GenAI Showdown: How Amazon and Walmart Are Raising the Stakes

Amazon and Walmart are both leveraging generative artificial intelligence (AI) to enhance their operations and capture a larger share of consumer spending. We dive in to explore yet another facet of the ever-evolving fight for supremacy.

Related: Walmart and Amazon Battle for Dominance Intensifies

How Amazon Harnesses AI to Lead the eCommerce Industry

In March 2024, Amazon announced an additional $2.75 billion investment in Anthropic, an AI startup based in San Francisco. This move brings Amazon’s total investment in Anthropic to $4 billion, emphasizing its commitment to advancing AI technologies.

This partnership focuses on developing foundation models, which are the backbone of generative AI systems. Under the agreement, Anthropic will leverage AWS as its primary cloud provider and utilize Amazon’s custom chips for building, training, and deploying AI models. 

Additionally, AWS customers will gain access to these models through Amazon’s Bedrock service, an AI app development platform. Major companies like Delta Air Lines and Siemens are already utilizing Bedrock to tap into Anthropic’s AI capabilities.

One month later, Amazon introduced custom AI capabilities to Bedrock, allowing companies to use their own gen AI models. This initiative is part of Amazon’s broader strategy to stay competitive in the rapidly evolving AI and cloud-computing market.

1. Custom AI Model Integration

AWS now permits companies to integrate their own generative AI models into Bedrock. This enhancement simplifies collaboration between enterprise developers and data scientists.

By enabling the addition of DIY models, Amazon aims to make its platform more adaptable and appealing to businesses seeking customized AI solutions.

Impact on Businesses

• Enhanced Flexibility: Businesses can tailor AI models to their specific needs, leading to more effective and personalized AI solutions.
• Improved Collaboration: The integration fosters better collaboration between developers and data scientists, streamlining the development process.
• Competitive Edge: Companies can innovate faster and create unique offerings by leveraging their proprietary data and AI models.

2. New AI Models Released

Amazon introduced two new AI models: the Titan image-generator model, which creates images from text, and the Titan text-embeddings V2 model, designed for Q&A chatbots and personalized recommendations.

Impact on Consumers and Businesses

• Improved User Experience: Consumers benefit from more accurate and personalized interactions with AI-driven applications, enhancing engagement and satisfaction.
• Diverse Application: Businesses can utilize these models for a wide range of applications, from customer service to marketing, thereby expanding their AI capabilities.

3. Positioning as a Neutral Provider

AWS has positioned itself as a neutral provider, offering a variety of AI models, including its own, proprietary models from other companies like Anthropic, and open-source models such as Meta’s Llama 3. This approach contrasts with competitors like Microsoft and Google, who are more invested in their own models.

Impact on Businesses

• Model Variety: Businesses have access to a broad spectrum of AI models, allowing them to choose the best fit for their needs without being locked into a single vendor’s ecosystem.
• Reduced Testing Time: AWS’s model evaluation tool helps businesses save time on testing and analyzing different models, accelerating the deployment of AI solutions.

4. Addressing Market Needs

The strategy to offer multiple AI models aligns with market trends, where companies are still exploring which AI technologies provide the best return on investment. By being a “home for every model,” AWS caters to businesses that seek flexibility and the ability to experiment with various AI models.

Impact on the Market

• Increased Adoption: Businesses may be more inclined to adopt AWS’s services due to the flexibility and variety of models available.
• Innovation Facilitation: The diverse model offerings can drive innovation, as companies can experiment with and deploy the most effective models for their use cases.

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Walmart’s GenAI Capabilities and Their Impact on Consumers and Businesses

Earlier this year, Walmart introduced new AI features into its app, leveraging large language models (LLMs) from Microsoft’s Azure OpenAI Service alongside its own retail-specific models to enhance search functionality. This strategy aims to keep Walmart competitive with Amazon’s marketplace advancements by improving its own customer experience through AI technology.

Enhanced Search Functionality

Walmart’s integration of GenAI into its app primarily focuses on enhancing search capabilities. 

In his Consumer Electronics Show 2024 Keynote speech, CEO Doug McMillon highlighted that the most significant improvement so far has been in search, with generative AI enabling a more solution-oriented search experience for customers. This improvement means that shoppers can find products more easily and receive more relevant results, leading to a more efficient and satisfying shopping experience.

Impact on Consumers

• Improved Shopping Experience: Consumers benefit from more accurate and relevant search results, reducing the time and effort needed to find desired products.
• Personalized Suggestions: With AI-driven insights, shoppers receive tailored recommendations that align with their preferences and past behaviors.

Impact on Businesses

• Increased Sales: Enhanced search functionality can lead to higher conversion rates as customers find what they need more quickly.
• Better Customer Retention: A smoother and more intuitive shopping experience can boost customer satisfaction and loyalty.

Shoppable Media Initiatives

Walmart is also expanding its shoppable media footprint, collaborating with platforms like TikTok, Roku, and NBCUniversal’s Peacock to integrate shopping features into entertainment content. This strategy allows consumers to purchase products directly from the media they are consuming, seamlessly blending entertainment and shopping.

Consider the “Add to Heart” series, which was modeled after a Hallmark holiday movie, as an example. This 23-part series allowed viewers to purchase products seen on screen, offering a novel and engaging shopping experience.

Impact on Consumers

• Convenient Shopping: Consumers can buy products directly from their viewing content without leaving the entertainment environment.
• Engaging Experience: Shoppable media transforms passive viewing into an interactive experience, seamlessly integrating shopping into daily activities and making it more enjoyable.

Impact on Businesses

• Increased Impulse Purchases: Integrating shopping into entertainment can drive impulse buys, boosting sales.
• Enhanced Marketing Opportunities: Brands can leverage popular media to showcase their products, reaching a wider audience in a captivating manner.

Related: Shop Socially: Amazon and Meta Team Up for One-Click Social Commerce

Competitive Landscape: Walmart vs. Amazon

While Amazon currently holds a commanding lead in consumer spending with a market share of 4.4% compared to Walmart’s 3% as of Q4 2023, Walmart’s introduction of GenAI capabilities aims to close this gap. Both retailers are focusing heavily on leveraging AI to enhance their offerings and improve customer experience.

Impact on Consumers

• More Choices: Competition between Walmart and Amazon drives innovation, providing consumers with better services and more options.
• Improved Services: As both eComm giants strive to outdo each other, consumers benefit from enhancements in delivery speed, product recommendations, and overall shopping convenience.

Impact on Businesses

• Increased Pressure to Innovate: Smaller retailers need to adopt similar technologies to stay competitive.
• Collaborative Opportunities: Businesses can partner with AI technology providers to enhance their capabilities and remain relevant in the competitive retail space.

Overall, Amazon and Walmart investing in generative AI can profoundly transform their consumer-facing operations.

GenAI enables the analysis of extensive customer data to create personalized marketing content, including product recommendations, targeted ads, and customized email campaigns. This personalized approach enhances engagement and boosts conversion rates by aligning marketing efforts with individual customer preferences and behaviors.

Moreover, GenAI can streamline customer service through automation and can leverage GenAI to develop virtual try-on solutions, allowing customers to see how products would look on them before purchasing.

These innovations promise significant benefits for consumers through more customized and convenient shopping experiences, while businesses stand to gain from increased sales and optimized marketing efforts.

As Walmart and Amazon continue to innovate with AI, the retail landscape is set to become more dynamic and consumer-centric.

Related: AI Trends Redefining Shopping Experiences, AI & Automation