The Supply Side: Walmart’s launch of agentic commerce comes with risks

Walmart recently announced a partnership with OpenAI to allow ChatGPT users to directly shop and buy products using the chatbot app with no human interaction. This is known as agentic commerce.

The retail giant said ChatGPT interacts with users in a conversational style that mimics human interaction and uses machine learning to continually refine and improve its responses.

The partnership will allow Walmart and Sam’s Club shoppers to complete purchases directly within ChatGPT and “instant checkout,” which enables users to browse and purchase items directly from partner retailers within the ChatGPT environment.

“For many years now, e-commerce shopping experiences have consisted of a search bar and a long list of item responses,” said Doug McMillon, Walmart president and CEO. “That is about to change. There is a native AI experience coming that is multi-media, personalized and contextual. We are running towards that more enjoyable and convenient future with Sparky and through partnerships, including this important step with OpenAI.”

Walmart follows Shopify and Etsy, which have already offered ChatGPT-enabled shopping via the instant checkout feature on their platforms. The retailer said its ChatGPT shopping experience will get smarter so that it anticipates customer needs before they do.

While agentic commerce is a leap ahead in retail, it is not without risks, according to analysts with McKinsey & Associates. The customer must add their payment form to the ChatGPT app instant checkout format. From there, a unique token that is specific to the customer’s AI agent will be created for that specific customer. The AI agent will then be able to make purchases on the customer’s behalf without being prompted.

While there are safeguards in place with Visa and Mastercard models, there are still concerns about who might be responsible for an unwanted order the chatbot makes for the customer. Michael Nevski, director of global insights at Visa, said during a recent podcast that consumers are craving efficiencies and agentic AI will provide that, along with supporting shoppers’ needs and desires.

Visa recently surveyed consumers about plans to use ChatGPT as a shopping assistant. Among consumers up to age 59, at least one-third said they are somewhat likely to use a chatbot if the AI agent could guarantee the best available price. One in four said they would allow the agent to make purchases on their behalf. About a third of the respondents across all age demographics were not likely to use the chatbots to make purchases for themselves.

While younger consumers are more likely to try and adopt new technologies, Nevski said 67% of the respondents of all ages would require human review for any transaction made by the chatbot over a certain amount. Also, 61% would like to see a “panic button” to instantly halt a transaction with no veto windows. More than half said they would want real-time spending notifications with veto windows as an extra security level.

“That means people still need to develop trust in the technology,” said Nevski. “We are still dealing with innovators and early adopters.”

The survey data also reveals issues with responsibility in AI-driven purchases, with no clear consensus on who should be accountable when an agent makes an unwanted purchase. Among Americans who are likely to adopt AI agents, the company offering the AI service emerges as the top choice for primary responsibility, with 63% ranking it first or second.

The AI developer/company ranks third for primary responsibility, with 48% of respondents who think the developer should fix the problem. About one-third of respondents believe the user should be held responsible for incorrect purchases. Payment networks are least likely to be considered primarily responsible, according to the Visa results.

“Agentic commerce will push payments providers to evolve in many ways,” said Marie-Claude Nadeau, senior partner and global leader of McKinsey’s payments work. “Authentication and fraud prevention will become more complex, moving from stopping bots from making transactions to enabling the right agents to transact for customers. Agentic commerce is also likely to shift some of the control of subscription models and card-on-file payments from merchants to consumer agents. And consumer payments players will have to rethink how they acquire new customers while retaining top-of-wallet status among consumers who are increasingly evaluating products through an agent.”

Nadeau said retailers will have some growing pains through the initial phases of implementing this technology. Lareina Yee, a senior partner at McKinsey, said retailers will soon have to grapple with the fact that a significant percentage of their customers will not be human users but rather agents.

“The challenge will be to get out in front of it now, before your rivals do,” Yee said. “The companies that move first, even in small ways, will be the ones that help shape the future.”

A recent BCG report included a list of threats and implications that agentic commerce will have in disrupting retailers. Topping the list is a loss of direct traffic to a retailer’s website, which could reduce e-commerce revenue. They see a future dependency on generative AI platforms to drive traffic and sales to a site. If that’s the case, BCG expects retailers will have to spend more on AI ads to keep up and stay relevant.

There is also the risk of reduced insight into customer behavior and weaker direct customer relationships. BCG said this diminishes capabilities for personalization and data monetization which is now a revenue stream for retailers like Walmart. There is also the loss of cross-selling opportunities as bots simplify single-item purchases. BCG notes that a lack of cross-selling opportunities could result in lower average order values and margin pressure for retailers.

Lastly, companies like Walmart have invested and benefited from their retail media businesses. A decline in retail media revenue is likely as less traffic comes directly to sites, according to the BCG report. Last year, Walmart’s media business generated roughly $4.4 billion, rising 31% and another 42% in the first and second quarters of this year. This additional revenue stream is one of the retailer’s fastest-growing segments over the past three years.

Naveen Sastry, a senior partner at McKinsey, said agentic commerce is flipping the script on how consumers engage with the digital world.

“We’re entering an era where AI agents won’t just assist — they’ll decide,” he said. “Business models need to evolve from optimizing clicks to earning trust from algorithms acting for consumers. This raises questions: How do you make your offering ‘agent discoverable?’ What does brand loyalty mean when decisions are delegated? How do you build for a world where the buyer is a model acting in someone’s best interest? Leaders need to ask: Are we building experiences for people or their agents? Because increasingly, the agent will be the customer.”

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics, and is sponsored by HRG.