Amazon Seller Updates: Amazon’s AI Push vs. Walmart’s Expanding Reach

The Amazon Updates You Need to Know This Week

This week’s Amazon seller news covers huge strides by Amazon and Walmart to attract shoppers and brands, setting the stage for an intense showdown in online retail.

• Amazon Unveils AI-Powered Alexa Plus: Amazon is upgrading its voice assistant with Alexa+, a generative AI-powered version designed to compete with Google and Microsoft. Available for $19 per month (free for Prime members), Alexa+ integrates Amazon’s proprietary AI models and Anthropic’s technology to enable seamless multi-app task execution.
• Amazon Introduces Video Ads in Rufus: Amazon is testing video ads in Rufus, its generative AI shopping assistant. This follows the introduction of text-based search ads in September, further expanding advertising opportunities on the platform.
• Walmart Expands Ecommerce & Advertising: Walmart now reaches 93% of US households with same-day delivery, launches luxury-inspired products to attract affluent shoppers, and introduces an ad API for brands to manage campaigns on its ecommerce platform.

As the retail tech race intensifies, these Amazon seller updates highlight a rapidly expanding marketplace where AI, advertising, and logistics are central to future growth.

Amazon Alexa Plus Takes AI Shopping and Smart Homes to the Next Level

Amazon is making another bold push into AI-powered shopping, home automation, and customer engagement with the launch of Alexa+, its next-generation virtual assistant. This upgrade promises to make the Amazon AI agent more conversational, intuitive, and capable, transforming how users interact with Amazon’s devices.

How Alexa+ Works and What It Means for Sellers

Alexa+ builds on Amazon’s proprietary large language models (LLMs) and Anthropic’s AI technology, allowing it to process natural language more fluidly and take independent actions across Amazon services. Here’s what’s new:

• Seamless Shopping & Smart Recommendations: Alexa+ integrates deeply with Amazon’s own shopping platform, offering users highly personalized suggestions based on purchase history, interests, and contextual cues. For sellers, this means increased exposure to potential buyers who rely on voice search and AI recommendations. This also means sellers who optimize their listings with AI-friendly keywords and content stand to gain a competitive edge. 
• Third-Party Integrations: Alexa+ connects with external services like Uber, Grubhub, OpenTable, and Ticketmaster. Sellers in industries adjacent to retail, such as travel and entertainment, can benefit from these AI-driven cross-platform integrations.
• Alexa’s Autonomous Purchasing Power: Alexa+ introduces autonomous capabilities that allow it to independently navigate the internet to complete tasks for you. For example, if your oven needs repair, Alexa+ can search Thumbtack, authenticate, schedule a technician, and confirm the appointment—all without requiring your supervision or intervention. For sellers, this evolution represents a major shift in consumer purchasing behavior, as more frequent voice-activated autonomous shopping could impact product discovery and purchase patterns, requiring strategic optimization for voice search and Alexa compatibility.

Amazon’s latest innovations with Alexa+ could mark a turning point for ecommerce, blending AI convenience with powerful retail integration. As AI-driven shopping assistants become mainstream, sellers must stay ahead by optimizing for voice commerce, leveraging AI ads, and keeping an eye on changing competitive dynamics.

Amazon Rufus Now Features Video Ads

Amazon’s AI-powered shopping assistant, Rufus, is evolving—and with it, the advertising landscape for brands selling on the platform. What started as a chatbot providing product recommendations based on search queries is now integrating video ads, marking a change in Amazon’s approach to advertising and search optimization.

The Rise of Ads in Rufus

Amazon initially introduced sponsored search ads to Rufus last year, allowing brands to appear in AI-generated product recommendations. Now, according to AdWeek, the company has expanded these placements to include video ads, further blurring the line between organic search and paid promotion.

How Rufus Ads Work

• Context-Aware Advertising: Rufus uses AI to analyze product listings, customer reviews, and broader internet knowledge to respond to shopper queries. The chatbot can compare products, suggest items for specific needs (e.g., “best fall camping gear”), and now, insert video ads alongside search results.
• Shifting Search Strategies: Unlike traditional keyword-based search advertising, Rufus prioritizes topic-based discovery, or semantic SEO. This means brands must optimize product listings based on common customer phrases and context rather than just targeting specific keywords.‍
• Ad Measurement Challenges: While Amazon continues to experiment with Rufus ads, advertisers currently lack dedicated performance metrics. As of now, these placements account for only about 1% of advertisers’ Amazon search budgets, per Matt Koski, Paid Media Director at Envision Horizons.

For brands selling on Amazon, this update presents both opportunities and limitations.

• More Visibility for Advertisers: With Amazon’s traditional search already saturated with ads, Rufus provides a new avenue to reach shoppers.
• Less Control Over Ad Placement: Without clear performance data, sellers are operating in a “black box” where they can’t measure ad effectiveness, according to Koski. eMarketer also mentioned that “Amazon won’t include Rufus campaigns in the metrics that advertisers receive.” 
• Potential for Customer Frustration: If ads aren’t clearly labeled or feel intrusive, consumers may become wary of relying on Rufus for shopping advice.

How Sellers Can Adapt

To make the most of this new ad format, sellers should:

• Optimize for Semantic SEO: Analyze customer reviews to identify common phrases that describe product benefits.
• Experiment with Video Ads: Since video is becoming a key format, brands should test engaging content that highlights product value.
• Monitor Ad Performance Closely: Even without direct Rufus metrics, track overall Amazon ad performance to identify potential correlations.‍
• Focus on Authenticity: Ensure that ads provide real value to consumers and seamlessly fit into the shopping experience.

Walmart’s Bold Moves to Challenge Amazon

Walmart is making aggressive strategic moves to compete with Amazon, doubling down on fast delivery, expanding its advertising capabilities, and targeting more affluent customers. These initiatives highlight Walmart’s push to capture greater market share in ecommerce and retail media.

1. Expanded Walmart Same-Day Delivery

Walmart is closing the gap with Amazon on delivery speed, reaching 93% of US households with same-day delivery—up from 80% in late 2023. This expansion is fueled by:

• Geospatial Technology: Walmart is using data analytics to optimize delivery routes and store coverage, allowing more efficient delivery networks.
• Cost Reduction: Walmart’s CFO John David Rainey highlighted that spreading operational costs over more orders has led to a 20% reduction in US net delivery cost per order.
• Growing Consumer Demand: Over 30% of Walmart’s orders now involve customers paying extra for three-hour or faster delivery, with a peak of 77% on Christmas Eve 2024.

This positions Walmart as a strong competitor to Amazon’s Prime service, which reported delivering over 9 billion same-day or next-day orders in 2024. Sellers on Walmart’s platform will benefit from improved logistics, but they must optimize inventory management and fulfillment strategies to stay competitive.

2. Walmart Follows Amazon’s Blueprint for Retail Media Dominance

Walmart is making it easier for brands to advertise on its platform, following Amazon’s model by launching an API for retail adtech firms to build and manage their own ad tools. This shift benefits sellers by:

• Self-Service Ad Buying: Similar to Amazon, Walmart’s new API allows businesses of all sizes to purchase and manage display ads without going through a sales representative.
• Targeted Advertising: Walmart’s ad system uses keyword and demographic-based targeting, similar to Amazon, but also incorporates in-store sales data to refine audience segmentation.
• Attracting Small Sellers: Walmart’s move to a self-serve ad model makes it more accessible for third-party sellers who may not have large advertising budgets.

Walmart Connect, the company’s ad division, reported $4.4 billion in revenue in 2024, a 27% year-over-year increase. This presents a new revenue stream for Walmart and a competitive alternative for brands looking beyond Amazon’s ad ecosystem.

3. Winning Over Affluent Shoppers While Maintaining Affordability

Walmart is making some changes to its brand perception to attract wealthier consumers while maintaining its value-driven approach. CEO Doug McMillon emphasized that Walmart is studying top competitors—especially Amazon—and adapting successful strategies. Key initiatives include:

• Expanding Product Assortment: Walmart is introducing new fashion lines and upscale products, including the “Wirkin” luxury-inspired purse, to compete with fast-fashion brands like Temu.
• Hiring Tech Talent: Walmart is bringing in expertise from Amazon and Google to strengthen its e-commerce and digital marketplace.
• Navigating Political and Economic Changes: McMillon has engaged in discussions with former President Donald Trump to ensure Walmart remains a key economic player amid potential tariff increases and inflation concerns.

This evolving strategy presents opportunities for premium brands to tap into Walmart’s growing ecommerce presence, but it also means more competition for sellers traditionally focused on budget-conscious consumers.

Other Amazon Seller Updates This Week 

1. Amazon and TradeBridge Launch Term Financing for Sellers

A new financing option, Term Financing, provides eligible UK sellers with access to up to £5 million, based on their Amazon business revenue and performance, helping sellers scale their operations.

2. Amazon Expands Electric Delivery Fleet

Amazon has deployed 20,000 electric delivery vehicles across 40 major US cities, progressing toward its goal of 100,000 EVs by 2030 as part of its Climate Pledge to reach net-zero emissions by 2040.

3. AWS Adds Anthropic’s Most Advanced AI Model

Amazon Web Services now offers Claude 3.7 Sonnet in Amazon Bedrock. This "hybrid reasoning" AI model allows users to balance speed, cost, and depth of responses for more efficient AI-powered decision-making.

4. Amazon Debuts Its First Quantum Computing Chip

Amazon introduced Ocelot, its first quantum computing chip, designed to advance bosonic error correction—an important step toward making quantum computing practical for complex problem-solving.