The End of Amazon
It seems that its time for Jeff Bezos to retire. He has been very successful and changed the way the world shops, but according to tech press pundits, it’s over. It all because ChatGPT (pvt) announced “Instant Checkout” last week that some imply will put Amazon (AMZN) out of business. Behind the hype is OpenAI’s ‘revolutionary’ application, which allows the user to ask the chat to recommend an item, and (drumroll) purchase it without leaving the chat! No more does one have to open another window to buy the product, they just have to press the ’BUY” button in the chat and of course, pay for it, without all of that additional stress of opening a new window (“Having to do all that work makes me very sad and nervous!”)
Currently Amazon has 1.9m active sellers, 9.7m 3rd party sellers and, by some estimates almost1m 1st party sellers that operate under Amazon fulfillment. ChatGPT has Etsy (ETSY), and while the make-up of the merchant base of Amazon and Etsy could not be more different, Etsy is thought to have over 5.6m active sellers. If you want to buy a TV you can on Amazon but not on Etsy, unless it’s a home-made TV, but if you want to buy a sweater for a German Shepard with the word “Woof” on the side, you would go to Etsy, so the difference is night and day.
On Amazon, you have some idea of the criteria used for product placement and ranking, which are essentially recommendations; Sponsorship, reviews, and some mysterious Amazon algorithm. ChatGPT is a black box, which makes it considerably more difficult to know if the recommendation is tailored to you or to another agenda, but be that as it may, in either case you have to make the final choice. That said, you can buy as many items as you want on Amazon, while the ChatGPT service is single item only, at least for now. ChatGPT is also working with Shopify (SHOP) to add their sellers to the service through Stripe (pvt), but as yet Shopify is in the ‘supported’ mode and not quite available to the public through the chat.
From the merchant’s standpoint the big selling point is ChatGPT’s ~800m MAUs, an attractive proposition, although more than likely all of those users have access to the vendor’s website directly, so it is hard to value that connection. Vendors will also have to find their way in the ChatGPT recommendation ranking to become meaningful, and that is a difficult job, especially against a hoard of other vendors. If a vendor knows it is rarely or never going to be the ChatGPT recommendation, its almost not worth the sign-up, or the ‘small fee’ that OpenAI will charge (unpublished amount) the vendor if the transaction is completed.
We don’t mean to be critical, but just because OpenAI developed the application doesn’t mean it will change the world. Not everybody huddles into a ball and hides in a corner when they have to do something like opening a 2nd window on their phone and Amazon makes it very easy and convenient to make purchases, so we shouldn’t expect Amazon to shrivel up a die a quick death, especially if Amazon is able to develop its own version of the Instant Checkout app, or even decide to absorb the ‘small fee’ OpenAI charges and become an Instant Checkout vendor. The OpenAI product is once again, a convenience (aka ‘productivity improvement’), not a game changer, and a good agentic system should be able to improve your shopping workflow even better.
Here are the instructions you give you Ai agent to do the same thing:
“I am interested in purchasing a 65” TV. I am not sure whether to buy an LCD TV or an OLED TV and I don’t know what brand to choose. Can you do the research, make 5 recommendations, listing the pros and cons of each. When I make the choice, please go to the site and fill out the purchase form. I will enter the credit card info and you can execute the purchase and send the receipt to my e-mail. The price should be between $900 and $1600 and it should be deliverable within 5 days.”
It will do a better job on the research….
Currently Amazon has 1.9m active sellers, 9.7m 3rd party sellers and, by some estimates almost1m 1st party sellers that operate under Amazon fulfillment. ChatGPT has Etsy (ETSY), and while the make-up of the merchant base of Amazon and Etsy could not be more different, Etsy is thought to have over 5.6m active sellers. If you want to buy a TV you can on Amazon but not on Etsy, unless it’s a home-made TV, but if you want to buy a sweater for a German Shepard with the word “Woof” on the side, you would go to Etsy, so the difference is night and day.
On Amazon, you have some idea of the criteria used for product placement and ranking, which are essentially recommendations; Sponsorship, reviews, and some mysterious Amazon algorithm. ChatGPT is a black box, which makes it considerably more difficult to know if the recommendation is tailored to you or to another agenda, but be that as it may, in either case you have to make the final choice. That said, you can buy as many items as you want on Amazon, while the ChatGPT service is single item only, at least for now. ChatGPT is also working with Shopify (SHOP) to add their sellers to the service through Stripe (pvt), but as yet Shopify is in the ‘supported’ mode and not quite available to the public through the chat.
From the merchant’s standpoint the big selling point is ChatGPT’s ~800m MAUs, an attractive proposition, although more than likely all of those users have access to the vendor’s website directly, so it is hard to value that connection. Vendors will also have to find their way in the ChatGPT recommendation ranking to become meaningful, and that is a difficult job, especially against a hoard of other vendors. If a vendor knows it is rarely or never going to be the ChatGPT recommendation, its almost not worth the sign-up, or the ‘small fee’ that OpenAI will charge (unpublished amount) the vendor if the transaction is completed.
We don’t mean to be critical, but just because OpenAI developed the application doesn’t mean it will change the world. Not everybody huddles into a ball and hides in a corner when they have to do something like opening a 2nd window on their phone and Amazon makes it very easy and convenient to make purchases, so we shouldn’t expect Amazon to shrivel up a die a quick death, especially if Amazon is able to develop its own version of the Instant Checkout app, or even decide to absorb the ‘small fee’ OpenAI charges and become an Instant Checkout vendor. The OpenAI product is once again, a convenience (aka ‘productivity improvement’), not a game changer, and a good agentic system should be able to improve your shopping workflow even better.
Here are the instructions you give you Ai agent to do the same thing:
“I am interested in purchasing a 65” TV. I am not sure whether to buy an LCD TV or an OLED TV and I don’t know what brand to choose. Can you do the research, make 5 recommendations, listing the pros and cons of each. When I make the choice, please go to the site and fill out the purchase form. I will enter the credit card info and you can execute the purchase and send the receipt to my e-mail. The price should be between $900 and $1600 and it should be deliverable within 5 days.”
It will do a better job on the research….
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