Why Amazon Said "No" to ChatGPT
Decoding why Walmart wants to be everywhere, while Amazon forces you to come to them
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Part 3 ( AI Product Case Studies ) — Read Here
Walmart announced a major partnership with OpenAI. Soon, users will be able to shop for Walmart products directly inside ChatGPT.
This raises a strategic question: Why isn’t Amazon doing this?
Amazon has the best logistics and the largest catalog. Logic suggests they should be the first to plug into the world’s leading AI.
Instead, Amazon is actively blocking AI bots from accessing their data.
This divergence is not an accident. It comes down to how each company makes money.
Amazon’s Advertising Dilemma
While Amazon sells billions of dollars in products, a massive portion of its operating profit comes from advertising.
When you search for “Smart TV” on Amazon, the top results are “Sponsored Products.” You click different options, compare prices, and read reviews. Each step in that journey is an opportunity for Amazon to generate ad revenue.
Generative AI breaks this model.
ChatGPT is designed to give you the single best answer, not a list of options. It collapses the shopping funnel.
Current Model: Search → Browse multiple items → Click ads → Buy. [Discover — Evaluate/Reason — Transaction]
AI Model: Ask a question → Get answer → Buy.
If the user gets the right answer immediately, they don’t click around. If they don’t click around, Amazon cannot serve ads.
Amazon wants to be the front door with the customers. Due to this relationshp, it will be able to do cross-sell, it will be able to grow the emerging categories etc. But in the other case, brows-ability time on the Amazon platform may take a hit.
If Amazon allows ChatGPT to become the “shopping assistant,” they risk becoming a simple logistics utility—shipping the box but losing the high-margin ad revenue that powers their business. They are protecting their profitability by keeping users inside their own platform.
It’s not that Amazon is not utilising AI, they have Rufus which is like a Shopping Assistant or Shopping Agent.
Walmart plays a different game. Their core business model relies on transaction volume and supply chain efficiency, not digital advertising dominance.
Walmart knows they lost the product search war to Google and Amazon years ago. They have less to lose by disrupting the current search experience.
By partnering with OpenAI, Walmart is executing a Distribution Strategy:
Amazon wants to be the Destination (You must come to Amazon.com).
Walmart focuses on Distribution (They will sell to you wherever you are).
Walmart is betting that the interface doesn’t matter. Whether you are in a physical store, on the Walmart app, or chatting with an AI bot, as long as Walmart fulfills the order, they win.
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Traditional Shopping to Agentic Shopping
We are moving away from traditional search toward Agentic Shopping. This means users will stop searching for products and start assigning tasks to AI agents.
Old Way: “Find chocolate cake recipe” (User searches, clicks links, adds ingredients to cart).
New Way: “I am hosting a birthday party for 10 kids. Order the food.” (AI handles the rest).
For an AI agent to execute that command, it needs a backend connected to the real world—real-time inventory, pricing, and local delivery slots.
Walmart is positioning itself as that backend infrastructure. They are providing the data pipeline so that when an AI suggests a dinner plan, it can actually deliver the groceries to your door.
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About Author
Shailesh Sharma! | LinkedIn I help PMs and business leaders excel in Product, Strategy, and AI using First Principles Thinking. For more, check out my Live cohort course, PM Interview Mastery Course, Cracking Strategy, and other Resources
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