Alibaba, China’s e-commerce giant is changing the paradigm of online consumer shopping experience by applying artificial intelligence (AI) technology throughout its core operations. Use of AI has helped Alibaba to increase its scale of operation more efficiently and has resulted in cost-effective outcomes. The technology is still in its infancy state, according to Jack Ma, the founder of Alibaba but if properly harnessed can change the way online shopping is done.
How Alibaba is applying AI in business
Alibaba Group evolved from an early e-commerce company into a giant conglomerate pioneering in terms of technology and big data analytics and uses. It is among the top 10 most valuable and biggest companies in the world. As of November 2017, Alibaba’s market cap stood at US$486.27 billion. Alibaba has incorporated AI in its operations through the following ways.
Smart Product Search and Recommendation
Search engines are getting modified by incorporating not only customer history but also accommodating all data sources to determine individual customer-specific wants. Recommendation engines are then recommending similar products bought or searched recently. To make the search engine and recommendation engine more specific, Alibaba has developed a software called “E-commerce Brain,” which uses real-time online data to predict consumer wants, and the models are constantly updated for each individual through AI to take into account purchase history, browsing history and online activities.
Smart Customer Service
AI-driven assistants like Apple’s Siri, Amazon’s Alexa or Google Home have gained its fair share of popularity. At Alibaba, this is done through chatbots. Any common queries and questions asked are automatically redirected to a computer system called Ali Xiaomi (Ali Assistant). Other than answering frequent questions and delivery status, it can help users find the right products when provided with a text or voice description or even a photo. It is capable of handling 95% of the customer service queries. This could be the future of all shopping platforms. Chatbots resolve consumer complaints without requiring human intervention.
The key to successful e-commerce business is engagement and interaction with consumers. Alibaba is doing highly targeted, AI-assisted marketing to achieve this. Merchants selling on Tmall (a consumer-to-consumer e-commerce platform) and Taobao (a business-to-consumer e-commerce platform) can now personalize their virtual stores for individual customers based on their taste and preferences. This can lead to higher conversion rates. The system is fast and self-improving.
Smart Supply Chain
Alibaba has upgraded its supply chain management developing the Ali Smart Supply Chain (ASSC). It uses AI to help online and offline merchants and sellers to predict product demand, help in preparing inventory for optimal turnover; choosing appropriate pricing strategies and offering the right product to choose. This helps in automated quick business response to shifting consumer tastes based using all data sources and integrating the system across all the units.
Alibaba’s logistics affiliate – Cainiao Network, creates a logistics information platform that links a wide network of partners, warehouses, and distribution centers. As of August 2016, Cainiao processed data for 70 percent of parcel deliveries in China using 10 percent less vehicles. This was made possible by Cainiao’s big data and AI enabled smart technologies. The company is using GIS (Geographic Information System) and AI techniques to determine the fastest and cost-effective delivery routes, thus enabling faster delivery.
Smart AI-Powered Interface
Alibaba developed FashionAI which provides a recognizable interface for customers to use while trying on clothes. It’s a screen interface that makes clothing and accessory suggestions to customers based on the items they try on. Putting up AI-powered screens in dressing rooms may ultimately save a lot of human jobs.
Deep Learning and Machine Learning
Deep learning technologies allow the AI to make connections in real-time by accessing massive quantities of data and making effective decisions. In implementing AI, Alibaba is applying numerous complex machine learning methods and disciplines.
Alibaba’s fintech affiliate has developed an AI-enabled face-recognition technology that helps in secure electronic payments.
According to Ma, “Large-scale computing and data are the father and mother of artificial intelligence.” Alibaba has increased focus on cloud computing heavily. The company’s cloud computing subsidiary has developed an operating system called Apsara and can process more than 175,000 transactions a second. Alibaba’s revenue from cloud computing and Internet infrastructure is growing rapidly.
Implications and Future
The way Alibaba is integrating AI in e-commerce will lead to significant changes in the future. The company has vast resources and sources of data from millions of customers which enables it to use several complex machine-learning methods. So, the company is well-suited for implementation of modern technologies. Technology now can perform things which are not humanly possible – like memorizing shopping preferences of millions of consumers. These features will change the whole shopping experience. These technologies are helping the company to realize economies of scale more efficiently and produce innovative new features.
All these imply a wider variety of choices for consumers and more personalized shopping experience. With increased focus on virtual reality (VR), computer-generated 3-D imaging, and augmented reality (AR), Jack Ma believes that customers would be able to photograph an outfit they like on a stranger and be immediately redirected to the page where the clothing can be purchased. As mobile commerce increasingly becomes a trend, more data will be generated which will help in efficient implementation of AI.
Here is an interview featuring Jack Ma who concurs that technology specially AI and machine learning will change the way business will work in future.
By incorporating AI throughout, Alibaba is speeding up the future commerce applications and is proving that there is no need for advanced AI tools to make a progress. If AI is harnessed appropriately, it can be beneficial for all. Eventually, with more data generation, AI will get better at determining our choices, saving time and make way for a new experience altogether.