Episode Details

Our analysts Andrew Ruben and Nathan Feather discuss how AI shopping agents could transform how consumers discover, compare and buy products and the implications for eCommerce.

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Andrew Ruben: Welcome to Thoughts on the Market. I'm Andrew Ruben, Latin America Retail and E-commerce Analyst at Morgan Stanley.

Nathan Feather: And I'm Nathan Feather, U.S. Small and Mid-Cap Internet Analyst at Morgan Stanley.

Andrew Ruben: Today, what happens when the shopping cart starts thinking for itself and maybe even for you?

It's Monday, August 17th at 10am in New York.

As we think about trends that are driving e-commerce, which remains a share gainer within the overall retail landscape, it seems that there's a transformation that's quickly building around agentic e-commerce.

So, Nathan, I think it's timely for us to talk today as agentic seems like it could be the next catalyzer of growth and innovation within the e-commerce landscape.

Nathan Feather: How much bigger do we think agentic commerce could make the global e-commerce market?

Andrew Ruben: Global e-commerce as we see it is a nearly [$]5 trillion market today. That implies 22 percent of retail sales. The way we see over the next five years is a $7 trillion opportunity, with growth accelerating to a 9 percent compounded rate, up from about 7 percent over the past four years. And this is partly on the tailwinds from agentic.

What we see here is this broad arc of reducing friction with e-commerce over time.

Think about how easy it is now to pick up your phone, search for some inventory, click, and the goods can be here within one, two days, if not same day. That's reduction of friction that we think physical retail can't match, and the improvements of agentic commerce. Having this agent that can help you search, help you discover – that should further the e-commerce opportunity.

We think agentic alone could add about 6 percent to the five-year e-commerce addressable market, with about 20 percent of industry volumes having some material agent influence.

So, within this opportunity, Nathan, agentic isn't one size. How should investors distinguish between AI influence shopping and fully autonomous purchasing?

Nathan Feather: To your point, there's a wide different flavors that we're calling agentic commerce. And it starts really at the top of the funnel with, you know, you could go to your chatbot of choice and say, ‘I want a hiking backpack with a water bottle slot and a place to hold my keys,’ right? ‘Show me the best options in a certain price range.’

And there you're capturing the top of the funnel, but as you click in, you may bounce out to a retailer and purchase on there. Or it could go even further, and maybe you complete your entire checkout within that specific chatbot.

Now, right now what we're seeing is about half of consumers are starting the top of the funnel at least sometimes with a chatbot, but a very small portion are actually completing purchases. And so, as time evolves, we expect that funnel to widen and start to see a little bit more of this fully autonomous purchasing; although for the most part, we think it's really going to remain top of funnel and mid-funnel.

Now, adoption does look very different across regions, partially because of different consumer behaviors. Why has AI shopping gained more traction in some markets than in others?

Andrew Ruben: I think that's right, and what we see is so far to date, agentic shopping has been led by the U.S. and China. These are the two largest e-commerce markets globally, also among the h