The Machine Ate the Storefront, PayPal Mapped the Collapse

Speaker A: Mark Grether, welcome to Future Commerce.

Speaker B: Thanks so much for having me.

Speaker A: Thank you for opening up this beautiful space to us. We're glad to have you here. Um, on the show you've said the merchant homepage is disappearing. What do you mean by that?

Speaker B: You know, if you look into consumer behavior, we see that consumers are no longer starting the customer journey on search and then go to a merchant website to make a transaction. Instead what they're doing is to actually start the search on LLMs. ChatGPT Gemini. Right. Claude Perplexity. Um, and then eventually they may actually then make the purchase on merchant websites. But over time what we're seeing is that there will be more and more, uh, the situation where the consumer is actually making the purchase on the LLMs directly so there's no need for them actually right. To go to the merchant website anymore.

Speaker A: How far are we away from that? This seems like a far future prospect.

Speaker B: I'm not talking about that now an agent is making a decision on my behalf. It's more where is actually discovery happening and where is actually discovering and purchase actually colliding into a very seamless process? And that I think is happening more and more within the LLMs. Um, are we fully there yet? Definitely not. Right. Because the lms, um, while doing a fantastic job in helping with discovery, they do not yet have the fully fledged out kind of operations to actually ship products to consumers.

Speaker A: Future Commerce data, when we are polling consumers, as of December January 2026 we found 77, 76% of consumers prefer to have control. They don't want necessarily uh, to finish the shopping journey in the LLM. When we ask them, they like to click through to the brand website that's today. Uh, you're speaking about a uh, current behavior that you're believing is latent, maybe already exists now, but it would have to be pervasive for the merchant homepage to be deprioritized over time.

Speaker B: But look what happened uh, with publishers, right? Because what happens with publishers, I think

Speaker A: about it all the time because I am one.

Speaker B: What happens with a lot of publishers is in the past a consumer was looking for some content, again was searching for it and then eventually they went to the publisher site to really dive deep into the content and consume content. What is now happening is they're getting actually the content results within lms, um, and hence there's no longer the need to go actually to publish your websites. And so my prediction is actually something very similar might actually also happen to merchants. Again it might take a bit longer because the infrastructure needs to be built, um, behind the scenes. But what may happen is that the storefront moves to the LLMs. The physical delivery of goods might still be carried out by the merchants, but the storefront itself is no longer sitting on the merchant website, but it's actually moving to the LLMs.

Speaker A: And uh, a lot of folks in the uh, content ecosystem, this is the zero click phenomenon, right? We're getting the information that we need, we don't have to click through anymore. Much like uh, uh, Uber, we used to go to transit, Transit comes to us. Now you have some experience there. Um, and that uh, you've been at PayPal for a couple years here building the ads business. Um, you've built ads businesses I think for most of your career, right?

Speaker B: Yeah.

Speaker A: Um, how does the ads business that you've been building here at PayPal differ from your experience in the past and what has changed here in the last couple of years that's informing your current journey?

Speaker B: The big difference compared to building the advertising business at Uber, right, or building the advertising business out of Amazon is just the breadth of our data. Which means we are sitting um, across 30 million merchants, 400 million consumers, right? So we are seeing what consumers do not just from a single merchant perspective, no matter how large the merchant is, but we're seeing it across all the merchants. Right? And that gives us this kind of much more ah, horizontal view of consumer behavior. Um, and I think that is the key difference. The other key difference is we're not just seeing behavior, we're actually seeing the real transactions. We know what actually people are purchasing, right? Not whether they search for something, whether they proud for something. We actually see what they are actually buying. And that is again the other big difference compared to where I was in the past. And in addition to that, it's not just that we have PayPal, we also have as you know, Vemno. Right, of course. Which means we know what people are sharing with each other, right? How many, you can't imagine how many kind of um, Uber uh, emojis fly between people, how many pizza logos m fly between people people share with uh, each other, um, Uber rides or pizzas. Um, and we also have that as part of what we call a transaction graph. Um, and last but not least, we have, as I mentioned earlier, the brows behavior from honey. All of that actually comes together TO uh, the PayPal transaction graph. And having access to that richness of uh, data, uh, is really a really fantastic starting point to build uh, an advertising business.

Speaker C: On top of that, the ElevenLabs Soho pop up was an incredible success. It closed its doors. But I keep coming back in my mind to how the whole thing actually worked. Because when I walked in and I visited, I put on my headphones, I started talking to a voice agent. And it was very close to how I would talk to an actual retail sales associate. Just like being in a store, I might not have had the product name. I didn't have a SKU in mind. I didn't know what I wanted. But I had a loose idea of what I usually wear, what I already own in my closet, and what I tend to reach for, and what kind of a piece I might actually use. Living in South Florida, I think that's how most shopping starts for most people. You show up with some intent, but you don't always know exactly what you want or how to express it. And the agent asked me a few questions like what are you shopping for? What do you already have and what are you usually drawn to? And then it did what the best of retail associates do. It connected the thing in my head to something that was actually available on the show floor. And a few minutes later I was trying on a short sleeve crew neck that I would not have found on my own. And it all started because I was talking to an agent. And that's the moment that matters. Because for every brand, there are shoppers that are arriving every day with intent and they're ready to buy. But they don't know your taxonomy, they don't know which collection page to visit, they don't know which filter to use, they don't know whether the answer is buried in a PDP or a size guide or a support article. There is somewhere that your merchandising logic is breaking down that only your team understands and they just know what they are trying to solve.

Speaker B: And.

Speaker C: And 11 Labs gives brands a way to meet that intent via conversation. Klarna is using Elevenlabs infrastructure to support 35 million customers. Revolut deployed it and cut resolution times by over 8x and it's live right now at store elevenlabs IO where elevenlabs own e commerce store is up for you to talk to a voice agent for yourself. The Soho pop up might be closed, but the experience is open. Go try it and bring voice agents to your brand. Start at elevenlabs IO Future Commerce. The future voice agents are here for your brand@11labsio futurecommerce.

Speaker A: You said transaction graph and I'm just inferring here but uh, I think about what I buy, uh, because we say at future commerce we have this thesis. Not many editorial outlets have a thesis. We have a thesis that commerce is culture. The way that we experience culture is through what we buy. And to some degree I believe who I am is experience through what I buy because it's a function of I experience my life through what I buy. It's part of my aspiration of who I want to become. And so what I hear you saying is that you have insight into people's like the culture of people and who they are and how we're actually building the future of society. Um, say more about the transaction graph and how that plays into your outlook on building that uh, future of the ads business.

Speaker B: I think you make a really good point in this. Kind of who I am is kind of what I'm buying. Right. In a way. Uh, and the difference with PayPal is what the benefit of PayPal is that we have again, this holistic view on what you're actually buying or so many different categories. Right. Whether it's in travel, whether it's in fashion, whether it's in groceries, whatever it may be. We all know that. And so we have again this richness of understanding who you are as an individual. Right. And not only can uh, we then, uh, um, explain what you purchased in the past, but we also can make good inferences what you're going to buy in the future. Right, right. Uh, which is what matters most to the advertisers. Now to your question, what are we using the data for? Right. Uh, and there are um, two main kind of use cases. The first one is from a merchant perspective, we're helping them to reach the right audiences based on the transaction data. That's the obvious one. Right. But what's also important for the merchant is we're also helping them with generating insights about their consumers and potential prospects, but we're also helping them to actually build measure the success of campaigns. Right. If I'm selling, we both have here sneakers, right. Um, if I'm someone who's selling sneakers, I would like to understand where are my consumers on which merchant websites are they actually selling? Buying my sneakers. And if I spend money into an advertising campaign with retailer number one, what is my return on that spent? And more importantly, what is the return of the spend relative to me spending my advertising dollars with retailer B. Right. And so we are the ones who basically have this kind of cross retailer perspective because again we see everything, um, and so from that perspective, being able to target, providing insights and then providing kind of closed loop attribution is the key differentiator uh, that we can provide to them.

Speaker A: I think this is a really relevant time and topic because there's been a lot of questioning about you know, we spent a lot of money, a lot of time in retail, uh, media and I think a lot of folks are starting to question uh, what has been the efficacy and the return for all of that investment and do the right networks actually exist right now that actually target the audiences and do they show up? Is my brand showing up at the right time, uh, during that buyer journey? Um, it also reminds me I saw a recent Google stat and of course uh, everybody likes to talk their own book. But um, said 89% of uh, social media attribution purchases um, that are based on last click data actually began their journey either on YouTube or on Google search. And we're not seeing, because we don't do a lot of multi click attribution these days, we're not actually seeing a lot of the full of the buyer journey. And so I'm really interested into what you're talking about because of the way that our purchase behavior informs future predictive behavior. Um, where does leaving the web for a moment, uh, talk to me a little bit about CTV and some of the other areas where buyer decisions are being formed and tastes are being formed.

Speaker B: M. You made a great point which is uh, as an advertiser I spent money on ctv. Then the question is, does it actually drive transactions? That's a big question at the end. As a cmo, you need to justify the spend in front of your cfo. You have to have the data. Um, what's happening today is in the best case scenario you have a CTV provider who is connected to a retail outlet and you can connect the dots between both. But how often is it that you might see actually a campaign on CTV and you shop somewhere else, right? Uh, which people can't connect. People can't connect, they can't connect the dots. Unless um, um now that's where PayPal and our identity comes into play, right? Unless you have someone like us who actually is integrated on all the merchant websites and is actually therefore seeing all the transactions that happen across all the merchants and can tie back to the CTV campaign because we have this unified identity, right? So one of the key things which I think is a little bit kind of um, underestimated in terms of importance is the fact that we have across our 400 million consumers our own identity. Now the trick about our identity is it was built from a um, finance perspective, meaning I need to Understand that you are you and not your twin brother if I receive money from you or if I want to pay you. Right. Meaning our identity, uh, has to clear a much higher bar compared to probabilistic ideas or cookies. And hence we are in a position to stitch together data much better than anyone else. And hence we can help with, to your earlier point with attribution and measurement. Again, it's not based on probabilistic, um, ideas on cookies. It's based on the real ID that is used to actually make transactions with your PayPal account.

Speaker A: Sure. Those are irrespective of payment method because, uh, you have such a surface area across the web because of the payments profile.

Speaker B: Exactly.

Speaker A: I think that that's so interesting because, uh, the uh, CMO and CFO relationship notwithstanding, uh, the digital identity resolution question is one that keeps coming up over and over again, especially as you see new products come up in market, um, depending on who's taking over the subway this week. Um, but there's these questions around how does the identity resolution, how is that being accomplished? What is it being used for? And is it able to be used in my business in all regions? And I think that that's another question is how can merchants uh, expect to be able to use this in campaigns, uh, in North America versus Europe? Is this a global solution? Give me a little bit of a sense of how that plays out.

Speaker B: Yeah, sure. So, um, we started about two years ago, right? Um, and so right now we are live in the US in UK and Germany, right. Which obviously from advertising perspective are the biggest and most important markets. Uh, and so the products are life in all these markets. So we have the PayPal ID, right. We have the targeting and the measurement. We have our own supply, we have CTV supply, which you spoke about. Right. We have another thing which we haven't spoken about yet. Coming back to your earlier point about uh, zero click or one click, which is we have a product called Store for Nats. And the idea of storefront ads is that the creative itself becomes the shop. Meaning you actually are now getting exposed to the sneakers. Right. And we know that you're into buying sneakers and if one click you can actually make the purchase. We already know who you are, we know your bank account, we know your address. Everything is kind of uh, pre populated. So from a consumer perspective it becomes super easy to basically finish a transaction. And from a merchant perspective it means that while we earlier spoke about consumers over time may not go to your website anymore because, um, the shopping interface, um, has moved into LLMs it means that you can actually turn any interaction that you have with consumer, whether it's on your own site, whether it's in lms, whether it's on the open web, into a shoppable experience. I think that is really, really important because merchants will be challenged not getting enough reach in the future if everything eventually gets more and more concentrated, uh, to LLMs. So they need to basically be wherever the consumer is and turn every opportunity into a purchasable kind of experience for the consumers to really make sure that they're kind of maximizing transaction opportunities.

Speaker A: This shoppable ads, I think it definitely brings back the performance versus brand conversation. It's sort of the never ending loop. Um, I think that comes up over and over again too. And now we're in the CTV conversation around performance versus brand and that's, you know, we're having the same conversation but in a new channel. Um, and I think when we are also needing to have a conversation around how trends, uh, and creators, uh, start to inform how we're creating new creative in those channels, because I start to see how we're shifting creative into performance in those channels too. Um, because I think authenticity and storytelling are part of those channels because we have a little bit longer of a format with a little more targeted format in CTV. So how do you keep uh, at uh, PayPal, how are you helping to keep the insights and measurement piece intact as that creative plane expands in the authenticity and storytelling? Uh, and how do you help merchants?

Speaker B: M. Let's talk about uh, creators for a moment, right? If you think about creators at the end explicitly, implicitly, they're almost running kind of two businesses at the same time. The first one is they are creating a platform that attracts consumers, um, by having engaging content on the platform. But what they implicitly do is they are generating data about the consumers. That's at the end what it is, right? If it's like Google is all about, you search something, which means you give data to Google. If you take an Uber ride, you give data to Uber. If you make a transaction with PayPal, you give data to PayPal. If you are uh, engaging with a creator, you give the creator data about yourself, about your interests and so on, so forth, right? The question now is how actually cost efficient can you create a content and the data that is produced?

Speaker C: Hey, have you ever tried explaining just what it is that you do in retail to someone else that's outside of the industry and you just watch their eyes glaze over, Am I right? You start talking about demand forecasting or why products are out of stock one week and overstock the next. And, uh, you can feel like you've already lost them and I don't want to lose you now. And that's why you need to tune into your next favorite series. It's called the how the World Works and it's such a good watch. It's a six part documentary from ASCM that's the association for Supply Chain Management. And it helps explain some of the most complex parts of our industry. And it dives into supply chain and the supply chain side of retail that makes the world work. It covers topics like how grocery stores stay stocked with every type of producer no matter what the season is. Or, uh, my favorite actually, how one supplier in the world makes every NFL football. I had no idea. But through stories of real people and interviews with industry experts, the chain connects all of the dots behind how products actually get made, moved and sold. And it, uh, even highlights some of the more complex issues impacting the retail world, like the risks of relying on single suppliers or how fast fashion keeps up with the pace of current trend cycles. So if you're looking for your next weekend binge, or you just want to get your friends clued in on what

Speaker A: it is you do for a living,

Speaker C: check out the chain on Amazon prime or head to ascm.org to learn more. It's called the how the World Works and it's fantastic. You should check it out. Set some time aside, go to the chain on Amazon prime or ASCM.org, thanks so much to the association of Supply Chain Management for supporting this episode of Future Commerce.

Speaker B: That's kind of at the end, what a creator needs to think about. Right. How can I create as much data as possible in a very efficient form by being a fantastic creator. And then the second business, which the creator isn't running again, implicitly, uh, or explicitly, is how do I actually monetize the data that typically happens with ads? If I now can show that the ads actually perform, I actually get paid more money for my ads. So the creator has now two things to do. He needs to create content that generates data, and he is then running an advertising business that ideally is highly performant to monetize the data that he's creating. Yeah, and what we now bring to the table is we helping in stitching those two worlds together with the payments, ID, the measurement, enriching the data with the transaction graph. Right. So we're helping the creators to basically make this flywheel spin faster.

Speaker A: There's a, uh, you're going to can give me a little bit about how your, uh, showing up there in your activation. Are you speaking?

Speaker B: Yeah, indeed. So can for us is, um, a couple of things. It is mainly, um, speaking to both brands and agencies, uh, and having speaking engagement. Right. To really make sure that more people, um, understand how PayPal ads can help with their own business. Businesses. Right. That's kind of the main purpose. And um, that's why we're spending a lot of time there. That's why we have a small group over there to really kind of get in front of advertisers and agencies. Um, we didn't talk about like Today about the PayPal ads product storefront ads will be a big topic. Curated ads. CTV will be a big topic. Measurement will be a big topic. Identity will become a big topic. Right. And then of course we can also talk to, um, some our partners and to see what can we do together, uh, as we go into 2027.

Speaker A: Uh, I'm really big on partner ecosystems. I spent 22 years in E commerce and uh, retail. And I think that the partner ecosystems are often overlooked as how you find your way to success. Right. Agency partners, technology, uh, partners. Uh, any suggestions or any advice on how you guys show up in the market?

Speaker B: Yeah, I mean for us it is kind of a. To your point, we are heavily leaning into partners because you don't want to kind of reinvent the wheel for the 10th time. Right. If someone has done that and perfected it. Uh, and so if you look down at the partners that we're looking into is basically three dimensions. The first one is who can help us on the demand side. Right. What are the channel? Partners, agencies. An example, helping us with bringing in demand. Who can help us on the supply side? That's why we talk to publishers, that's why we talk to, um, SSPs and others helping us on the supply side. Uh, and then in the middle, who can help us in stitching it together from a tech perspective, from a data, from a measurement perspective, it's demand on the one hand, supply on the other hand. And who is helping us to bring, um, those two dimensions together?

Speaker A: Uh, I'm just fascinated that you've accomplished so much in just a couple short years. Uh, I can't wait to see you at Cannes. We'll be there. I think we're going to be doing a little bit of content with you guys and uh, I hope to catch you maybe on stage.

Speaker B: Yeah, of course.

Speaker C: Thank you.

Speaker A: Mark Grether, thank you for joining us at Future Commerce and uh, congrats on all your success so far.

Speaker B: Thanks so much for having me.

Speaker C: Thanks.

Speaker B: Thank you.