The Commerce Collective Podcast

Episode: This Month Above the Fold w/ Patrick Miller – Amazon's “agents versus AWS” strategy, Walmart's AI and assortment bets, & Amazon's grocery pivot
Host: Emma Erwin (Flywheel Digital)
Guest: Patrick Miller (Co-founder, Flywheel Digital)
Date: February 2, 2026

Episode Overview

In this insightful episode, host Emma Erwin and e-commerce strategist Patrick Miller break down the most influential developments shaping the retail ecosystem in early 2026. The topics center on Amazon’s renewed AI strategy in the context of AWS, Walmart’s evolving approach to AI and assortment, and Amazon’s significant pivot in its grocery business. The conversation is packed with tactical advice for brands and nuanced takes on where the giants of retail are headed.

Key Discussion Points & Insights

1. Amazon’s AI Priorities: AWS Over Agents

(00:10–07:25)

• Jassy’s Strategic Focus:

  • Andy Jassy’s recent interview signals Amazon’s priority: reignite AWS growth, rather than leading the charge on AI-powered retail “agents.”
  • “He wants to drive the AWS growth. That’s the laggard in the stock right now. And so it’s less about the agents and commerce and more about driving growth on AWS.” — Patrick Miller, 01:30
  • Amazon sees partnerships (e.g., OpenAI) as a lever for AWS, not primarily for direct e-commerce disruption.

• Complexity of “Agents” in Retail:

  • Integrating LLMs into shopping is “harder than it looks.” The concept of “hands off” AI agents is compelling but not yet practical.
  • "A year ago it was going to be the year of the agent...That hasn't happened because it's hard." — Patrick Miller, 01:58

• The Data Play:

  • Amazon is clamping down on data scraping, guarding shopper and marketplace data as a competitive moat.
  • The “frenemy” dance with OpenAI, Google, and Microsoft means Amazon wants to direct commerce queries to its own properties.
  • “Amazon and Walmart’s biggest regret is that a single search happens anywhere other than their sites.” — Patrick Miller, 03:10

• AWS’s Role:

  • AWS is now a mature, highly profitable segment, but growth has moderated as Azure and GCP catch up.
  • Integration of LLMs is viewed as a means to re-accelerate AWS (through compute, not just storage).
  • "If they end up sort of doing some of the compute, hosting some of these LLMs, that's a way to drive growth." — Patrick Miller, 05:17

• Brand Takeaway:

  • Focus on the fundamentals: catalog quality and data cleanliness remain core for success as LLM-generated traffic is filtered through existing engines.
  • "Just get your catalog right…there's all these like magic geo companies...at the end of the day…having a clean catalog…that’s the biggest thing you can do." — Patrick Miller, 06:38

2. Walmart’s AI, Retail Media, and Assortment Bets

(07:25–14:31)

• Walmart Connect and Retail Media:

  • Patrick reflects on presenting at Walmart Connect’s annual conference—an impressive, rapidly scaling organization.
  • The key: Walmart’s durable advantages remain “price, selection, convenience,” but now supercharged by partnerships (such as the Vizio acquisition and heavy video integration).
  • "The durable advantages that Walmart has—price, selection, convenience—is very true to how much they're leaning into video and the Vizio acquisition, which is absolutely the right strategy." — Patrick Miller, 08:32

• Walmart’s AI Partnerships:

  • Walmart is embracing a “traffic-first” strategy, playing nice with AI partners (e.g., Google Gemini, OpenAI) to capture more product-related queries wherever they originate.
  • At the same time, Walmart wants to own the customer touchpoint whenever possible, holding back certain advantages (like full customer data integration) for its own platforms.
  • “It's a game of traffic, first and foremost. So if I'm Walmart, I want to take all the traffic I can get.” — Patrick Miller, 10:02
  • The Walmart App and “Sparky” (their AI assistant) are more than just chatbots; AI is being deeply integrated across many surfaces and touchpoints.

• Broader AI Adoption:

  • AI-powered features are becoming embedded across shopping, not just via chatbots.
  • "People are too obsessed with the stupid chatbot...it's also all the other surfaces across these apps that are leveraging LLMs." — Patrick Miller, 11:15

• Assortment as a Differentiator:

  • Walmart’s flywheel: nurturing insurgent brands online and then promoting them to brick-and-mortar—a strong attraction for emerging brands, especially with younger shoppers.
  • “Brands that start on Walmart.com and are then being picked up in the stores—that’s the killer app.” — Patrick Miller, 13:13
  • Walmart’s “quiet execution” gets results, but they may under-publicize these wins.

3. Amazon’s Grocery Pivot: Shutting Go/Fresh, Doubling Down on Delivery

(14:31–19:40)

• Store Format Shutdowns:

  • Amazon is eliminating its Go and Fresh store formats, instead expanding Whole Foods and betting on online grocery innovation.
  • Patrick isn’t surprised: Fresh “just sucks as a grocery store" (15:15), and Go—though technologically impressive—could not scale economically.

• Grocery Delivery Innovation:

  • Amazon’s new model differentiates between urgent, high-margin same-day delivery (e.g., cough syrup) and lower-urgency, bulk “asynchronous basket” orders (which are incentivized with rewards like credit card cash-back).
  • "They're breaking into the grocery category without it being dilutive to the overall retail business, which is absolutely stunning." — Patrick Miller, 16:23

• Competitive Impact:

  • Amazon’s growing grocery convenience (bundling household and grocery items in one delivery) should alarm incumbent grocers.
  • Regional, curated grocers (like Wegmans and Trader Joe’s) will thrive on experience; mainstream, “mushy middle” chains are most at risk.

• Assortment Challenges:

  • Both Emma and Patrick note Amazon’s grocery selection can feel random and less curated, a point of potential friction for shoppers.
  • "Have you ever visited the marketplace? Like, it’s bizarre and random." — Patrick Miller, 17:41

• Brand Strategy for Amazon Grocery:

  • CPG brands should carefully weigh profitability (trade terms) of Amazon Grocery versus other channels.
  • The window for easy entry to Amazon Fresh is closing: brands in late-adoption grocery categories—especially fresh and frozen—should “double down now.”
  • "If I'm those companies, I would double down in those categories because it's never going to be cheaper than it was yesterday." — Patrick Miller, 19:18

Notable Quotes & Memorable Moments

• “AWS...principally a compute growth, not a storage growth.” – Patrick Miller, 05:51
• “The more that...brands that start on Walmart.com and are then being picked up in the stores...that’s the killer app.” – Patrick Miller, 13:13
• “If they [Amazon] can break into the grocery category without it being dilutive...that’s absolutely stunning. And if I’m another retailer, I should be scared to death.” – Patrick Miller, 16:35
• “It’s the mushy middle, you know, that is going to get hollowed out.” – Patrick Miller, 18:18
• “Just get your catalog right and...having a clean catalog...that’s the biggest thing you can do. As boring as that is, it is the right approach.” – Patrick Miller, 06:38

Timestamps for Key Segments

• 00:10–07:25 — Amazon: Jassy’s AI strategy, AWS, and agent limitations
• 07:25–14:31 — Walmart: AI partnerships, retail media, assortment innovations
• 14:31–19:40 — Amazon: Shutting physical stores, grocery delivery, impact for brands

Summary Takeaways

• Amazon’s AI bet is on AWS’s infrastructure, not “agents” replacing the shopping process soon.
• Walmart is blending aggressive AI partnership with online-to-store brand incubation while holding close the shopper experience.
• Amazon’s exit from Go and Fresh stores is accelerating the push to profitable, innovative grocery delivery—and threatening undifferentiated grocers.
• For brands: Double down on data hygiene and consider rapid expansion into Amazon’s growing grocery ecosystem, especially in categories yet to see full e-commerce penetration.

This lively, expert episode is a must-listen for anyone invested in e-commerce, retail tech, and the maneuvers of Amazon and Walmart in the age of AI-powered commerce.