This year's holiday season in the United States, AI may drive $263 billion in sales, with Walmart and Target competing for the next generation of "traffic entry points."

Artificial intelligence is reshaping the shopping experience and driving a surge in holiday revenue for the retail industry. According to Salesforce's forecast, AI will propel global online sales to $263 billion during this holiday season, accounting for 21% of all holiday orders. This trend has prompted retail giants such as Walmart and Target to accelerate the deployment of AI shopping assistants to compete for consumer attention in new ways.

On December 12, media reports indicated that multiple surveys show 40% to 83% of consumers plan to use AI for shopping this holiday season. Adobe data reveals that from November 1 to December 1, AI traffic on U.S. retail websites surged by 760%. Shoppers arriving at retail websites via generative AI platforms are 30% more likely to make a purchase and have 14% higher engagement than those using non-AI channels.

These AI-driven shopping visits generate 8% higher revenue per session compared to traditional channels. AI tools not only help shoppers discover deals but also provide smaller brands with opportunities to be discovered, changing traditional search engine optimization strategies.

Retailers are readjusting their digital marketing strategies from search engine optimization (SEO) to answer engine optimization (AEO). Walmart and Amazon have launched their own AI shopping assistants, while Walmart, Target, Etsy, and others are collaborating with OpenAI to allow customers to search and purchase products directly within ChatGPT.

Retail Giants Accelerate AI Deployment Competition

Walmart announced a partnership with OpenAI in October, enabling shoppers to find and purchase products without leaving ChatGPT. The retailer has also launched an AI assistant named Sparky in its app, capable of answering questions and recommending products.

Last month, Target announced a partnership allowing customers to shop using the Target app within ChatGPT. This test feature supports shoppers in purchasing multiple items in a single transaction, including groceries, with options for delivery or curbside pickup.

Etsy and many Shopify merchants, including Glossier, have also signed agreements for instant checkout features with OpenAI. This feature will initially allow U.S. customers to purchase single items. An OpenAI spokesperson stated that the instant checkout feature went live on Etsy in late September.

In contrast, Amazon has taken the opposite approach. The online retail giant has blocked external AI chatbots developed by OpenAI, Google, and Meta from scraping its website and sent a cease-and-desist letter to Perplexity AI in an attempt to prevent users of its AI browser Comet from purchasing Amazon products.

Marketing Strategy Shift from SEO to AEO

Traditional search engine optimization (SEO) strategies primarily focus on embedding keywords in the backend of product listings, but with the rapid development of AI platforms, retailers are facing pressure to adjust their overall content and e-commerce strategies.

According to an OpenAI spokesperson, AI platforms like ChatGPT present results based on the relevance of user queries to product information, and the ranking mechanism is not influenced by advertising placements, paid rankings, or commercial partnerships. These platforms not only identify keywords but also integrate diverse information such as user reviews, authoritative media reports, and product descriptions for judgment Michael Wieder, co-founder of the American baby products retailer Lalo, revealed that the team is actively researching the questions consumers may pose on AI platforms and optimizing product information accordingly to ensure that product listings can directly and clearly address these potential inquiries.

AI Shopping Experience Still Has Room for Improvement

Although AI platforms have pointed many shoppers in the right direction, not every tool hits the mark accurately. When CNBC inquired about Target's Gift Finder providing suggestions based on personalized scenarios, the chatbot offered gift guide links and repetitive content instead of specific product recommendations.

Some consumers have reported shortcomings in the AI shopping experience. Diana Tan, founder of a Seattle startup, asked ChatGPT for help in building a capsule wardrobe earlier this year, providing extensive information about her body type, preferences, and budget. However, what she received were not curated options, but rather repetitive basics like black shirts, gray pants, and black turtlenecks, leading her to abandon the use of AI shopping. Tan stated:

"It's like talking to a grandmother with dementia, you keep reminding it, 'Well, I really want something in this price range. No, that's too expensive, please don't send me that again.'"