February 3rd, 2025: Risks to Amazon in the AI Wars, private equity outlook in 2025, Artificial Intelligence moving from creating to doing with OpenAI Operator,how to grow faster is an elusive question
Today’s episode of The Watson Weekly Podcast is sponsored by Mirakl
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It’s February 3, 2025 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Risks to Amazon in the AI Wars
Private Equity Outlook in 2025
Artificial Intelligence Moving from Creating to Doing with OpenAI Operator
How to Grow Faster is an Elusive Question
- and finally, The Investor Minute which contains 5 items this week from the world of venture capital, acquisitions, and IPOs.
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BUT FIRST in our shopping cart full of news….
Risks to Amazon in the AI Wars
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.
[References:]
Our Second Story
Private Equity Outlook in 2025
COVID-Era PE Investments Will Become Chicken Soup Or Chicken Nuggets in 2025
The typical private equity firm that we all grew up with holds investments for 3-5 years. Incidentally, 2020 was the "oh shit" year for private equity and eCommerce. Many woke up, including new funds, and started investing in 2021.
Fast forward another 4 years and here we sit in 2025. Private equity holders are staring directly at the end of their runway. Growth has happened, but not enough. Profits, on the other hand, have often failed to materialize. Often through multiple regimes, programs, the latest technology, and "sure things".
The two options forward are Chicken Soup or Chicken Nuggets.
Chicken Soup: There is a good strategically aligned owner and outcome. And most importantly, there is a story to tell to the next buyer.
This will probably happen to 10% of situations.
Chicken Nuggets: The company will either be liquidated or become completely unrecognizable to its former self.
90% will end up here.
If you are one of these owners at this stage, the options are few:
1 - Get patient and reinvent. Find the pockets of growth, lean into them, and shed absolutely everything else, no matter how painful. This is not for everyone, because there is an opportunity cost for your time and capital.
The key question you need to answer is: "What part of this brand still has a reason to exist?"
2 - Find an interesting buyer who needs an opportunity. This is a tougher road. The number of "brand opportunities" out there are plentiful and most of them are not worth a damn.
The key question you need to answer is: "Who has means, motive and opportunity for an eCommerce growth story in their portfolio?" Identifying a buyer starts with convincing yourself there is a credible story to tell for the buyer, as well as a willing management team to take it on.
The reason this is unlikely is that the number of firms like this are few, and they are being constantly pitched. Like venture capitalists themselves, they can afford to be patient and picky. Your story must stand out.
3 - Some kind of liquidation/bankruptcy scenario. The exit is here, and the party is over. Closing time: you don't have to go home, but you can't stay here.
On the other hand, there is another side of this market where there is more dry powder waiting to invest than there has been in some time. This creates optimism for the future. Most investors would rather bet on the future than an old story for the past. Which to me, makes this a year of reinvention.
It's moving day in the private equity world - are you prepared?
[References:]
Our Third Story
Artificial Intelligence Moving from Creating to Doing with OpenAI Operator
The march of OpenAI and other models has been fascinating to watch the last few years. Starting with text generation and moving to creation of virtually any media, the models have now moved up another level to performing tasks with the research preview of OpenAI's Operator.
This was essentially inevitable with the pace of innovation. For humans, the future can seem quite disturbing, however the dream has always been to free up humans from having to do menial tasks. Take the human out of the loop.
For now, these tasks are likely to be quite repetitive. Think about the creation of Amazon's "Mechanical Turk" in 2005, this is like that invention except no Turkers are needed. (!!)
For eCommerce, this has a number of interesting applications, both business and consumer-oriented.
* Help you monitor something over a long range of time and take actions independently.
* Reorder, restock and book goods and services.
* Automate procurement based on an understanding of company purchase cycles, needs, and opportunities.
I think the company use cases are more interesting than the consumer ones frankly. For large companies, it is entirely possibly that procurement departments might be automated on a permanent basis.
And you thought automated bot-scraping lawsuits submitted to online website owners were popular before, you ain't seen nothing yet. Yikes.
We have talked about automated AI negotiation between multiple parties, and I think at this point this is a solved problem. This will happen in short order.
For consumers, I could see how I might automate my Christmas shopping based on a spreadsheet of who needs a gift, and what some ideas might be.
The question is will I want to?
But this reminds me - especially for the business setting. Your data needs to be accurate for it to have any value: Is your inventory accurate? Are you sure ;-)
[References:]
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And Our Last Story
How to Grow Faster is an Elusive Question
It seems like a simple question but it often comes with a complex answer. Being a consultant requires you to have a good deal of humility and patience.
Humility that the person hiring you wouldn't be hiring you if they could avoid it.
Patience that things don't often get turned around overnight.
Still, there are common reasons for growth challenges, some of which I will outline here.
* Your brand doesn't have a clear reason to exist.
* You don't have a clear picture of who your growth consumer is.
* Or why they buy from you.
* Your offer isn't attractive (anymore).
* Growing "faster" implies both a plan (which you may not have) and an expectation (which may be incorrect).
* Someone else could be taking better care of your desired customer better than you. Or you haven't given then a compelling reason to switch.
* Or, you haven't stuck to the same plan for long enough to see it through.
* Wrong people working on it.
* Sometimes, doing some good things, but not enough of the right things consistently enough.
* Or you've investing but not enough to hit your goals. You could be underfunding your business.
* Your team could spend most of their days fighting fires. Sometimes because of technology challenges, but it also could be organizational politics.
Notice most of these reasons have nothing to do with technology. Great brands were built decades ago and did not require the latest tools to succeed.
If you are finding the latest tool in search of your silver bullet, chances are ... the only person you are fooling is yourself. Technology has gotten really good and there are often many paths to the same goal as long as you don't find yourself in an unsupported platform situation.
Pick a stable, well-supported, growing ecosystem and you will end up in a pretty decent place. If you don't fall into one of the (many) traps above. Still, diagnosing organization and process problems is tricky business.
Someone needs to want to hear the answer. In fact, that is usually the last question I ask before I sign a contract with a new client: "Who wants to hear it?"
The answer to that question will often determine your destiny. Being willing to try new things that are outside your comfort zone is the key to all of us learning and getting better over time. Especially when the answer isn't what you want to hear.
It's very easy to buy yet another platform or application. Much harder to change people or process.
[References:]
It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Generative AI for Fashion Design Platform Raspberry AI Raises $24M in Series A Funding
Raspberry AI, a generative artificial intelligence platform for fashion design, has raised $24 million in Series A funding, which will be used to hire talent and further develop its product. The apparel sector has struggled to bring products to market quickly. Generative AI will help designers create multiple product versions rapidly. Expect more companies like Raspberry AI in 2025 to support designers in various sectors.
Link: https://techcrunch.com/2025/01/13/raspberry-ai-raises-24m-from-a16z-to-accelerate-fashion-design/
Second
Supply Chain Visibility Platform Shippeo Raises $30M In New Funding
Supply chain visibility platform Shippeo has raised $30 million in new funding that will be used to further expand in North America and Asia Pacific (APAC) markets and invest in its platform. it feels like this sector is receiving investment weekly and clearly investors believe that brands will need to be aware of their goods in real time . Is this a sector that is maturing or does it not have a market leader?
Link: https://smartmaritimenetwork.com/2025/01/21/shippeo-raises-30m-in-new-capital/
Third
Trade Desk Buys Ad Data Firm Sincera
The Trade Desk, an independent demand-side advertising platform (DSP) has acquired digital advertising metadata startup Sincera for an undisclosed sum. This acquisition will enable The Trade Desk to offer publishers which data signals are most highly valued by advertisers. It is clear that The Trade Desk is trying to build an end-to-end solution that will rival its competitors.
Link: https://www.marketingdive.com/news/trade-desk-dsp-acquires-sincera-programmatic-advertising/737683/
Fourth
Customer Data Platform mParticle Merges with Rokt
Rokt, an e-commerce advertising platform, announced a $300 million investment in mParticle, a customer data platform (CDP), to unlock real-time relevance across e-commerce, advertising, and customer experience. The merger is between companies that serve similar markets and improve Rokt’s service in e-commerce marketing beyond advertising.
Link: https://www.linkedin.com/posts/mparticle-inc-_roktxmparticle-activity-7285642402516619265-JDQh
AND FINALLY …
UPS Broadens Network with Frigo-Trans and BPL Acquisitions
UPS announced that it had completed the acquisition of German logistics companies Frigo-Trans and its sister company BPL, which provide complex healthcare logistics solutions across Europe. The acquisitions enhance the end-to-end capabilities available to UPS Healthcare customers, who increasingly need temperature-controlled and time-critical logistics solutions globally.
Link: https://finance.yahoo.com/news/ups-broadens-network-double-health-205100265.html
That’s all for this week! Till next time Watsonians.....
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Hi, I’m Rick Watson, CEO and Founder of RMW Commerce Consulting and host of the Watson Weekly podcast - your essential eCommerce Digest.
Our production partner for the series is CitizenRacecar. The show is produced by Jose Baez; Production Manager, Gabriela Montequin.
To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.
