TMTB Weekly: Agentic Commerce and AMZN Preview
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Agentic Commerce
Since the market is taking whole industries and names with any perceived AI hair out to the wood shed, evaporating multiples and market caps faster than you can Claude Code a CRM system, I figured I’d spend some this week focusing on the part of the AMZN narrative that has the most potential to give the stock trouble: agentic commerce. In fact, we think a big reason why AMZN hasn’t received much Claude Code, CPU pricing, or adjacent Anthropic love is because of this issue.
After digging in, we were surprised to come away feeling a bit more positive than when we went in. There are plenty of places AMZN can play offense and defense, but definitely plenty of risks they need to navigate. After the last few months, we know enough not to make any sweeping and confident conclusions on how the world will look like in 5 years, let alone in the next 1-2 years, but it’s always good to have a mental roadmap and framework of how to think about things.
I feel most positive around AMZN’s agentic commerce potential when I look at the big picture. Writing this piece, this infamous exchange with Jeff Bezos kept popping back into our minds:
“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time.
...In our retail business, we know that customers [and agents] want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection.
It’s impossible to imagine a future 10 years from now where a customer [or agents] comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ or ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible
I think those things still ring true: fast delivery, low prices, and vast selection. It doesn’t matter if we live in a world of self-driving cars, agents buying things for us, robots running our lives, or Google’s Genie project spitting out video games within 2 seconds, people will still want their physical goods delivered as soon as possible for the lowest possible price.
Big picture: AMZN is arguably one of the Tech companies outside of Semis/Hardware that is least susceptible to AI risks because you cannot digitize the movement of physical atoms. While AI can revolutionize code, content, and search, it cannot replace the massive, capital-intensive infrastructure required to move a box from a warehouse to a doorstep. Something AMZN has spent hundreds of billions of dollars over 20 years building out. That’s the moat we keep coming back to.
Yes, it’s true that while AI cannot replace the delivery of the box, it can commoditize the decision to buy it, which is where AMZN makes its highest margins (ads). Still, as we’ll go into below, we think AMZN is well-positioned to capture share in the new world of Agentic AI ad units as well.
Back to the big picture: we think Agentic AI has the potential to rapidly accelerate the penetration of e-commerce. One of our core investment tenets in Tech has always been that in an industry with strong secular tailwinds, a rising tide lifts all boats. As the biggest e-commerce player, AMZN stands to benefit significantly from reducing the friction of buying things. In a world of a narrowing gap between desire and fulfillment, speed wins. How many times have you stood in a store and taken our your phone to search if you can find it cheaper on AMZN? With future AI devices/agents, this all becomes a lot simpler/faster and likely to occur more often. In an agentic world, we think humans become even less patient and will want their goods shipped even faster.
It’s also possible that in a world of agentic commerce, the big get bigger. In a world stripped of marketing veneer, wouldn’t smart AI agents optimize purely for statistical certainty of speed and returns? A Shopify storefront that takes 5 days to ship and charges for shipping or same day delivery? Back to AMZN’s logistics moat again.
Could we get an explosion of goods in the near future if AI helps the barriers to physical creation collapse as AI agents get faster and better at going from idea to creation to fulfillment? Very possible. If more goods flood the market, then it becomes harder distinguishing it from the noise. Sure ChatGPT can surface a 100 goods for you in 2 seconds. But in that world of reduced scarcity, wouldn’t agents filter for reliability, depth of reviews, and guaranteed delivery speed. In other words, whoever owns the “trust infrastructure” wins. Yup, AMZN. How do you get past the noise to get your product seen? Yup, agentic ad units.
As Bezos said above, there are a few core things that will never change; when we focus on those things, it’s easy to see a future where AMZN’s lead potentially strengthens. Where we get less outright positive is when we dig into the details and potential paths agentic commerce can take and how AMZN needs to navigate those risks.
Let’s dig in: