AI tools drive Christmas sales, and Walmart, Target want in

Holiday shopping has always felt like a “chore” for Amrita Bhasin. 

Between deciding what to buy, comparing prices and checking reviews, the 24-year-old retail tech CEO said she spent more than 15 hours each year buying gifts for her friends and family, a process that took the joy out of giving. 

But this year, Bhasin said she did all of her shopping in a fraction of the time and even had a little “fun” — all thanks to her new personal assistant: ChatGPT. 

“I feel like I’ve got that physical store associate that I’m talking to, so I feel like I’m getting better recommendations. I actually think my tendency to buy is higher because of ChatGPT,” Bhasin, based in Menlo Park, California, told CNBC. “It has really changed the game.” 

Bhasin is one of the many shoppers turning to AI platforms like OpenAI’s ChatGPT, Google‘s Gemini and Perplexity this holiday season to help them buy gifts for their loved ones, and maybe a few for themselves, too. Whether consumers use them to get gift ideas or compare prices, AI platforms are poised to reshape the shopping experience and drive billions in revenue this holiday season as it becomes harder to get discovered on traditional search platforms.

In a report published last month, Salesforce said it expects AI to drive a staggering $263 billion in global online holiday sales this year, representing 21% of all holiday orders. 

Though estimates vary widely, surveys conducted by Visa, Zeta Global and other organizations found that between 40% and 83% of consumers plan to use AI for shopping this holiday season. Meanwhile, AI traffic to U.S. retail sites surged 760% between Nov. 1 and Dec. 1, according to Adobe. 

While AI shopping is in its early stages, initial reads on how shoppers are interacting with it show the opportunity it can bring for retailers. Shoppers arriving on retail websites from generative AI platforms are 30% more likely to buy something and about 14% more engaged than those coming from non-AI sources, meaning they’re spending more time on the site and are less likely to leave immediately, Adobe found. 

These AI-fueled shopping visits now generate 8% more revenue per session, the firm found. AI tools can also help shoppers spot deals and aid lesser-known brands in getting discovered — about half of the gifts Bhasin bought this year came from brands she’d never shopped before.

“It’s where consumers are going, because they’re just asking questions around, like, ‘Hey, where can I find the best gift under $20 for my niece that cares about these things?'” said Kimberly Shenk, the founder and CEO of Novi, a tech firm that helps brands adjust to AI shopping.

The surge in AI shopping has led retailers big and small to rethink their strategies to ensure they’re showing up where customers expect them to be. Walmart and Amazon have each launched their own AI shopping assistants, and others, including Walmart, Target and Etsy, have partnered with OpenAI so customers can search for items or buy products without leaving ChatGPT.

Apparel retailer PacSun said it hopes to join OpenAI’s platform and in the meantime is reformatting its website so its teen-friendly clothes will show up in AI searches. Others are changing their budgets, directing funds away from SEO, or search engine optimization, and into AEO, or answer engine optimization, and hiring outside firms to help them navigate the shift. 

Shenk said her company has seen a “major surge in demand” from retailers and brands that have started to see a steep decline in traffic from social media ads and search engines.

“I’ve heard so many brands talking about their paid advertising in Meta and all these different places really just not performing and ultimately seeing a ton of that transition over to AI mode in Google, ChatGPT, Perplexity,” Shenk said. “I think people were caught off guard … so brands are really scrambling to figure out, ‘How do I know if I’m visible? I have no idea if I’m even showing up. I have no idea how I’m showing up, but I’m seeing all my traffic drop off, and I got to figure that out. Now.'” 

Brands are walking a tightrope. They have to adjust to consumers who are using AI to discover products, but still be present through traditional channels for those who prefer old-fashioned shopping. While AI companies and retailers themselves have made massive investments in the chatbot shopping experience, some consumers also say it doesn’t yet measure up to searching for gifts themselves.

As more shoppers start their gift searches on AI chatbots, some of the country’s biggest retailers, including Walmart, Target and Etsy, have announced their own strategies to try to attract customers through AI assistants.

Walmart announced a deal in October with OpenAI that will…