Behind Alibaba's Sucess

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. Alibaba has incorporated AI in its operations through the following ways.

1. 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.

2. Smart Costumer 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.

3. Pervasive Personalization

  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.

4. 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.

5. Smart Logistics

  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.

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.

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.

The objective of Alibaba Group is to build the largest and most active online trading market so that every middle or small corporations find it not difficult to do business. In the initial stage, it has clear business mode which is different from the early internet company which is driven by technology. The founders of e-commerce are lovers or talents of computer or communication technologies. They create distinctive websites to amuse themselves primarily, and then explore possible internet service mode. The founders of Alibaba, Jack Ma’s particular experience enables its corporation has clear positioning (Palaga, Nguyen, Leser & Hakenberg 2009). With B2B e-commerce mode, its other forms and service or functions are surrounded it this mode and works upon it as well.

As an electronic transaction platform, Alibaba website is a neutral online trading market B2B mode which is invested by the third party but not sellers or buyers. Matchmaking tradeoff mode is the most universal in Alibaba. Such mode involves many parties of sellers and buyers. It is also the integration of concentrated buyers and concentrated sellers mode.

Such online trading mode requires corporations have a full set of qualified electronic management system within the corporations and the system can achieve seamless joint with external environment so that the information integration of corporations’ production, purchasing and sales can be made. The internal operation and transaction can be connected together so that information value can be improved. Generally, there are three aspects in Alibaba’s e-commerce mode which are commercial mode, information mode and the construction of local websites.