Coffee & Commerce #53: Gmail Goes Shoppable, Back-to-School Buzz & ChatGPT’s cut in shopping sales

Good afternoon,

Here’s the headlines for this week: 25 July 2025

ECOMMERCE

Google is experimenting with “Demand Gen” ads in Gmail’s Promotions tab, turning email into a mini e‑commerce storefront featuring product images, prices, ratings and promo labels like “Free shipping.”
These visually rich, shoppable ads allow users to browse a carousel of products without leaving Gmail, offering brands enhanced opportunities for engagement directly in users’ inboxes.
Initially tested with brands such as iRobot, Google may expand this format to YouTube and Discover if results are positive.

On July 22, 2025, President Trump announced a significant trade deal with Japan that lowers proposed tariffs on Japanese imports, from 25% to 15% for automobiles and other goods, in exchange for Japanese market access to U.S. agriculture and autos, plus a commitment of US$550 billion in investment.
The agreement excludes steel and aluminum tariffs, which remain at 50%, and triggered investor optimism as Japanese automaker stocks rose and U.S. markets rallied.
U.S. automakers criticized the deal for continuing to penalize domestic producers with higher tariffs, while labor unions raised issues over competitive fairness and worker standards

Consumer sentiment edged up in July, reaching a five-month high as inflation expectations for the next year eased to 4.4% from 5%, though overall sentiment remains below historical norms.
Retail sales rebounded 0.6% in June, unemployment ticked down to 4.1%, but inflation rose to 2.7% annually, driven largely by import tariffs.
Fed officials are split on rate cuts, with some urging patience due to tariff-driven price pressures, while others argue for immediate cuts given weakening private-sector job growth and near-target inflation.

As of early July 2025, 67% of parents and students have already started back‑to‑school shopping, up from 55% last year, the highest early‑shopping rate since NRF began tracking in 2018.
Economic pressures like tariffs and inflation are prompting consumers to shop early at discount stores and summer sales to secure deals .
NRF data suggests retailers should capitalize by offering promotions and value bundles earlier to engage cost-conscious families.

Google introduced “AI Mode” in search results, adding a dedicated AI‑powered tab that provides deep, organized, and conversational answers beyond the traditional search interface, built on Gemini models.
The mode features capabilities like deep follow‑up questioning, multimodal search (“search what you see”), and integrations like AI‑initiated phone calls to businesses.
The rollout is expanding beyond beta in the U.S., signaling a shift in how users and marketers should approach search and SEO optimization.

OpenAI is developing integrated ecommerce checkout within ChatGPT (via Shopify partnership), allowing users to complete purchases without leaving the chat interface.
The company plans to take a commission on transactions, marking a strategic expansion from premium subscriptions to transactional revenue.
Retailers and merchants are preparing for “AIO” (Artificial Intelligence Optimization) techniques to ensure their products are prioritized in ChatGPT recommendations.

A recent report notes roughly two-thirds of shoppers distrust AI shopping assistants, citing concerns over data privacy, transparency, and usefulness.
About 39% of users have abandoned purchases due to poor AI recommendations or negative chatbot experiences.
Experts urge retailers to prioritize transparency, human oversight, and refined pilot programs to build consumer comfort with AI tools.

Target has launched a themed “Back‑to‑School‑idays” event, combining in‑store personalization and extended discounts through its Circle Week initiative.
The event includes tailored campaigns for both traditional school and college audiences, with exclusive deals for Target Circle and Target.
Highlights include deep discounts (apparel from US$5, bedding from $10), student and teacher exclusive offers, and early access for loyalty members.

Independent data shows these value-focused grocers are experiencing surging in‑store foot traffic, outperforming many traditional supermarkets .
Their appeal is driven by low prices, curated product selections, and strong private‑label strategies.
Continued expansion suggests strong consumer preference for no‑frills, value‑oriented shopping in 2025.

A federal judge has dismissed a class‑action lawsuit alleging Amazon improperly placed ads within Prime Video content.
Plaintiffs had claimed the ads deceived users and violated consumer protection laws.
The dismissal removes a potential legal challenge to Amazon’s ad‑supported streaming practices.