"The era of AI e-commerce has just begun. It is both an opportunity and a challenge for everyone." Jack Ma said this not long ago.

In September 2023, Alibaba clarified its strategic focus of "user first, AI-driven". At the 2023 Tmall Double 11 press conference, Dai Shan, CEO of Taotian Group, mentioned AI 20 times in a 20-minute speech and announced that 10 AI tools would be launched to merchants.

It was also during this Double 11 that the large-model native AI application "Taobao Wenwen" was put into use for the first time. Here we need to note a background, that is, in 2023, Pinduoduo's market value exceeded Alibaba. The e-commerce landscape in China and even the world is undergoing new trend changes.

From representatives of "shelf e-commerce" such as Taobao Tmall, Amazon, and JD.com to representatives of "interest e-commerce" such as Douyin and TikTok, major e-commerce companies have begun to pick up low-price weapons again. Spending the lowest cost to achieve the highest profit is becoming the key point of competition in the e-commerce industry.

In this situation, AI has become the biggest tool for e-commerce.

AI e-commerce, everyone knows it is an opportunity

2023 is the year of the explosion of big models, and the e-commerce industry is fully empowering AI technology .

At present, including Alibaba, Baidu, JD.com, Xiaohongshu, Douyin, Kuaishou, etc. have all made arrangements. Among them, Alibaba and JD.com have already started to use AI technology during the 6.18 period, and all of them have adopted AI technology during Double 11.

Take JD.com as an example. In July 2023, it released the AI ​​model "JD.com Yanxi". During this year's Lunar New Year Festival, "Yanxi" supported a user activity of intelligent outbound calls. The voice of this call came from Mr. Li Lihong, the "official" commentator of "A Bite of China". This activity increased the arrival rate by 56% and the order conversion rate by 51% (compared with users who were not connected).

Node Finance Research found that the reason why this activity has achieved such good results is that AI technology is now able to understand and respond to users' emotional changes and has a considerable degree of "emotional intelligence", which is a huge improvement over the past when it could only give simple standard responses and is very humane.

Moreover, AI technology already has a considerable degree of decision-making ability on speaking rights. For intelligent dialogue, it is a big challenge to judge when to take over the speaking rights and to smoothly and naturally switch between listener and speaker.

For example, when you open Douyin and click "Search", the "AI Search" function option will appear at the bottom. This option is listed alongside options such as Comprehensive, User, Video, Experience, Product, Anchor, and Group Purchase. When users search through "AI Search", they will get an answer after intelligent search.

For example, if you search for "Which brand of snacks is delicious?", AI will give you a brief introduction and features of multiple brands. Judging from the results, the content it searches out should come from in-site video content or third-party websites, and the actual effect is average.

Alibaba's "Taobao Q&A" is similar to Douyin's "AI Search". Its beta version can be popped up after searching on Taobao. When the same question is asked to AI, Taobao Q&A gives text and video links and some analysis. It can be seen that most of its information and data come from Taobao, which has a certain degree of usability.

In addition, Xiaohongshu, a community e-commerce platform consisting of multiple small communities and circles, is also internally testing its AI application "Da Vinci".

After using it, Node Finance believes that "Da Vinci" can answer all kinds of questions about life, such as travel guides, food guides, geographical and cultural knowledge, life skills, activity recommendations, etc. Of course, as a social platform, Xiaohongshu's application of AI is more inclined to social functions, which is different from traditional e-commerce.

In addition to AI applications for text interaction, various types of "AI virtual anchors" are more widely used in the field of live e-commerce. After selecting a character template and inputting lines in text or recording, the AI ​​virtual anchor can speak the product copy in a realistic tone, making it lifelike and even indistinguishable from the real thing.

Baidu can be used in this regard. Although its main business is not e-commerce, it has also conducted relevant research and development for the sales scene. On Double 11 in 2023, Baidu's generative AI started large-scale application. Its Baidu Select relied on the digital human live broadcast sales model, and the live broadcast GMV increased by 740% year-on-year.

After experiencing the AI ​​technologies of many e-commerce companies, Node Finance believes that, in general, the AI ​​products of the above-mentioned e-commerce companies have certain limitations in understanding Chinese semantics, and have not yet reached the level of disruptive innovation.

On the other hand, AI virtual anchors broadcast live 24 hours a day without interruption and at a low cost, but they have shortcomings such as lack of interaction and inability to try out products. Therefore, most brands only try them out briefly or use them as substitutes during unpopular time periods.

It is not difficult to understand why this situation has occurred. After all, the explosion of AI technology has only been in the past year, and it will definitely take some time for it to be truly implemented. However, the general trend of AI empowering e-commerce is irreversible.

Now, what can AI do for e-commerce?

Let's first look at the data from the National Bureau of Statistics. In 2022, the national e-commerce transaction volume reached 43.83 trillion yuan, an increase of 3.5% compared with 2021 on a comparable basis. Compared with the past days, the entire e-commerce industry is gradually entering the competition stage of the stock market.

Node Finance’s research found that major e-commerce companies have long been aware of the changes in this trend. Specifically, when it comes to AI empowering e-commerce, the most fundamental goals are two: reducing costs and increasing efficiency and improving consumer experience.

At a time when labor costs are rising, any product that helps save costs and improve efficiency will be valued by the industry. AI technology, which can almost completely replace humans, is even more highly anticipated.

For e-commerce, in order to reduce costs and increase efficiency, AI customer service, AI anchors, AI models, etc. have become new attempts in the e-commerce industry. Node Finance believes that AI-based e-commerce operation assistance will become the standard for e-commerce in the future.

In this regard, some independent AI e-commerce tools have emerged, such as the "Meitu Design Studio" used in the field of e-commerce design, which covers multiple usage scenarios such as intelligent cutouts, AI product images, AI model fittings, and AI posters.

Read more: Leia Inc.

The use of AI tools like this will reduce the operational burden of e-commerce

For example, a friend who runs a clothing e-commerce business told Node Finance, "In recent years, traffic on major platforms has become increasingly expensive, and only good content can attract consumers. We launch at least hundreds of new women's clothing styles every month, but now e-commerce content is a major trend. Each product needs to be well introduced and live-streamed, and we need to produce at least 400 more pieces of content every month."

In this case, AI tools will become a "must-have" for e-commerce to reduce costs and increase efficiency.

Moreover, with the popularity of live streaming, AI digital human hosts have gradually appeared in live streaming. This kind of AI digital human can automatically explain the products, answer questions based on keyword prompts, and broadcast 24 hours a day.

The cost of traditional live broadcasting is very high, starting at 100,000 yuan. In comparison, the cost of AI anchors is much lower at 2,000 to 3,000 yuan a month. According to a survey by Node Finance, many small and medium-sized businesses, brand businesses, and some MCN agencies have begun to try to use AI digital anchors.

Data from Baidu shows that Baidu's digital humans can currently reduce merchants' live broadcast operating costs by nearly 80%; JD Cloud's Yanxi digital humans can intelligently "read" product details, quickly "remember" product selling points, and automatically generate scripts. They can start broadcasting within 2 hours, with a daily cost of less than 100 yuan.

Read more: 4 examples of the use of AI in e-commerce

AI's empowerment of e-commerce is also reflected in the multi-faceted improvement of C-end consumer experience

First, in terms of transaction facilitation, AI shopping guides can provide real-time Q&A, improve the user experience and transaction conversion rate, and reduce labor costs. Moreover, e-commerce platforms can use AI technology and big data to push personalized products to different customers. The "JD Yanxi" intelligent outbound call project mentioned earlier in this article can achieve such a function.

Secondly, in after-sales service, AI technology can optimize logistics and warehouse management processes. Even with the help of AI technologies such as machine vision and evolutionary algorithms, various intelligent robots are beginning to play a key role.

Moreover, AI robots can achieve a higher degree of automation in logistics operations within the warehouse through functions such as self-perception, self-learning, self-decision-making and self-execution, thereby optimizing delivery routes, intelligently allocating orders, improving transaction efficiency, and thus enhancing users' consumption experience.

In general, with the support of AI technology, e-commerce platforms are changing many key links in the e-commerce system, from reducing costs and increasing efficiency to improving shopping experience. However, Node Finance believes that this is only the initial change that AI has brought to e-commerce. How AI will change the overall landscape of e-commerce in the future is actually more worthy of attention.

In the new cycle of e-commerce, is AI expected to break through?

Over the past decade, the evolution of domestic e-commerce giants has gone from a two-horse race between "cats and dogs" to a four-horse race between Taobao, JD.com, Pinduoduo and Douyin. From the perspective of competition in supply and demand matching efficiency, the evolution path is generally a shift from "people looking for goods" to "goods looking for people".

Read more: How to Use AI Tools Effectively as a Business Owner

This change is not only happening domestically, but also internationally

In 2021, TikTok launched its Indonesian store, and in September 2022, Temu landed in the United States. "Interest e-commerce" and "social e-commerce" are popular, and global e-commerce is also showing stronger and stronger personalized characteristics. For example, through the live broadcast room anchors who bring goods, the Internet celebrity bloggers who plant grass, and the friends and relatives who share the link in the WeChat group to "cut a knife".

The personalization factor between the supply and demand of goods and consumers is becoming stronger and stronger. Many consumers make purchases through the channels of specific people based entirely on their likes and trust, such as Dong Yuhui.

On the other hand, the mismatch between goods and consumer demand has become increasingly prominent, and low-price consumption has gained momentum. The most obvious manifestation is "buy from whoever lowers the price", or emotional consumption, with orders placed quickly and returned quickly.

The reason why Pinduoduo can attract a large number of consumers with "low prices" and "refund only" is that it hits this trend. After JD.com and Taobao resumed low-price weapons in 2022, they followed suit and launched "refund only" in 2023. The underlying logic is also to cater to this trend.

However, Node Finance also observed that this situation is also very painful for sellers and brands. For example, Amazon’s old sellers gave up selling low-priced goods in large numbers because they could not compete with Temu, forcing Amazon to reduce the sales commission of low-priced clothing.

The emergence of AI may become a disruptor of the low-price homogeneous "involution" of e-commerce, and achieve an efficient match between "multi-level supply of merchants" and "diversified demands of consumers."

Merchants can use AI to accurately understand consumer needs and produce and purchase goods on demand. Conversely, consumers can use AI to obtain personalized products that meet their needs.

Of course, current AI technology has not yet reached this ideal state. However, Node Finance believes that the reason why we should pay attention to AI technology is largely due to its "terrifying" development speed. Slow response or wrong direction to the disruptive challenges that AI technology may bring may lead to irreparable losses.

In fact, from the earliest 8848, to Taobao, JD.com, Pinduoduo, and live streaming e-commerce, the e-commerce industry will usher in an innovation cycle of three years at the shortest and five years at the longest. With the continuous advancement of technology and business, the current AI e-commerce is expected to become the core of the new round of e-commerce innovation.

In the view of Node Finance, AI e-commerce is by no means a simple AI customer service, AI anchor, AI model, smart recommendation, etc. The future AI e-commerce must be to infiltrate data, algorithms, and user thinking into every aspect of e-commerce, deconstruct user data and behavior, shorten the back-end supply chain, optimize logistics efficiency, and truly reshape the efficient operation of the supply side through AI, thereby transforming the entire e-commerce.

AI e-commerce will be a completely new narrative and a challenge that may subvert the existing landscape.

TAKE THE NEXT STEP WITH EDUTO SOFTWARE, DON’T LET YOUR BUSINESS FALL BEHIND

Established in 2020, EDUTO is one of the leading IT companies in Vietnam, specializing in providing digital transformation consulting services and software solutions in the fields of finance, healthcare and retail for domestic and international enterprises. With the desire to contribute to enhancing Vietnam's position on the global IT map, EDUTO aims to bring innovative technology to life by leveraging the technical workforce in Vietnam, and the vision of becoming a leading IT company in the ASEAN region.

The artificial intelligence industry has great potential for development and needs a lot of human resources. Therefore, participating in AI courses brings many good development opportunities for you. The artificial intelligence course at EDUTO will help you learn basic and in-depth knowledge about AI effectively. With a scientifically arranged learning path suitable for many different subjects, it will help you optimize the learning process.

Contact to us at: EDUTO's Website