed queries. This is prompting retailers to reevaluate their online product descriptions and how customers discover their brands. As Josh Friedman, Ulta Beauty’s head of digital and e-commerce, puts it, “Whether it’s Google search, affiliate marketing, or Facebook, there’s always a price to pay for engaging customers on other people’s platforms. This is no different.”

Ulta Beauty has noticed a significant surge in conversion and customer intent from shoppers discovering its products through Gemini and ChatGPT. Collaborating with Google, the company is integrating shopping carts and its Ulta Beauty Rewards loyalty program into AI-powered shopping within Gemini. However, Friedman maintains that the retailer would rather have customers conclude transactions on Ulta’s website.

Retailers’ Advantage

Retail executives claim an advantage over general-purpose AI tools due to their in-depth knowledge of customer preferences. For instance, when a customer completes a purchase on a brand’s site, the retailer continues to maintain a direct relationship with that customer, according to Vince Koh, global head of digital commerce at Amazon Web Services.

The Knot, a wedding-planning platform, is adopting a similar approach. They are optimizing their website to pop up in ChatGPT results, but encourage customers to book wedding venues and invitations directly via their website.

Despite ChatGPT and Gemini becoming critical marketing tools, customers seem more at ease completing purchases on retailers’ own websites. For instance, OpenAI shut down Instant Checkout, a tool that allowed purchases through ChatGPT, and is now focusing on product discovery. Etsy has also observed users finding products through ChatGPT and returning to Etsy’s website to complete the transactions.