Why Walmart and Open AI Are Shaking Up Their Agentic Shopping Deal | WIRED

Overview

Why Walmart and Open AI Are Shaking Up Their Agentic Shopping Deal

Since November, Walmart has let some Chat GPT users order a limited selection of products without ever leaving Open AI’s chatbot interface. Sales have been disappointing, a Walmart executive vice president exclusively tells WIRED.

Details

The results suggest that a future where chatbots and AI agents take over ecommerce is still a way off, if it ever materializes. Last year, Open AI made a bet that it could boost revenue by charging a commission on purchases made through Chat GPT. It partnered with Walmart, Etsy, and other shops on an “agentic commerce” feature called Instant Checkout.

Walmart has made about 200,000 products available directly in chat responses, allowing consumers to provide their shipping and payment details to Open AI and place their order within Chat GPT. For products like TVs, shoppers still have to open Walmart’s website to make a purchase the old-fashioned online way. Conversion rates—the percentage of users following through with a purchase of an item shown to them by Chat GPT—have been three times lower for the selection sold directly inside the chatbot than those that require clicking out, according to Daniel Danker, who oversees design and product for Walmart. Put simply, Instant Checkout has been a flop.

Open AI and Walmart could have spent years trying to fix the ”unsatisfying” consumer experience of Instant Checkout, Danker says. He credits Open AI for choosing instead to quickly move to a new system long favored by Walmart. Next week, Walmart’s chatbot, Sparky, will begin operating within Chat GPT—essentially a chatbot inside a chatbot. A similar setup will arrive in Google’s Gemini chatbot next month.

The approach solves what Danker says he believes is the biggest problem with Instant Checkout: It forces people to buy items individually. “They fear that when checkout happens automatically after every single item that they're going to receive five boxes when they actually just want it all in one,” Danker says. “They generally don't want to split the checkout experience, where it buys the one item, even though they had other items in their Walmart cart already.”

Among the items that have been available in the Instant Checkout experience, top sellers include vitamin and protein supplements. People new to GLP-1 weight-loss drugs asking Chat GPT what they need to know about them are receiving advice to increase nutrient intake, Danker says. Other items that have done well tended to be pricey enough that the orders weren’t subject to added shipping or small-basket fees. All told, the automotive, beauty, home management, hardware, and tools categories account for over half of Instant Checkout orders.

Walmart has good reason to want to get the experience in Chat GPT correct. The chatbot is now bringing in about twice the rate of new customers as search engines, Danker says. He suspects that’s because the power users of Chat GPT are not typical Walmart customers. But the retailer’s price, selection, and broad geographic footprint mean that its products are showing up in many Chat GPT responses.

Sparky was developed by Walmart, Danker says. But it relies on open source generative AI models combined with some retail-specific ones trained on decades of Walmart data. “We're able to route certain questions to one model and certain questions to another because we find that the quality of answers differs,” Danker says. “It's never stuck in any one.”

The chatbot also is intentionally flexible, with the new integrations in mind. “It can take on slight tweaks to the look and feel, to make it feel like a natural part of other environments,” Danker says.

The new Walmart experience is part of a broader pivot for Open AI to focus on having checkouts take place within embedded apps, the Information reported earlier this month, without providing a rationale for the change. Danker spoke about the shift at the Morgan Stanley investor conference this month but didn’t cite the data behind it.

Open AI spokesperson Taya Christianson says the company wants to focus on improvements to help users research products, while giving merchants more control over checkout. “We appreciate our partners for learning with us,” she added.

Walmart has excluded some products from Instant Checkout because it knew “the single-item checkout experience is detrimental” in some cases, Danker says. For instance, when someone buys a TV, they likely need to buy accessories like HDMI cables. On its website, Walmart can nudge shoppers to buy a bundle to avoid a frustrating installation experience, Danker says. Through Sparky, Walmart will be able to replicate that in chatbots.

Retailers were eager to collaborate on Instant Checkout because the alternative at the time to serve Chat GPT users was by linking out to their websites. Walmart believes the Sparky experience will feel even “more seamless,” because users will be able to continue chatting and refining their order without needing to reenter their payment and delivery information already saved with Walmart.

Sparky has been criticized by people purporting to work for Walmart on Reddit, and testimonials for the chatbot are difficult to find on social media. But half of Walmart app users have engaged with it, according to the company. While people typically use the app to search for staples such as milk and bananas, they ask Sparky about exotic items or for solutions to more complicated problems. Walmart US CEO David Guggina recently said Sparky users spend about 35 percent more per order than other shoppers.

Danker acknowledges that Sparky is slow and generates weak responses often enough that some consumers might dismiss it as unreliable. Danker says the priority this year is training Sparky to be more proactive, getting it to learn more about individual shoppers, and making it helpful across more of Walmart’s many departments, such as the pharmacy.

While Walmart is pushing Sparky elsewhere, it hasn’t—and doesn’t plan—to block other AI agents from shopping on its website. Amazon, on the other hand, recently won a temporary court order barring Perplexity’s automated technology from masquerading as a human to make purchases. Danker says Walmart wants to support whatever tools customers are using as long as it’s a good experience. As in, there shouldn’t be erroneous orders, shocking bills, or an excessive need for customer service.

“We don't want to be prescriptive of the exact journey that every customer is going to take,” he says. “We don’t want to block things on a speculative or hypothetical concern.”

When it comes to how many consumers will trust AI with their shopping, Danker is prepared to speculate. “This idea that it will all become automated might be a little bit far-fetched,” he says. “People do get excited about shopping for clothes, for their home, for their children.” Walmart wants to leave users in control, just now with Sparky by their side in more places.

In your inbox: Our biggest stories, handpicked for you each day

What a Google subpoena response looks like—courtesy of the Epstein files

Big Story: The undersea cable that made the global internet possible

Replay: Livestream on the hype, reality, and future of EVs

Key Takeaways

Why Walmart and Open AI Are Shaking Up Their Agentic Shopping Deal
Since November, Walmart has let some Chat GPT users order a limited selection of products without ever leaving Open AI’s chatbot interface
The results suggest that a future where chatbots and AI agents take over ecommerce is still a way off, if it ever materializes
Walmart has made about 200,000 products available directly in chat responses, allowing consumers to provide their shipping and payment details to Open AI and place their order within Chat GPT
Open AI and Walmart could have spent years trying to fix the ”unsatisfying” consumer experience of Instant Checkout, Danker says