Target's $15M+ Bet on ChatGPT-Commerce
Two days ago the "red circle store" (as my 3 year old calls it), Target, announced a partnership with OpenAI to integrate their shopping experience directly into ChatGPT, launching next week for Thanksgiving.
Coincidentally, the announcement came the same day they reported their Q3 2025 earnings compared to last year:
- Same-store sales: -2.7%
- Overall sales : -1.5%
- Net income: -19%
- Store traffic: On the Decline.
Interesting.
The partnership has two components:
- Consumer-facing for sales: A ChatGPT app allowing 800 million weekly ChatGPT users to browse products, build multi-item carts, shop for fresh food, and checkout using Drive Up, Order Pickup, or shipping.
- Internal operations for employees: ChatGPT Enterprise deployed to 18,000 Target headquarters employees for supply chain forecasting, store process optimization, and customer service enhancement.
How much will this cost them?
At industry-standard ChatGPT Enterprise pricing of $60-100 per user/month, Target is investing approximately $13-22 million annually just for internal AI tools, before counting transaction fees from consumer purchases.
Walmart Made A Similar Deal Last Month.
Target isn't alone.
Walmart announced a similar OpenAI partnership on October 14, 2025, though slightly different:
- Walmart customers will shop through ChatGPT using "Instant Checkout"
- Initially supporting single-item purchases (multi-item carts "coming soon")
- ChatGPT Enterprise rolled out to Walmart teams company-wide
- First retail partner to embrace OpenAI Certifications for employee AI training
- Powered by Walmart's AI assistant "Sparky"
The key difference: Target's app is supposedly going live this week, giving them a PR advantage during the critical holiday shopping season. Walmart announced first but hasn't launched.
Like Target, Walmart's announcement likely served two purposes: signal "innovation leadership" while distracting from competitive pressures as Amazon's "Buy for Me" and GenAI "Rufus" features have started to gain traction.
The Current State of ChatGPT Commerce
Despite the hype, few merchants have working integrations. This is very new.
Currently Operational (as of November 21, 2025):
- Etsy Sellers (launched September 29, 2025) - All U.S. Etsy sellers automatically enabled
- Select Shopify merchants - Glossier, SKIMS, Spanx, Vuori (partial rollout in progress)
Big Brands Announced, But Not Yet Live:
- Walmart - Announced Oct 14, "coming soon" (no date)
- Target - Announced Nov 19, launches "week of Nov 25"
- Salesforce Agentforce Commerce - Announced Oct 2025 (includes L'Oréal, Pandora, Saks)
- PayPal's global merchant network - Announced Oct 28, 2025 (no date)
How ChatGPT's Recommendations Work:
1: Find Relevant Products
Let's say you tell ChatGPT "I need a new coffee maker". It'll search for "top coffee makers 2025" using web search, read the top ranking articles and reviews, and form suggestions based on relevance. It creates 'product cards' for each relevant product. For most results (currently), you'll see a "visit" button (on the right).
2: The Buy Button (For Approved Merchants)
If a retailer/seller has a merchant account, and has enabled "Instant Checkout" (such as in Walmart's announcement), you'll see a "Buy" button instead.
After ChatGPT builds a list of products to show, it references approved merchants and returns a "Buy" button instead of a "Visit" button. Curious about potential conflicts of interest in how ChatGPT chooses what products to show, and in what order, I visited their documentation:
"ChatGPT considers factors like availability, price, quality, whether a merchant is the primary seller, and whether Instant Checkout is enabled, to optimize the user experience."
I Interpret this as "Instant checkout items don't get preferentially chosen to show in results, but they do get preferentially ranked." Too soon to tell. What are your thoughts?
3: Checkout in Chat
Click "Buy" and a checkout window appears inside ChatGPT. For paid ChatGPT subscribers (Plus/Pro), shipping and payment info auto-fills. You confirm the order, ChatGPT sends the details to the merchant via the Agentic Commerce Protocol, the merchant processes payment through their existing system, and you receive confirmation... all without leaving the conversation.
The Technical Infrastructure Powering This:
Behind the scenes:
- Merchant provides a product feed to OpenAI (product names, descriptions, prices, availability)
- Merchant builds an integration using ACP (REST API endpoints, webhooks, payment processing)
- OpenAI certifies the integration passes "conformance checks"
- Products become searchable in ChatGPT with optional Instant Checkout
Security:
- Payment information is processed by Stripe or the merchant's existing payment provider
- OpenAI doesn't store complete card numbers, only tokenized references
- Merchants remain "merchant of record" (handle orders, fulfillment, returns, customer service)
- Data encrypted at rest (AES 256) and in transit (TLS 1.2+)
Agentic Commerce Protocol (ACP):
- An Open-source standard co-developed by OpenAI and Stripe
- Creates encrypted tokens for payment data
- Works across different payment processors (though easiest with Stripe)
- Merchants using Stripe can enable it "in as little as one line of code"
Source: OpenAI Developers, Stripe Press Release
What Do You Think This Means For Brick-And-Mortar Retail?
1. The skeptical view: When retailers are thriving, they invest in stores, staff, and inventory. When they're struggling, they chase technology silver bullets. Target's $15M+ annual AI investment while cutting costs elsewhere signals "Hail Mary" more than a "strategic decision."
2. The charitable view: Every major retail innovation looked crazy at first. Amazon lost money for years. Nobody wanted to type credit cards into websites in 1995. Maybe LLM-commerce is genuinely transformative, and early movers will win.
3. The 50/50 view: LLM-commerce will likely follow the path of all previous retail technologies that promised to be revolutionary:
- Massive hype
- Slow, gradual adoption by early adopters
- Modest incremental impact on consumer behavior
- Integration into existing shopping journeys rather than replacement
- Net result: One more channel among many, not a paradigm shift
Which view do you align with?
Send your thoughts to andy@growthfactor.ai, especially if you'd like to see more pointed posts on AI & retail.