How Artificial Intelligence Is Threatening Amazons Dominance In Online Shopping

With over 43 million adult Britons making purchases on Amazon every month, the retail giant has become the default destination for online shopping in the UK. Consumers spend more than two hours a month browsing the site, far exceeding the time spent on its closest competitors. One in every four pounds spent online is transacted through Amazon, placing it behind only Tesco and Sainsbury’s in the broader retail market. The company’s appeal lies in its vast selection and convenience, ensuring that late holiday orders consistently arrive in time.

The emergence of artificial intelligence shopping assistants, however, signals a potential shift in consumer behaviour that could challenge Amazon’s position. OpenAI, the developer behind ChatGPT, has introduced a shopping assistant capable of reviewing online feedback and recommending products across the web. This feature extends to facilitating purchases directly within ChatGPT, partnering with platforms such as Etsy, Target, and Walmart. AI agents now allow consumers to efficiently locate the lowest prices and apply promotional codes, removing the manual burden that has historically driven shoppers to Amazon by default.

Rival technologies are responding in kind. Google has announced forthcoming shopping capabilities within its Gemini platform, and Perplexity has launched its own assistant. As investment in AI infrastructure climbs into the trillions, major companies are seeking to monetise new user experiences, with advertising emerging as a likely avenue. According to McKinsey, agentic commerce could represent one trillion dollars in annual sales in the United States by 2030, and as much as five trillion dollars globally. Research from Bain indicates that 17 percent of today’s consumers report using AI to commence their shopping, with this figure increasing to 52 percent amongst millennials.

Analysts suggest these agents could significantly enhance price transparency, challenging retailers who depend on customer loyalty and brand relationships. As bots regularly funnel users to competing sites, Amazon faces the risk that it will cease to be the default starting point for online shopping. Such developments also undermine the rationale for maintaining Amazon Prime subscriptions, which incentivise ongoing engagement with the platform’s services.

Amazon’s business model increasingly relies on advertising revenue, which boasts higher margins than product sales and shipping. When users make purchases based on chatbot recommendations rather than through Amazon’s search features, the opportunity for Amazon to profit from adverts diminishes. In response, Amazon has taken measures to restrict access; in November, it blocked ChatGPT from crawling its website and initiated legal action against Perplexity for allegedly bypassing these restrictions. The dispute has escalated despite Perplexity’s use of Amazon’s cloud services and significant investment by Jeff Bezos.

Even as Amazon negotiates potential investments with OpenAI and seeks to position itself as an AI-forward organisation, company leadership downplays the capabilities of current bots for shopping tasks, citing inaccurate delivery estimates, pricing errors, and lack of personalisation. At the same time, Amazon has introduced its own shopping assistant, although this tool remains confined to the retailer’s own ecosystem. Industry experts predict that such defensive strategies will have limited impact as AI agents become more prevalent. While Amazon anticipates record sales for the current festive season, broader structural changes could very soon reshape the way consumers approach online shopping.