The 5 Possible Futures of Consumer Behavior & E-Commerce…

I am thrilled to be back home after 10 wonderful and long weeks of travel, speech making, panel speaking, private dinner attending, Board Meeting participating, and endless learning. It was great and I am now ready for summer in Seattle!

As I reflect on my learnings and conversations from the past 10 weeks, my mind keeps going back to a series of conversations about the future of consumer behavior. Specifically, I keep returning to a feeling of unease that I experienced when folks around me spoke with certainty about the way AI could alter consumer behavior. It seems to me that there are at least 5 plausible futures for E-Commerce and online consumer habits and that as of today, no one can speak to this with any real certainty. And that those who espouse to know how the future will unfold are likely biased by having a dog in this fight and thus a desired outcome; or are full of BS.

As I think about the future and the way AI and the Great Commoditization will change E-Commerce and Consumer Behavior, I see at least 5 potential winners of the future. They are the AI Giants, Industry Incumbents, Personal Assistants & Personal AIs, new Startups, and 5 is simply ‘other’; new avenues for commerce that we have not even thought of yet.

To use a simple example, lets think about the way a traveler will book a hotel reservation in 2035; but the same logic applies elsewhere. 

Possible Future Outcome One – Winners: The AI Giants (OpenAI , Google /Gemini, Perplexity, etc.) – many believe, and past experience (aka Google) indicates, that one contender to be the potential winner of the new E-Commerce race are the core model providers whose offerings are used daily for nearly everything. Some believe that OpenAI and its competitors will become the almost AOL of the internet; by that I mean a complete portal where all internet activity, including E-Commerce, flows through.

Thus, option 1 for booking a hotel is that the traveler simply goes to OpenAI, Perplexity, or their competitors to search and book a hotel reservation on those platforms.

Possible Future Outcome Two – Winners: Personal AI’s & AI Assistant (think Siri but much better) – another popular theory about the future of E-Commerce is that much of shopping and discovery will be handled by a Personal AI acting as a personal assistant; think Siri but WAY better. The big advantage here is that your Personal AI on your phone, computer, new device type, or personal cloud is likely to have easy and secure access to more data and connected systems than any other tech provider, potentially making this the most personal option and the one that requires the least amount of personal oversight; aka the most automated.

The unlock here is that the traveler is no longer at the mercy of aggregators because their personal AI is happy to visit 152 different hotel websites to pick the perfect choice for them this summer in NYC. Thus, bypassing the OTAs and similar inventory aggregators.

Thus, option 2 for booking a hotel is that the traveler simply says ‘Hi Siri’ or whatever activates your personal AI ‘book me a hotel’. Using all the data on your personal device (calendar, messages & other communications, past transactions, past photos, e-wallet, etc.) your personal AI knows where, when, why, and all the other details that one would otherwise have to manually input into an AI system with less access, making it the most personal and efficient. 

*This option is complicated by the reality that OpenAI and the other AI giants from outcome 1 may be powering the personal AIs discussed in option 2.

**It’s also complicated by the fact that different parts of Google, because of its scale, appear in different ways in outcomes 1, 2, and 3.

Possible Future Outcome Three – Winners: the Existing Incumbents (Expedia Group, Booking.com, Marriott International and the new incumbents like Fora Travel, Safara, and others born before the Great Commoditization, benefiting from the ease of adoption of AI) – another option, even though in my circle this is the one very few people believe in, is that the existing incumbents like the OTAs, global hospitality brands, etc. take the massive advantages they had coming into this new epoch of technology and combine that with the incredible ease and speed of utilizing AI to win the future. In an era when access to differentiated data, inventory, brand awareness, and capital seem to be the deterministic elements of AI deployment it may be that these incumbents bring 1000x as much of the things that matter to the table compared to Startups.

Thus, option 3 for booking a hotel is that the traveler simply navigates to the digital environment of an incumbent and utilizes the latest AI there.

Possible Future Outcome Four – Winners: the post Great Commoditization crop of Startups (Mindtrip, Inc., Layla AI Travel Agent, and the 100s of upstarts building as I type) – another option, which is of course my personal preference, is that the future of E-Commerce is won by a Startup or group of Startups born after the Great Commoditization; launched in 2023 or after. The bull case here is that this crop of players are the true AI natives and thus in the best position to see a future unincumbered by the mental models and lessons of the past. One could argue that these Startups are even more native to AI than OpenAI and the organizations that built the Great Commoditization because those teams formed, learned, and found success in the past era of technology. 

Thus, option 4 for booking a hotel is that the traveler navigates to an upstart like MindTrip, or one not yet formed, and that with time these become the new industry incumbents. Just like Expedia did with the WWW and .com era, the thesis goes so will this new batch of founders in the AI Era.

Possible Future Outcome Five – Winners: Other/Unknown – offering, capabilities, and use cases that we have not yet imagined since we are still on page one of the real AI Story.

Hybrid – it seems very likely that at least at first, over the next 5 – 10 years, there will be a hybrid overlap of these options shaping the near future of E-Commerce and digital consumer behavior; some people will use their Personal Assistant on their phone, some will use the AI on OTA websites, some will use Perplexity, etc.

As we start to see this hybrid fusion coming into view, those who pay close attention will get early glimpses of the future. Entrepreneurs and investors will need to ask ourselves, to where is market power accruing? Which of these options create a new generation of moats?

We will ask, is this new era of the Great Commoditization like the past 20 years where Aggregation Theory and a company’s ability to aggregate demand will win the day? If so, options 1, 3, and (less so) 4 seem most likely.

Where as, if in this era those with access to deep differentiated data win? If so, option 2 and then 1 seem most likely.

Some predict that access to real world inventory supply will get much harder? This is hard for me to believe but if true than option 3 is the likely winner.

 And in the long long term, my bet is on option 5!