SHANGHAI, Oct. 29, 2024 /PRNewswire/ — Chinese retail players are investing in generative AI to boost sales and Singles Day could be the perfect opportunity, according to a new report by Bain & Company launched today.
Since 2023, big players such as Alibaba and JD.com have been investing ferociously in AI with up to 40% and 50% of their acquisitions respectively, being AI-themed. Against a backdrop of slowing retail and a more subdued Singles Day, generative AI is expected to feature more prominently.
Bain & Company’s survey of over 500 merchants trading on China’s giant e-commerce platforms are embracing AI as 52% have used at least one generative AI–enabled tool. Slightly more than half have used generative AI–powered customer service chatbot tools, and about one in three have used AI to generate content.
Crucially, 56% of surveyed merchants say AI tools have had high positive impact in improving productivity (time and effort) and 39% responded with high positive impact in terms of operational cost reduction. In March, for instance, JD.com launched an enhanced suite of AI-powered solutions designed to cut merchants’ operational costs by as much as 50%. The solutions include an assistant to accelerate online store launches and a realistic avatar generator to enable round-the-clock interactive shopping livestreams.
“AI’s increasing prominence across Chinese retail offers a timely boost to a maturing industry that is facing challenges including slower retail sales growth, price stagnation, falling property prices, youth unemployment, and fragile consumer confidence,” said Kelly Liu, partner at Bain & Company’s Greater China Retail and Performance Improvement practices.
On the consumer side, AI is slowly gaining traction. Bain & Company’s survey of over 3,000 Chinese consumers revealed that only 12% of shoppers used AI retail tools in the last six months, with 23% penetration among Gen Z shoppers over the same period. Across all ages, Chinese shoppers are most likely to have used generative AI in the areas of visual search (beginning a search with an image rather than a text-based query), customer service chatbots, and voice-activated search and shopping.
In the consumer survey, 49% of shoppers said they are excited about the upcoming Singles Day, down from 53% in 2023 and 76% in 2021. About three-quarters of respondents said they expect to spend the same amount or less on Singles Day promotions in 2024, broadly in line with last year’s findings. Some shoppers have also indicated that they want to limit their Singles Day spending to household products only. Shoppers who plan to maintain their Singles Day spending are also hoping that this year’s deals will be as attractive as last year’s.
“As expected, economic headwinds have caused a stagnation in Singles Day sales last year as gross merchandise value increased by a record low of 2%, supported by newer livestreaming and short video e-commerce channels,” said James Yang, head of Bain & Company’s Greater China Retail practice. “We have predicted this for some time now, and it is vital that Chinese retailers deepen their customer engagement. AI tools can energize customer retention efforts, enabling e-commerce players to hyper-personalize their engagement with consumers and create bespoke shopping experiences for them.”
Retailers that master generative AI in three key areas — deepening customer engagement, turbocharging productivity and cost savings, and finding new growth beyond trade — could build a lasting strategic advantage, says the report.
To retain and nurture customer relationships, leading players are already starting to deploy enhancements such as SEO-friendly automation of product pages, AI-written summaries of customer reviews and even virtual try-ons – through services such as Taobao’s AI fitting room.
Generative AI has massively expanded cost-saving automation possibilities in previously labor-intensive areas of marketing, through the creation of product photos and descriptions, as well as in merchandising and software engineering. A big part of the AI productivity opportunity involves helping frontline staff to be more effective through smart automated assistance that gives them more capacity to get things done.
Bain & Company’s experience advising on generative AI globally suggests many retailers should be able to increase revenue by 5% to 10% overall through AI-powered personalization initiatives and achieve productivity gains of 30% to 40% in marketing, 25% to 30% in software development, and 5% to 25% from using generative AI to reshape the way employees work on the front line, in warehouses, and at HQ.
Chinese retailers need to transition faster from AI experimentation to deployment at scale. Longer term, Chinese retailers must also consider how they can use AI to find new growth beyond trade as the technology starts to open up adjacencies to traditional buying and selling that could extend their already diverse activities.
“We have strong reasons to believe that Chinese retailers have what it takes to succeed in the AI race and win over customers. E-commerce penetration rates have been robust and e-commerce infrastructure—particularly its vast ecosystems of consumers, retailers, and partners—should accelerate adoption as familiarity with AI builds. And finally, the market’s AI research and development is also notably strong, leading the world in AI-related patent filings,” said Melanie Sanders, Asia Pacific head of Bain & Company’s Retail practice.
Editor’s Note: For more information or interview requests please contact:
Gary Duncan (London) — Email: gary.duncan@bain.com
Katie Ware (New York) — Email: katie.ware@bain.com
Ann Lee (Singapore) — Email: ann.lee@bain.com
About Bain & Company
Bain & Company is a global consultancy that helps the world’s most ambitious change makers define the future.
Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today’s urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry.
View original content to download multimedia:https://www.prnewswire.com/news-releases/chinese-retailers-invest-in-generative-ai-to-boost-performance-302290689.html
SOURCE Bain & Company
Technology5 days ago
Coin Market5 days ago
Technology5 days ago
Technology5 days ago
Technology4 days ago
Technology5 days ago