How AWS & Amazon Ads Are Moving Retail Forward in 2025 | 5IM

Summary

Omni Talk Retail Podcast Summary

Episode: How AWS & Amazon Ads Are Moving Retail Forward in 2025 | 5IM
Release Date: January 27, 2025
Hosted by: Chris Walton and Anne Mezzenga
Guest: Justin Hahnemann, Head of Worldwide Retail Restaurants and Consumer Goods Business Development at AWS

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Introduction

In this episode of Omni Talk Retail, hosts Chris Walton and Anne Mezzenga engage in a comprehensive discussion with Justin Hahnemann from AWS. The conversation delves into the pivotal trends shaping the retail landscape in 2025, the innovative strides of Amazon Ads in retail media, and the evolving dynamics between physical stores and digital commerce.

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Key Trends for 2025

Justin Hahnemann outlines three major trends that are steering the retail industry towards 2025:

1. Artificial Intelligence (AI):

   • Generative AI Explosion: AI remains a dominant topic, particularly with the advent of generative AI. Justin highlights AWS's launch of the Nova models, a new suite of foundation models encompassing text, image, and video generation capabilities.
   • Quote: “AI has been around since the '50s, but a lot of new use cases around generative AI are emerging” ([00:36]).

2. Retail Ad Services:

   • Amazon Ads Expansion: AWS recently introduced Retail Ad Services, leveraging Amazon Advertising's robust engine to empower retailers to execute ads on their own platforms. This service enhances retailers' ability to drive traffic and sales independently.
   • Quote: “We just launched a whole new set of models at AWS called Nova” ([00:36]), and later, “Amazon Advertising is a very significant business underneath Amazon” ([02:47]).

3. Unified Commerce:

   • Seamless Integration: The concept of unified commerce emphasizes the integration of in-store and digital experiences, fostering a cohesive environment for consumers to interact with retailers seamlessly.
   • Quote: “Unified commerce is still bringing together the in-store experience with the digital experience” ([00:36]).

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Business Value and Data in AI

The discussion pivots to how retailers can harness AI tools to drive business value:

• Data as the Foundation:

  • Customer and Operational Data: Effective use of generative AI hinges on access to comprehensive customer and operational data. AWS observes a significant push towards cloud migration and investment in data cleaning to support AI initiatives.
  • Quote: “A big focus of our customers is on the customer data, the operational data, the connection of operations in the stores data” ([01:59]).

• Cloud Acceleration:

  • Flexible Data Platforms: Retailers are accelerating their move to cloud-based, flexible data platforms to facilitate advanced modeling and AI applications like the Nova models.
  • Quote: “Acceleration investment in cleaning up data is the foundation to allowing you to take advantage of things like the Nova models” ([01:59]).

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Amazon Ads and Retail Media Networks

Justin elaborates on the newly launched Retail Ad Services and its implications:

• Retail Ad Services Launch:

  • Empowering Retailers: This service allows retailers to utilize Amazon Advertising's sophisticated ad execution capabilities on their own websites, enabling better traffic and sales management without relying on Amazon.com directly.
  • Quote: “Retailers can use [Retail Ad Services] to drive ads on their own site” ([02:47]).

• Future of Retail Media Networks:

  • Revenue Potential: Justin discusses the vertical chart of potential retail media revenue based on ad spend, emphasizing the significant interest from retailers in leveraging these new tools to maximize their advertising investments.
  • Quote: “We had a lot of interest actually this week from retailers that are looking at ways to better leverage retail media spend” ([02:47]).

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Implications for End Consumers

The conversation shifts to the consumer perspective:

• Enhanced Personalization:

  • Data-Driven Experiences: Increased investment in data and AI will lead to unprecedented levels of personalization, delivering tailored experiences that better serve consumer preferences.
  • Quote: “You're going to see a level of personalization that you have not experienced elsewhere” ([04:01]).

• Role of AWS:

  • Facilitating Connections: AWS plays a crucial role in enabling retailers and brands to connect with consumers through advanced tools and infrastructure, enhancing the overall shopping experience.
  • Quote: “We really have an important role to play in the end customer experience” ([04:01]).

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Integration of Physical and Digital Commerce

Justin addresses the challenges and solutions in harmonizing physical stores with digital platforms:

• Legacy vs. Digital-Native Retailers:

  • Legacy Retailers: Many established retailers struggle to integrate their separate physical and digital infrastructures. AWS supports these retailers through composable commerce, enabling seamless multi-channel operations.
  • Digital-Native Retailers: These retailers, having launched in the cloud, are more adept at adopting new technologies and enhancing their customer experiences rapidly.
  • Quote: “The challenge for most retailers is they built their physical store kind of infrastructure, technology platform separate from E Commerce” ([04:53]).

• Employee Experience:

  • In-Store Insights: Enhancing the in-store experience extends to employees, providing them with better insights into customer behavior and inventory management, thereby improving service quality.
  • Quote: “How do you enable the staff member to have better insights into a customer or better insights into actual inventory” ([04:53]).

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Conclusion

Justin Hahnemann encapsulates the transformative journey of the retail industry powered by AI, advanced advertising services, and the seamless integration of physical and digital commerce. With AWS at the forefront, retailers are equipped to deliver personalized, efficient, and unified shopping experiences that cater to the evolving needs of consumers in 2025.

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Notable Quotes:

• “AI has been around since the '50s, but a lot of new use cases around generative AI are emerging” ([00:36]).
• “We just launched a whole new set of models at AWS called Nova” ([00:36]).
• “Retailers can use [Retail Ad Services] to drive ads on their own site” ([02:47]).
• “You're going to see a level of personalization that you have not experienced elsewhere” ([04:01]).
• “How do you enable the staff member to have better insights into a customer or better insights into actual inventory” ([04:53]).

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This episode provides valuable insights into the future of retail, highlighting the critical role of AI, the expanding capabilities of Amazon Ads, and the importance of integrating physical and digital retail strategies to meet consumer demands effectively.

Transcript

[A]

Foreigning us now for five insightful minutes is the head of worldwide retail restaurants and the consumer goods business development at aws, Justin Hahnemann. Justin is here to discuss the key trends he is seeing for 2025 and to give us his thoughts on Amazon Ads, recently launched retail ad services as well as many, many more topics. Justin, let's start off with this. What are the key topics and or trends you're hearing for 2025?

[B]

Three big areas I'd say that were top of mind this week. One, of course, AI. You can't not be talking AI now. And you know AI has been around since the 50s, but a lot of new, right? A lot of new use cases around generative AI. We just launched a whole new set of models at AWS called Nova. And these are a brand new set of foundation models. Everything from text to images to video and videos really coming to life this year. The second area, Retail Ad Services is a new service we launched literally in the last two weeks. It's taking the engine from Amazon Advertising and allowing retailers to use that to drive ads on their own site. Powerful leveraging the best practice of, of how you execute ads at Amazon Advertising and allowing retailers to use that. Really, really powerful. And then the third area, I'd say, you know, an old phrase but I think it's important, unified commerce. So still bringing together the in store experience with the digital experience and really creating an environment for consumers and shoppers to connect with a retailer or brand.

[C]

All the things you just talked about, especially with Genai, what do companies need to be doing with the tools you just talked about in order to generate business or see the business value and to generate more revenue in 2025 it.

[B]

Links back to data and so a big focus of our customers is on the customer data, the operational data, the connection of operations in the stores data. And in order to do some of the modeling and leveraging generative AI, you've got to have access to that. So we've really seen an acceleration, therefore in movement to cloud acceleration, move to more flexible data platforms and acceleration investment in cleaning up data. And that all is the foundation to allowing you to take advantage of things like the Nova models that we just launched.

[A]

All right, I want to go back to what we teased at the top because that was primarily why we were super excited to have you on today's program. Amazon Ads. Amazon Ads just launched retail ad service as it's called. Can you tell us more about that? And also I want to get your thoughts on retail media networks in 2025.

[B]

Yeah. So if you've been around retail for any number of years now, we've seen this kind of vertical chart of what retail media revenue could be for a retailer based on ad spend from like a brand or whatnot on those retailer sites or in store. Right. So for us, you know, Amazon advertising is a very significant business underneath Amazon and the engine that executes basically ads on a site, we've now taken and made that available to retailers so they can use that as a service to execute ads on their own site. And the orders that might be executed through ads are executed by that retailer. They are not executed through Amazon.com, so it's basically taking a service from the ad side, allowing retailers to leverage it to drive traffic, drive spend, to drive execution of orders on their own site. It's very powerful. It literally was just launched in the last two weeks. We had a lot of interest actually this week from retailers that are looking at ways to better leverage retail media spend.

[C]

Justin, let's get you out of here on this. Everything you've talked about makes a lot of sense for a retailer's investment, but what does it mean for the end consumer, knowing that that's always going to be top of mind for retailers and brands every year? And how do you kind of see that evolving in 2025 consumer?

[B]

You're going to see a level of personalization that you have not experienced elsewhere. I think that's one big thing you'll see across retailers is the investment in data. The investment in capabilities is going to provide a better experience, a more personalized experience, one where we know you to serve you. If you think about it from a retailer's perspective. And then our job with a retailer, for example, is to serve up the tools, the infrastructure, the kind of the how the how do we enable that experience for the customer retailer with that customer and for a brand? Remember, we, we work with the vast majority of brands in the world. We're helping them connect to customers, the retailer and their end consumer or shopper. So we really have an important role to play in the end customer experience to then backing it up from that into the retailer and then back to the brand.

[A]

Justin, how do you think about that across both the physical stores and the digital commerce environment?

[B]

Yeah, the challenge for most retailers is they built their physical store kind of infrastructure, technology platform separate from E Commerce. And so many of the legacy retailers are still struggling to, I'll say, integrate that so that they can operate across different channels. And that's something we're helping our customers with us, especially as it relates to what's called composable commerce. So that's a big focus for us with legacy retailers. For the I'd say the digital native retailers or those that might be newer, a lot of them started in cloud. They launched in cloud. So they're very interested in new tech, new capabilities. They can launch quickly to better that experience, whether it be on a mobile app, the website or in store. And then the third area that I just mentioned is the in store experience for the actual employee. Right. How do you enable the staff member to have better insights into a customer or better insights into actual inventory and whatnot? So there's a lot of focus on technology only for the customer, but for the staff member in store.

[A]

Great stuff. Justin, thanks for being here.

[C]

Thank you.