A Musk-Related Merger Helps Reveal The Future Of AI-Driven Retail

Elon Musk recently made headlines with the surprising announcement of a merger between two companies he owns, xAI and X (formerly Twitter).

xAI, co-founded by Musk, is known for its artificial intelligence chatbot named Grok. Grok competes with other artificial intelligence chatbots you likely heard of including OpenAI’s ChatGPT, Google DeepMind’s Gemini, Perplexity and others.

Adrien Menard, CEO of Botify, a digital search consultancy, noted that AI chatbots fundamentally alter how consumers find information online. “Previously, consumers did their own research,” Menard said. “Now, chatbots provide summarized answers directly,” no more links to click, just the answer you’re looking for.

If consumers keep using chatbots to search, it means the way they find products is going to change too. Companies that rely on Google to help consumers find them are going to have a problem. Possibly a big problem.

(If you’re not familiar with how AI chatbots work, it’s worth trying out for yourself. Here’s a link to Chat GPT and you can ask it anything. Go ahead, I’ll wait.)

Why Merge xAI and X?

One of the important motivations for the deal is the future of online searches. Traditional search methods—dominated by Google for decades—are rapidly shifting.

Integrating xAI with X enables social media users to leverage powerful AI capabilities, enhancing their social media experience. Simultaneously, it allows xAI’s Grok chatbot to learn continuously from vast text and images input by users on X, giving it a knowledge base that is a competitive edge.

Musk isn’t the only one who thinks combining chatbots with social media is smart. The Verge reports that OpenAI, the owner of ChatGPT, is working on its own social media network.

How Search Is Changing

According to Sabrina McPherson, SVP of Digital Business Strategy and Transformation at Publicis Sapient, “Traditional search is dead. Today 50% of searches aren’t on Google.” She’s referring to searches on Amazon, social media, and increasingly, AI chatbots.

If she’s right, brands have a problem they may not be ready for. In 2024, TikTok Marketplace alone generated over $33 billion in sales. If consumers stop shopping the way they have for a long time, no one knows how brands and retailers will be able to find new customers.

Integrating social media with AI-driven chatbots means retail is changing that will have an important impact on brands and retailers.

To find out more about the future of search, a critical driver of business for brands and retailers, I went to Shoptalk, an annual conference in Las Vegas where retail bigshots talk about the future. I asked some of them what the impact of AI chatbots on search and product discovery will be.

Implications For Brands And Retailers

Right now, no one can say with certainty what the impact of AI chatbots for search will be on brands and retailers. But everyone agrees it’s a big deal. Smart people are thinking a lot about it and have some ideas they shared with me.

Historically, brands evolved their marketing strategies from Google-centric methods to social platforms like Facebook, Instagram, Pinterest, Snapchat, YouTube, and TikTok. This decentralization, as Menard of Botify highlights, has made digital marketing increasingly fragmented.

AI chatbots are an entirely new paradigm. Unlike an algorithm, chatbots utilize neural networks—sophisticated systems capable of holding and analyzing vast amounts of information. They are not strictly formula-driven (if this then that), and they can come up with their own ideas and inspirations, like your brain but faster (and not as smart).

Amarachi Miller, VP of Product at Anthology Labs, a provider of ethically-sourced consumer data, categorizes current AI chatbot users into two groups: those seeking practical help (like students doing homework) and tech-savvy early adopters.

Anthology’s analysis of early adopter Perplexity users found they have high incomes, education and spending. Those users spend three times as much as the average user on the things they find on search. The ease with which chatbots find answers and products for consumers means, “there is wallet to be gotten there,” according to Miller.

McPherson of Publicis Sapient emphasizes the time savings of chatbots. “Consumers’ patience keeps declining. If you’re a retailer with search that is not AI-enabled, you’re losing out,” she told me.

Lori Schafer, CEO of Digital Wave Technology which integrates tech stacks to make them more effective, stresses the necessity for “conversational, structured, quality content that’s different than putting metadata on a webpage.” She says that enables each of the chatbots that have their own unique way of looking at the world to find your content.

Dominik Angerer, CEO and Founder of content management system Storyblok, says that if you’re a brand, two things are important for AI chatbots to pick up your content:

• Having content online that answers the questions consumers are asking the chatbot.
• Getting more sites to mention the brand.

Arthur Yao, Deputy CEO of Rezolve Ai, which runs conversational software to replicate a great in-store sales associate’s functionality for online shopping, agrees. He says the way to get AI chatbots to recommend your brand or products is not about keywords, it’s about context. “Having more collateral information out there for AI to ingest will drive more traffic.”

James Sachs, CEO of low-acid brand Puroast Coffee, emphasizes content-driven visibility rather than traditional SEO, allowing chatbots to organically discover and recommend his brand. Puroast has been participating in many varied online discussions that are relevant to its product in order to catch chatbots’ interest.

Juan Olea, VP of Commerce at Influential, the largest influencer marketing company in the world, believes influencers will be important in AI chatbot search. Olea says, “Gen Z consumers come into a store and say ‘I want this’ and show a screen to a sales associate.” Influential uses AI to help influencers stay on top of trends and that drives those young consumers to find the products they promote.

Blaine Nielsen, President of Rithum’s Retail Division which increases efficiency in e-commerce supply chains, predicts highly personalized recommendations are what will come out of AI-driven search.

While all this is being figured out, chatbots aren’t sitting still. Wired reports that Chat GPT will be launching a shopping feature soon so that when consumers find the products they want, they can click right to the purchase as they currently do on Google Shopping. A reported partnership with Shopify is reported to be in the works.

Future Challenges and Opportunities

Not everyone agrees that AI chatbots can’t be gamed to deliver specific results. Maju Kuruvilla, CEO of Spangle.ai, suggests that a science of Generative Engine Optimization (GEO) might emerge as a new marketing tool, just as there is Search Engine Optimization for Google.

Jen Purcell, CEO of wine brand Avaline, stresses real-world engagement through events like wine and food festivals, emphasizing visibility to supplement digital strategies.

Most experts agree that credibility and authoritative content are essential for brand visibility on chatbots. (For what it’s worth, many people I spoke with said Forbes is one of the best examples of a reputable source where brands need to be.)

Legacy Media Adaptation

Alison Levin, President, Advertising and Partnerships at NBC Universal, told me their data shows that the “upper funnel,” where brands make their name known, is key. She said “promoting your brand on TV and video will be just as important for AI to find and recommend your products as it has been in the past on Google or social media.”

Looking Ahead: AI Agents

The next significant innovation is AI agents—software that actively engages on behalf of users, performing tasks based on ongoing, personalized searches. Menard of Botify suggests these agents could soon dominate internet traffic, continually scouting for relevant opportunities.

When the smartphone was created, most people didn’t know that it would be how they’d order takeout or a car to the airport. So it may be that chatbots become the access points to tools that we can’t imagine yet. In fact, it’s pretty likely.

The Final Insight

With so many opinions floating around, I went to the source: ChatGPT. I asked it how brands could best optimize their visibility on chatbots. It said:

• Shift focus away from Google rankings.
• Create AI-friendly, conversational, structured, and authoritative content.
• Ensure your brand is cited by credible sources.
• Leverage multimedia formats (video, podcasts, guides) that AI can easily interpret.

Even ChatGPT admits the future of chatbot optimization is still evolving, highlighting the uncertainty and potential of AI-driven retail. But whatever it evolves into, it is coming up on us pretty fast.