Alibaba Harnesses AI to Safeguard Dominance in Chinese E-commerce
Alibaba utilises AI-powered chatbot Wenwen to offer personalised product recommendations to shoppers on its Taobao platform. Generative AI is employed to assist merchants in editing product photos and generating virtual models. CEO Eddie Wu emphasises e-commerce and cloud services as Alibaba's main focus.
The company is leveraging AI-driven tools to enhance the shopping experience for consumers and boost efficiency for merchants.
One of Alibaba's AI innovations is a chatbot named Wenwen, which operates on its Taobao e-commerce platform. Shoppers can seek product recommendations from Wenwen, who uses AI algorithms to suggest the best options based on user preferences. For example, when asked for the best value camera, Wenwen recommended a Sony product priced at around $650, tailored to the user's needs.
Wenwen is built on Tongyi Qianwen (Qwen), a language model developed by Alibaba's cloud unit. This AI-powered chatbot aims to provide personalised assistance to shoppers, enhancing their overall experience on the platform.
In addition to consumer-focused AI tools, Alibaba is also utilising generative AI to help merchants streamline their operations. This technology enables merchants to easily edit product photos and generate virtual models, making it more efficient for them to showcase their products to potential buyers.
Since assuming the role of CEO in September 2023, Eddie Wu has emphasised e-commerce and cloud services as Alibaba's primary focus. Wu has expressed the company's commitment to investing in these areas and implementing an AI-driven strategy to enhance user experiences and optimise operations.
Alibaba's financial results for the year ending in March 2024 reflect its resilience in the face of competition and regulatory challenges. The company reported a 10% increase in net profit, reaching 79.7 billion yuan ($11 billion), with revenue growing by 8% to 941.1 billion yuan. The Taobao and Tmall group, which encompasses Alibaba's domestic e-commerce businesses, achieved double-digit year-on-year growth in gross merchandise value during the January-March quarter.
Despite its strong performance, Alibaba faces mounting competition and government restrictions in the Chinese e-commerce landscape. According to Goldman Sachs, the combined market share of Alibaba's Taobao and Tmall platforms dropped to 37% in 2023 from 80% in 2017. Rivals such as Pinduoduo and Douyin (TikTok's sister platform in China) have gained significant traction, with Douyin projected to surpass Pinduoduo by 2026.
To counter these challenges, Alibaba recognises the importance of AI in maintaining its market share. Founder Jack Ma, in an internal company memo, emphasised that "the AI era has just arrived." However, Alibaba is not alone in its pursuit of AI advancements, as competitors like ByteDance and JD.com are also investing in AI technologies for their e-commerce platforms.
As Chinese consumers become more cautious amid economic uncertainty, e-commerce platforms are under pressure to enhance service quality and leverage their strengths in logistics and cloud services to retain customers.
Alibaba utilises AI-powered chatbot Wenwen to offer personalised product recommendations to shoppers on its Taobao platform.
Generative AI is employed to assist merchants in editing product photos and generating virtual models.
CEO Eddie Wu emphasises e-commerce and cloud services as Alibaba's main focus.
Source: NIKKEI ASIA