Agentic Commerce Is Here and It Changes Everything

[00:00:00] Tony Chopp: It's not just a snowboard jacket that I want, it is a snowboard jacket that's Gore-Tex or something similar that has that's this color that is available. You know, with free shipping that is, you know, is a really good price. It's, it's all of these things. It's all this specificity and, and then me, the user not going to websites, click filtered, this, that, and the other thing.

The, the AI, the LLM. Interfacing with the stores through this API, through this universal commerce protocol, and then returning back to me what I want, and ultimately, again, one step past that, like going through the checkout, like the whole thing.

[00:00:41] Richard Gaffin: Hey folks. Welcome to the Ecommerce Playbook Podcast. I'm your host, Richard Gaffin, Director of Digital Product Strategy here at Common Thread Collective. And I'm joined, we're meeting here on a Friday with Tony, “The Chopper” Chopp. We're talking a little bit about platform up. I, I would, I should say this, the, the topic that we came into this today with was platform updates, but that could be a lot of different things in this modern, sort of exciting day and age.

So, Tony has something that he wants to talk about specifically. We're just gonna dive right into it. I'm not gonna spoil anything, so I'll have you jump straight in, Tony.

[00:01:13] Tony Chopp: Richard, happy Friday to you. It's warm here in Southern California. How, how about how about Portland?

[00:01:19] Richard Gaffin: 45 degrees in Overcast. The darkness is back, but that's all right.

[00:01:24] Tony Chopp: That's not, it could be worse. I was in Colorado this past weekend to do some skiing. And it was one day we were, we were up on the mountain and it was zero degrees paired with like a 20 mile per hour wind, so, you know, feels like negative

[00:01:41] Richard Gaffin: Oh yeah.

[00:01:42] Tony Chopp: I texted my wife and I said, you know, these tropical vacations that you like me to go on are that I've been complaining about 'cause I want to go to the ski trips.

[00:01:50] Richard Gaffin: Yeah. Yeah.

[00:01:51] Tony Chopp: I, I think you might be onto something actually.

[00:01:53] Richard Gaffin: Starting, starting to look pretty good at that point. Yeah, man, I feel you.

[00:01:57] Tony Chopp: Anyway, good to be back in Southern California. So, happy you aren't freezing your butt off up there.

[00:02:01] Richard Gaffin: That's right.

[00:02:03] Tony Chopp: So I wanna, today I wanna talk about some nerdy marketing, like technical stuff that I, I've been, it's been a part of my whole career. And so I'm gonna give you the, I'm gonna give you the punchline first, then I'm gonna give you some of the.

You know, Tony's sort of wandering, meandering way of going about it. So we've been hearing about this idea of age agentic commerce for some time now. So, and Shopify was in the news recently in, developed something in partnership with Google called UCP or the Universal Commerce Protocol. And I think it's really fascinating and I think it, it shapes what. What I believe to be is going to be a meaningful part of the future of e-commerce. Okay, so before we get into UCP and what it is and what it means and everything else, it's a little bit of a back of a backstory. I, early on in my career, this is like 15 years or so ago. I was I was working for a small company and then I got this idea about like doing advertising on the side as a consultant.

So, so I, I took on some projects. One of the early projects that I took on was this retailer that sold auto parts and they had three or 4 million SKUs. I forget how many but it was a lot and. The punchline is the, the partnership didn't last very long. And the reason why is because I didn't know what I didn't know about the data layer.

So data feeds and product catalogs and the corresponding ecosystem that existed around these things. Platforms like Google Merchant Center, and this was actually before META'S Commerce Manager. But anyway, there's this whole like. This whole world that I didn't know anything about. And I, I went to work in a client partnership that it was really important and it, and it turned out not, not to be not very productive for me, but it was a pivotal moment in my career.

And it, it sort of, I, I didn't want, I learned that hard lesson and it forced me it allowed me an opportunity to, to get really good at this part of the world, this sort of feed stuff. And it's, in many ways, I, I believe it's coming full circle here 15 years later where. The, the product data feed and the catalog has, has always been. A really important part of the marketing stack, but, but it is literally the, the lifeblood, the DNA of this future commerce world, which you'll hear referred to as a agentic commerce. Okay, so let's talk a little bit more about a agentic commerce and the universal commerce protocol and, and what it actually is.

Okay, so the old world user. Has a thought problem, goes to Google, types in a search query, clicks on a blue link, navigates to a website, browses, adds to cart, goes into a checkout flow, payment processing, blah, blah, blah, blah, blah. Okay? Old world. The new world is, that all happens in inside the agents. Okay? And this, this idea of. Being able to actually transact within GBT or Gemini is what Agentic commerce is. And this step that Shopify and Google took in partnership to develop this universal language, this protocol of how that actually works is a marquee moment in this journey of being able to go to GPT or Gemini and say, I wanna buy a snowboard jacket.

And never actually clicking out to a website. So I'm just curious. I'm like super deep in this and technical and nerdy, but I'd love to get your take on it, Richard, from anything that you've experienced.

[00:05:57] Richard Gaffin: Yeah, I mean, I, I think within my experience so far, like the, the times that I've used GPT or Gemini or whatever to shop the, the initial experience is that it's like obviously a better way to do it, I guess, would be kind of like how it. We often say that like the best advertising is or the two factors that are most impactful on sales are price and a recommendation from a friend, right?

Or most impactful on whether or not somebody's persuaded. And there is definitely a vibe with chat, GPT that that recommendation from a friend is essentially sort of baked into it as opposed to something like, I dunno, wire cutter or whatever. Which is, you know, they aggregate different and give you recommendations or whatever, but it still feels like a publication sending it out to many, this feels like it's this one-on-one individual sort of bespoke shopping experience.

And so all that to say it like, it doesn't, it doesn't surprise me and I'm curious to see where it goes. But, you would use the, the metaphor before we jumped on here of the ghost kitchen for this, like, I'm, I'm curious, that might be helpful to, to kind of help flesh out a little bit more about what this looks like or what the paradigm shift is here.

[00:07:01] Tony Chopp: Yeah. Yeah. I, I think, I think it feels like a, a decent metaphor. So

[00:07:06] Richard Gaffin: Mm-hmm.

[00:07:06] Tony Chopp: Ghost Kitchen, most people are familiar with it. It's, there's no dining room, effectively,

[00:07:10] Richard Gaffin: No.

[00:07:12] Tony Chopp: kitchen transaction. In, in the transaction layer here, like happening on an app like Uber Eats or whatever else is the equivalent of sort of this UCP protocol and then the food gets delivered.

But you never go to the, you never go to the restaurant and sit down and, and in this metaphor, the restaurant itself, the dining room is the website that's, that's the, that's, that's the, the easiest like representation, mental model that I've been able to come up with. And, but you mentioned something before about like going into GPT and having sort of a discovery experience or for a product.

So the, the thing that I want to emphasize here is the way that GPT or Gemini or any other LLM for that matter, gets the information. To be able to recommend a product to you is not by us saying, Hey, GPT or Gemini, look at us. Look at us. Look at us. It is a product data feed, and this is the, the point of how I think this, this product data feed, is it, it always has been.

What, what you actually have to sell, right? Like, if you think about it, let's use a physical store as a metaphor. There's the physical store, there's the, the, the surroundings, the, the light. But at the end of the day, it's, it's the products in the store. That's what you're going there to buy.

[00:08:41] Richard Gaffin: Interesting.

[00:08:42] Tony Chopp: this this product data feed is the products and the, the, the process of making sure that that is.

Of high quality and available broadly is, is what I think the, the basis, the foundational aspect of what it, what it's going to mean to be successful in a gentech commerce and Shopify. By the way, Shopify is making this a default part of their. Of their technology stack. So if you go into the sales channel section of Shopify now you'll be able to see some of the settings that are.

Available to enable what they're calling their Ag agentic checkout or AG agentic storefront. And this, this is the dots that I want you all to connect this feature in Shopify is what is enabling the LLMs to interact with the product data feed, which therefore enables you, Richard, to go. It's not that I just wanna buy a, I'll use my example.

It's not, it's not just a snowboard jacket that I want, it is a snowboard jacket that's Gore-Tex or something similar that has that's this color that is available. You know, with free shipping that is, you know, is a really good price. It's, it's all of these things. It's all this specificity and, and then me, the user not going to websites, click filtered, this, that, and the other thing.

The, the AI, the LLM. Interfacing with the stores through this API, through this universal commerce protocol, and then returning back to me what I want, and ultimately, again, one step past that, like going through the checkout, like the whole thing.

[00:10:25] Richard Gaffin: Yeah, yeah, yeah. Right, right, right. Yeah. I think we talked about this last time maybe of eventually what's just gonna be happening is robots buying things from other robots or whatever, but at least, at the very least on your behalf. But I think okay, so, so then the question, this all raises of course, is like what this as, as a layman, it strikes me as this is sort, seems unusually.

Advertising proof or difficult to manipulate. And that's obviously like the question that's gonna be on everybody else's mind. How do I like LLM optimize my feed or something like that. And if that's a question of just make sure your feed has like clear names and describes what the product is that's one thing.

But I guess what I'm curious about is like, for instance, to manipulate SEO, you have to write your, I don't know, your recipe blog has to have all these questions. Like, what is eggplant? Where do I find eggplant before it actually gets to the recipe? Whereas in this case, it feels like those types of like clear manipulative techniques are no longer possible.

But tell, tell me what you think about that.

[00:11:26] Tony Chopp: Yeah, I, I haven't, I haven't been ex, my initial experience of this

[00:11:31] Richard Gaffin: Mm-hmm. Mm-hmm.

[00:11:58] Tony Chopp: not not just the user experience, but or as a sub component of the user experience, the security.

I mean, you mentioned robots buying things from robots, but. I, I'm, I'm p I'm pretty like future forward. So like, I'll be like, yeah, here's my credit card. Like, have fun. Maybe, maybe it'll be like a, you know, a secondary credit card with like a small limit on it. But

[00:12:20] Richard Gaffin: I mean, dude, if you could, if you could give him a credit card and say like, Hey, spend, you know, this is my budget for close this month, spend $500 and it just does it, and all the clothes are good, then what's the problem? You know? Yeah.

[00:12:31] Tony Chopp: this, that is the vision of the future right

[00:12:33] Richard Gaffin: Yeah.

[00:12:34] Tony Chopp: So the, so back to your question though. So the, the major players are working on what feels like the infrastructure piece of it. And for, for those of us that are advertisers, for those of us that have products, our, our mandate at this point in time is to understand that the mechanism that by which this happens is a product catalog.

But to your point about it being sort of not advertising friendly, once the user experience gets sorted the, the, the. The big players are going to monetize the access to the inventory for sure. A hundred percent. So in, in this little sidebar here on OpenAI, who released their, their ad product earlier this month which is, it's an all roads lead, lead to advertising funding

[00:13:22] Richard Gaffin: Of course.

[00:13:23] Tony Chopp: these companies, business models.

[00:13:24] Richard Gaffin: Yeah. It just, what I'm saying is it would have to look fundamentally different 'cause it would be about paid access as opposed to. Actually a a actually like running ads to people. I would imagine. Maybe I'm wrong about that, I don't know. But at the very least, like, I, I guess I'm, I'm trying to figure out like what I'm, what I'm asking here, but it, it, it's because the intermediary between your product and the person, is this like AI intelligence essentially that's doing the decision making.

The, yeah, what you're having to pay for is to. You're paying for the preference of that bot, I guess, is what, what, what the monetization would look like. Is that basically true?

[00:14:07] Tony Chopp: Like I, I understand, I understand what you're scratching at it. In the, in the old world, we paid for the, the eyeballs like to get in front of the eyeballs and there was no, there's always been some quality component to the

[00:14:25] Richard Gaffin: Mm-hmm.

[00:14:25] Tony Chopp: like the advertising having to be. Well let's do sort of an end around here. So. On meta with like a static or a video ad, for example. The, the click through rate, how much a user interacts with that ad is a signal to meta that this ad is high, is good quality.

[00:14:43] Richard Gaffin: Mm-hmm.

[00:14:43] Tony Chopp: as a result of that, it's shown more. Right? And the same thing on Google, like all of the, all of the tactics that we do, whether it's writing different search ad copy or manipulating the, the images or text in a product listing and all of it is a mechanism to. In include, have something good to show a user so that they click on it and this is and we're rewarded by the platforms with delivery effectively.

So I think the interesting to kind of thing to sort out here is like if the LLMs are sort of doing that decision making around what, what high quality is, like, what it means to be the right product for what this person is looking for at any given time. Like, how does, how does advertising sort of fit into that model?

In pre you use the word preference. I think that's, that's probably the way that it's been done historically. Like, not, not that much different than paid or paid Google advertising versus organic visibility. There's been like preferential access to the impressions if you're willing to,

[00:15:51] Richard Gaffin: Right, exactly. Yeah. Yeah. I guess I just like what, what, what shape will, like the tactical approach to this take, I guess is what I'm curious about because, so yeah. Right, there's there, because there's two elements to it. Like you mentioned like the more straightforward one being like the equivalent being paid search, right.

Where you shell out a certain amount if you're spending on the right things, then Google will show. Show your link as an ad. Right. And then, but what I'm thinking more about is like, what is the, the SEO of this look like? Because like, what are the decision making? What are the factors that, in that influence the decision of the LLM organically and or is there, like, is there gonna be no distinction between what's a paid link and what's organic?

I mean, at some point legally, maybe we'll have to figure that out. But I guess that's, that's what I'm curious about, like. How does the LLM decide what to recommend? It could be based on your preference, but there's maybe many products that satisfy that preference. So which one of those is it how, how does it determine that?

Is it, I dunno, reviews, like, whatever, like that, that's the kind of thing that I'm, I can't fully articulate, but I'm curious like your thoughts on what, how influencing the decision making capabilities of the LLM is gonna look like.

[00:17:05] Tony Chopp: Well, yeah, let, let me give you a couple things. So we, we have an AI SEO pilot that we're running for several. Projects right now. And one of the big things that we're, we're focused on in that is to, is to audit and understand the, the state of reviews for the business, AKA social proof. And there's some places that are turning out to be really important to the LLMs.

Like, like conversations on Reddit. But that that's not the only place that what it appears, that it appears that the LLMs are looking for some. Broad signal about the validity of a brand, the quality of a brand. And there, and there seemed to be looking at that from, with a, with a. With a broad view so that's one you mentioned preference.

So this, the preference thing connects back to the product data feed. So the, the more and this has always been true of, of product data, the more detailed, the more, and the more descriptive you are, the more likely you are to going to meet somebody's really unique preference. I think the, the third piece of this puzzle, back to this UCP Universal Commerce protocol and sort of LLMs interacting with Shopify stores. One of the things that we've heard some conversation around is the LLMs sort of being able to negotiate around, Hey, is there any offers? Is there any coupon codes for this product? So I would bucket this all into price, right? So if. The the price is competitive, especially if it's a, a retail product. And if there's some sort of mechanism in, in that process that's going to make the user experience better, like, oh, I got the best deal on it, then that is for sure something that's gonna be part of this, part of this ecosystem.

[00:19:05] Richard Gaffin: Right. No, I mean that makes sense. I mean, ultimately, just like many of these things feels like it comes back to just make a great product that people like talk about and they talk about in certain places, and that that will be what the LLM is sort of trilling for. But inevitably there's going to be some sort of, as marketers, I think that makes you feel kind of a little bit out of control.

So there's gonna be some sort of element of like. How the SEO of LLM or whatever, I guess, I dunno.

[00:19:30] Tony Chopp: It, it's no more out of control than it ever has been. It

[00:19:34] Richard Gaffin: Yeah, sure.

[00:19:36] Tony Chopp: marketing. And in this, whether it's on Meta or Google Ads or Super Bowl commercial, that that end node has always been a distribution mechanism, a way to get a message out. About

[00:19:51] Richard Gaffin: Mm-hmm.

[00:19:51] Tony Chopp: it is that you're selling. And so product, product and brand has always been like a critical factor in, in the marketing world.

We, especially, you know, specifically here at CTC, we get really methodical about how to understand the unit economics of advertising and et cetera, et cetera. But it, it doesn't supersede having a great product to sell and a, and a good story to tell that people resonate with.

[00:20:16] Richard Gaffin: Right, right. Of course. Yeah, I guess I was thinking like in instances where. Well, I mean, yeah, having a great product to sell, but not a great story to tell, I think is an issue people kind of run into or a, and kind of like the whole point behind something like SEO is you, you may have a great story to tell, but there's certain ways that you need to tell it in order to get the algorithm to actually read it.

Right. And so that, that, that's kind of what I'm, I'm thinking more of like, what are the, what are the techniques that you need to tell the story with, in order to trigger the LLM into thinking that like, oh, this is something interesting. And maybe at this point, because it's the way it thinks is so complex, all you can really do is like, make a great product and have people write good reviews about it.

[00:20:54] Tony Chopp: The jury's still out, right? But right now, today, the, a recommendation that I would have for anyone listening to this is number one, go do some research on this UCP on this protocol that's been developed between Shopify and Google, because it's, it's going to underpin this infrastructure and go do some research into Shopify's.

AG agentic checkout because that, that's the, that's literally the piece that sits underneath this, this thing as well. And the more that we all familiarize ourselves with what's happening sort of under the hood, I think it's gonna get, get us all to that, that next point that you're talking about is like, how do we how do we, how do we behave in this new world?

[00:21:38] Richard Gaffin: Right. Yeah. So this is, this is still something that's cooking. We're not ready quite yet to figure out how

[00:21:44] Tony Chopp: not there yet.

[00:21:44] Richard Gaffin: strategically. Yeah.

[00:21:45] Tony Chopp: I spent the first, I spent 30 minutes this morning trying to get it to actually work. So I was like in Gemini and I was like, Hey, I want to buy, I want to buy snowboard pants and I'd like you to do the checkout for me, end to end. And it sort of, it, it didn't work. Let's just leave it at that.

And when went a couple different loops. So the, they just started talking about it earlier this month, so I was like, give it to me now. But but I think this, that would be like a third piece of the puzzle is to, is. And this is kinda one of my favorite ways to, to do advertising is just to experience advertising.

And so I, I encourage everyone listening to, to try to try to get these experiences to trigger in their daily driver, whether that's Gemini or, or GPT or whatever. You can also preview it in Shopify. If you go into Shopify into the sales channel and go into the ATech checkout, you can actually see a preview of what, of what it's expected to look like in some of these tools.

So, but I want to, I want to like sort of shift gears just a little bit and hit one more connected idea. That I think is pretty cool too. So I was up at the meta office earlier this week to do some filming for their performance talk series, which was really fun. I got a chance to spend some time with our agency partner who shared, spilled some of the tea on the things that are important for, for meta this coming year.

And he, it's funny, funny enough, he's like, product feeds. I was like, oh and so. The, it all kind of clicked when I was up there. I, I'm not, are you a TikTok user at all?

[00:23:14] Richard Gaffin: No, I've been off for a couple years. It's been great, but, but continue.

[00:23:19] Tony Chopp: Well, so TikTok, yeah. I'm not super big user either. I use it to, to experience advertising products. They have a new product that is, that's pretty cool. And it is like a hover, clickable, thing that exists on a product that's in a video. Okay. So if you're watching a video and there's like. Shirt and the, you see a product you like, you can, you can click on it, right?

This is all being driven by product data feeds. And so what I, what I heard from our, our folks at Meadow was everything is going to be shoppable this year. So I think what we can expect to see is a similar functionality in, in reels specifically where. If Meta's algorithm is able to identify a product in a reel, there is very likely to be a clickable interface and potentially an agent checkout.

All within that there's one more thing that the audience can go and research a little bit. It's called Sam, it's a a model that meta has been building called the Segment Anything Model. So Sam three. So you can go and read about this. And essentially the easiest way to understand it is it is able to analyze a video and isolate any object or subject in that video from the rest of the content.

So think about this. I'm making a, I'm in a video. I'm wearing something, right? The SAM algorithm is able to identify this object. It's able to connect it to a product data feed for the retailer, and then a clickable link. Go buy this thing.

[00:25:02] Richard Gaffin: Yeah, it's crazy. Wow. Yeah. I mean, yeah, it's a, it's a brave new world we live in for sure. I mean, just thinking about like the possibilities of so I was thinking back to the, that thing that I was saying before about like, Hey, can I give. Gemini my credit card and say, you have 500 bucks to spend and give me this, whatever.

And just thinking about like, yeah, I saw some guy on a TV show and I really liked what he was wearing. Could, could there be like some scenario where, or like I'm watching a YouTube clip of it, I'm like, just gimme whatever's in there or gimme something like it or whatever and I don't know. Yeah, it's a.

That's, it's just kinda mind blowing, I guess.

[00:25:42] Tony Chopp: really cool if you think about it, like we, we've been in the UGC content creator era for, for a long time now, and I,

[00:25:47] Richard Gaffin: Mm-hmm.

[00:25:48] Tony Chopp: that that style of content is absolutely crushing on social advertising. It's, it's the. We have all sorts of data points in the agency about how, how important this is for our brands to make this style of content. some ways it is, it's still sort of, it's unequivocally ad advertorial, right? It's a person that's advertising a product and. And so it's going to continue to be important, but I, you can almost see this, this future world where you're watching something on TikTok or you're watching something on a reel on Meta or YouTube for that matter.

And nobody is intentionally advertising anything.

[00:26:26] Richard Gaffin: Yeah.

[00:26:27] Tony Chopp: They are just existing and probably being cool in whatever thing they're doing. And the infrastructure underneath all this is like, that's a product and I'm the user. Going like, Hmm, that that guy did a cool snowboard trick, but actually his jacket looks rad.

Click

[00:26:43] Richard Gaffin: Yeah, yeah, yeah, exactly. Yeah. No, that's fascinating.

[00:26:47] Tony Chopp: don't even click at all. Just be like, Hey, send that to my ship. That to

[00:26:50] Richard Gaffin: Yeah, yeah, yeah, yeah. Exactly. Just speak it into existence. All right, well, so, I mean, I feel like the, the takeaways from this practically speaking are just like, just do some research, get prepared any kind of other like, sort of like, practical takeaways you wanna pull out of this here.

[00:27:07] Tony Chopp: Yeah. I mean, so you said this, but go, go read about UCP. Go look at and educate yourself on the AG Agentic checkout in Shopify. Learn about the Sam algorithm on meta. If you don't know what a product data feed is or you don't understand what, what it means to have a good high quality product data, you need to educate yourself on this because this is going to be a material part of the future of commerce. And if you, if anyone buys any of these $60 CPM text ads on OpenAI, hit me up.

'Cause I'm, I'm curious about them. So apparently no, there's no conversion tracking. It's just clicks and views only, like, I guess there are text ads at the bottom of a, at the bottom of a search query. So it's sort of like, whoa. Really? Seems, seems pretty expensive, but yeah. So, so hit, hit up your boy if you buy some open AI ads.

'cause I'm curious.

[00:28:06] Richard Gaffin: All right. Sounds good. All right. So I mean, I think that's a great takeaway. Product data feeds get fluent on it now because it's gonna become really important in the future. So, all right, I think that's gonna do it for us for this week, folks. Thanks for listening to everybody, and we'll see you next time.