Chinese retailers are investing in AI to boost sales with more than half (52%) of the Asian country's e-commerce platforms having used at least one generative AI-enabled tool, a new survey by Bain & Company showed.
More than half of merchants surveyed have used generative AI-powered customer service chatbot tools, and about one in three have used AI to generate content, data showed.
Since 2023, big players such as Alibaba and JD.com have been investing in AI with up to 40% and 50% of their acquisitions, respectively, being AI-themed.
The use of generative AI on Singles' Day, marked on 11 November, could be the perfect opportunity for retailers amid a slowing retail market.
Kelly Liu, partner at Bain & Company's Greater China Retail and Performance Improvement practices, explained, "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."
Other Findings
The survey, comprising over 500 merchants, revealed that 56% of respondents believe AI tools have had a 'high positive impact' in improving productivity (time and effort).
Moreover, 39% said they experienced impact in terms of operational cost reduction.
For example, JD.com launched an enhanced suite of AI-powered solutions in March 2024 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.
Consumer Perspective
Only 12% of shoppers used AI retail tools in the last six months, with 23% penetration among Gen Z shoppers over the same period, Bain & Company's survey of over 3,000 Chinese consumers revealed.
Across all age groups, Chinese shoppers are most likely to have used generative AI in the areas of visual search, or a search using an image rather than a text-based query, customer service chatbots, and voice-activated search and shopping.
Excitement over the upcoming Singles' Day shopping event has dropped to around 49% this year, 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, according to the survey.
Moreover, shoppers indicated that they want to limit their Singles' Day spending to household products only and are hoping that this year's deals will be as attractive as last year's.
James Yang, head of Bain & Company's Greater China Retail practice, stated, "As expected, economic headwinds have caused stagnation in Singles' Day sales last year as gross merchandise value increased by a record low of 2%, supported by newer live streaming and short video e-commerce channels.
"We have predicted this for some time now, and it is vital that Chinese retailers deepen their customer engagement. AI tools can energise customer retention efforts, enabling e-commerce players to hyper-personalise their engagement with consumers and create bespoke shopping experiences for them."
Role Of GenAI
The study highlighted that retailers need to master generative AI in three key areas to build a lasting strategic advantage.
These include consolidating customer engagement, turbocharging productivity and cost savings, and finding new growth beyond trade.
To retain and nurture customer relationships, leading players have started to implement enhancements, such as SEO-friendly automation of product pages, AI-written summaries of customer reviews, and virtual try-ons - through services such as Taobao's AI fitting room, the report noted.
Generative AI has massively expanded cost-saving automation possibilities in previously labour-intensive areas of marketing by creating 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.
Melanie Sanders, Asia Pacific head of Bain & Company's retail practice, stated, "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."
