The Primary Risk to Amazon is Losing the Consumer Battle for First Search
Amazon and Google are currently shitting the bed with fear, and it's not just because of AI. It's because of Amazon's long-tenured position as the first search for eCommerece items. A position which has been eroded for the first time ever in the last couple of years by TikTok and other sites which provide social shopping inspiration.
Simply, what happens if Amazon is not the first search?
1 - Ad revenue declines. There is another reason Amazon is trying to acquire live sports rights, movie studios, and other unique defensible surfaces to place ads -- they are revenue streams not dependent on eCommerce that can defend its Prime franchise. Amazon Prime Video is a key pillar of Prime in every major Amazon market that has achieved scale.
And ads pays the bills.
2 - But What about Delivery?
Sure, if Amazon is not the "front-end" of eCommere (it was never fantastic at this anyway, except for its catalog + reviews) but couldn't that mean that Amazon ends up delivering everything still?
And so Amazon becomes a low margin delivery company without a high-margin ads business to support it? That sounds like the post office for the world, not a bad gig, but not throwing off a ton of free cash either.
Keep in mind, why has social shopping work? It replaces reliance on Amazon reviews. AI does the same thing faster and better. People still today overlook or underestimate the value of reviews to Amazon, an idea over 25 years old.
What does this mean for brands?
More than ever, a great brand with a fantastic product will be found. AI will be the first place consumers go to analyze consumer sentiment and compare products. Which means product positioning and marketing to niche sets of problems will be more important than ever.
AI will not replace word of mouth, it will augment it. If your product doesn't actually work, people will not speak well about it, and so what do you think AI will be trained on?
Furthermore, word of mouth marketing is still the cheapest form of marketing there is. And if people aren't getting their inspiration from Amazon, but instead AI... then Amazon has a serious problem on its hands. And it's a much deeper problem than Anthropic or OpenAI keeping up with DeepSeek.
The problem is the potential future crumbling pillars of Prime itself.
