Shopify president: Agentic commerce could usher in ‘merit-based shopping’

Retail is entering its agentic era.

At least that’s what Shopify President Harley Finkelstein told Retail Brew at NRF. He’s certainly not alone in that thinking: Agentic commerce was by far the show’s buzziest term, especially if you attended sessions featuring Google, Walmart, Ulta Beauty, Wayfair, The Home Depot, Urban Outfitters…the list goes on.

At the show on Sunday, Google unveiled the Universal Commerce Protocol (UCP), a new open standard to scale agentic commerce, co-developed with companies like Shopify, Walmart, and Target, and supported by 20+ others across retail. UCP connects AI agents to merchants, and enables these agents to work across shoppers’ purchasing journeys—giving shoppers options like using discount codes, inputting loyalty account information, or buying subscriptions within AI platforms. Shopify merchants will also be able to sell through Google’s AI Mode within search and its Gemini app.

The UCP addresses pain points and apprehension many brands have surrounding agentic commerce, Finkelstein said. He shared how the news is setting the stage for a major industry shift.

This interview has been lightly edited for length and clarity.

What makes Shopify so bullish in thinking that consumers want to shop using AI?

I’ve been at this for 17 years. Shopify’s been at this for 20 years. We’ve seen these trends that happen. I think social commerce was important. It was never something that most people will do most of the time. We built, initially, e-comm, and we moved to point of sale, and then obviously social commerce came. And we started seeing more of these channels…It has always been our philosophy that wherever there’s a new place where a consumer can buy, Shopify has to enable that.

The Roblox channel—Fenty is doing great with it, but a lot of other merchants don’t even use it because it’s just not relevant…All those things are different than agentic. Why? Because when we look at buyer behavior outside of commerce, if you look at the DAU [daily active user] chart for these agentic applications for just humans right now, it is exponential. That is very different than social media. That is very different from all these other products. So we are so bullish on this because there is a high likelihood that this will become one of the main paradigms of retail, like e-commerce, and so we have to be front and center for that sort of stuff as well.

We also have data to back it up. [In] 12 months, we’ve seen a 14x increase in orders to Shopify stores that have been sourced from some sort of agents…The base is small, but it’s growing fast. When you combine all those things, it’s easy to have a hypothesis that this thing may be dramatic for the industry.

I’ve heard a lot of people saying online and today at NRF that agentic commerce could be leading to e-commerce sites almost being obsolete and challenging the storytelling element of brands.

Their online store is their hub. It’s where they have their videos and their content. It’s where you sign up for their newsletters. It is where they display their newest products. It’s where they do product drops. It’s still going to be the hub. But I think there’s going to be this new potential spoke called agentic that could be very, very meaningful.

If you’re planning a trip, for example, and you need to buy from across five different stores. The agentic side of things will give you a much bigger benefit, rather than opening up five different tabs in your browser. But I don’t think e-commerce is going anywhere. In fact, there are a lot of people much smarter than me who believe that what agentic is going to do is actually increase the penetration of e-commerce, because someone right now that’s not buying online may be using ChatGPT to look up recipes, or to plan a trip, or to edit a document, and they may decide, “I’m gonna actually use this now to do some research on a product,” and they may actually complete the purchase on the product. E-commerce as a percentage of total retail is still sub-20% in the US, it’s ~12% in Canada, it’s [more than] 25% in the UK. There is a chance that actually—like Covid-19 bent the curve on e-commerce penetration—there could be a bending of the curve also with agentic.

What’s left for brands to do to compete in the agentic commerce space?

Make sure you have someone looking at catch off the catalog, the way your products get indexed, the way your products get syndicated. Make sure someone is looking at UCP to make sure all the stuff that matters on a per-product basis is in that protocol. Make sure you are ready for this.

The other thing that’s really cool is that the results in an agent, unlike the results in some sort of ad-based flow, is merit-based. It’s not actually based on who’s paid more money.

Last night, we did an event at the Shopify office with Tom Sachs…He’s the coolest sneaker designer in the world.

Tom Sachs is going to be discovered by more people because of the agentic stuff, because he doesn’t have any money—he runs what’s called NikeCraft, which is a division of Nike, which makes sneakers for what I call entrepreneurs. It’s not for basketball or sports. It’s just for, like, hanging out. And if the agent knows that I like these nichey things—that I like Kith, that I like Supreme, that I like limited-edition stuff, that I really love design and architecture—Tom Sachs is going to actually show up there, whereas now he’s never going to show up in some sponsored search, or even inside of Google because he doesn’t do SEO optimization. The products that will be found will be merit-based as opposed to ad-based. I think that’s democracy. That’ll level the playing field.