AI Will Be the Core Variable Deciding the Future of E-Commerce

[baoshi.rao]

Double 11 has turned 15, yet its vitality remains undiminished.

This year, the battle over pricing power continues to sweep across e-commerce platforms. However, price has never been the sole narrative of Double 11. Over the years, Double 11 has witnessed every pivotal moment in the evolution of China's e-commerce. Merchants don’t just want to sell during Double 11—they also hope to glimpse the future through it, seizing new opportunities in the next phase.

Image source: AI-generated, licensed by Midjourney

This year, the most noteworthy variable is undoubtedly AI.

Amid debates and real-world applications, the AI wave sparked by large models is surging. AI has already moved beyond press conferences and is being implemented across various industries. In e-commerce, AI is quietly integrating into platform operations and merchant strategies.

Take Taobao and Tmall as examples. In September this year, Taobao Wenwen (Ask Taobao) opened for testing, becoming China’s first consumer-facing AIGC (AI-generated content) application in e-commerce. For this year’s Double 11, Taobao and Tmall provided merchants with 10 free AI tools. Within the next five years, all merchant operation tools on Taobao and Tmall will become fully intelligent. From users and merchants to content, the new Taotian Group is building an 'AI-powered Taobao.'

According to insights from Deep Echo, e-commerce sellers are also actively exploring AI applications in their operations. Some have even included 'leveraging AI effectively' in their annual development plans. These actions reflect a shared realization: AI is a long-term trend for e-commerce, poised to propel the industry into a new era.

Breaking the Ceiling of Efficiency and Experience

This logic is worth unpacking. Many viewpoints label new technologies as industry 'watersheds,' but overuse risks sounding like hype. To understand AI’s long-term impact on e-commerce, we must return to core questions.

Looking back at the industry’s rise, you’ll see that 'e-commerce' itself is the result of technological innovation. In the last wave of internet transformation, the fusion of the internet and commerce unlocked immense value in e-commerce. Both platforms and brands embracing e-commerce became beneficiaries of this change.

Throughout e-commerce’s evolution, various innovative models (e.g., product listings, search, recommendations, content) have emerged from integrating new technologies. Together, they enhance user experience, improve product matching efficiency, and enable merchants to better meet user needs and grow their businesses.

Thus, e-commerce revolves around an 'essence' and a 'pattern'—while its manifestations vary, the essence is always about improving 'efficiency and experience.' This pattern repeats: embracing new technologies, prioritizing user-centric experiences, and fostering ecosystem prosperity, thereby ushering e-commerce into new phases.

So the question becomes: Where are the remaining opportunities to upgrade efficiency and experience for users and merchants?

User-side demands are clear. Today’s consumption trends are shifting from 'generic' to 'specialized' and 'personalized.' For instance, as household structures, living spaces, and lifestyles evolve, users’ demands for furniture and appliances are increasingly segmented. Even within 'compact appliances,' the needs of singles, families of three, and urban vs. rural residents differ—generic products can’t cover all scenarios.

Similarly, in fashion and accessories, users have vast unmet long-tail demands. Taobao once revealed that users generate hundreds of millions of long-tail queries daily. Addressing these 'non-standard' demands tests platforms’ technical and operational capabilities. Success here unlocks new commercial opportunities and traffic for merchants, creating a virtuous cycle.

Beyond personalized long-tail needs, new user behaviors also show that users often seek not just single items but holistic 'solutions.'

Take this year’s 'outdoor' trend as an example. Many users are 'inspired' by camping or river-trekking scenes, but their shopping needs remain untapped. Here, better 'efficiency and experience' means platforms combining user profiles and specific scenarios to offer complete shopping solutions. This deeper satisfaction unlocks more consumption potential.

With user-side upgrade paths clear, merchant-side priorities also come into focus.

The new market environment demands agility and streamlined operations from merchants—reducing repetitive tasks and focusing on innovation in marketing, operations, and technology to ride the waves of digitization and content. This isn’t just about meeting new user demands; it’s also a necessary path to cost reduction, efficiency gains, and capturing growth.

The underlying logic: E-commerce is a multi-stakeholder ecosystem of users, merchants, and platforms. Only when users enjoy great experiences and spend willingly will merchants flock in. And only when merchants can efficiently meet user needs will users engage more passionately, enabling the ecosystem to enter a 'positive cycle.'

Establishing this new 'positive cycle' requires a decisive driving force—and AI is that force.

A New AI Era for E-Commerce

From both user and merchant perspectives, AI’s value is evident.

For users’ 'specialized' and 'personalized' demands, AI leverages natural language understanding and decision-making to structurally refine consumer intent interpretation. Users need only pose lightweight, low-cost queries to receive precise results.

Taobao Wenwen, currently the only visible e-commerce AI assistant, follows this logic. Conversational AI can refine vague user requests through multi-turn dialogues, pinpointing needs and matching 'non-standard' demands with 'non-standard' products—a precision unattainable via traditional search commands.

Building on multi-turn dialogue comprehension, large models’ self-iteration and learning capabilities enable deeper understanding of individual users over time, aligning results ever closer to consumer preferences and habits.

Imagine this 'I-understand-you' experience as interacting with a long-serving 'professional salesperson.' When you ask for a 'dress that creates a vibe by the sea,' they not only grasp the ambiguous description but also infer unspoken needs based on your age, personality, aesthetic preferences, and life stage.

For merchants, large models’ multimodal processing unlocks new possibilities. With AIGC, merchants automate product descriptions, customer service, and personalized text, image, and video generation. This not only boosts productivity but also strengthens user connections amid the content-driven trend.

While AI equips merchants with 'cost-cutting, efficiency-boosting' tools, it also drives their digital and intelligent upgrades. As AI permeates business workflows, 'digital transformation'—like AI-powered product launches, inspections, or smart bot hosting—gains tangible entry points. Moreover, AI’s innate data sensitivity enables it to combine market trends and consumer behavior, offering insights on trends, hot searches, and hit products to inform critical decisions like R&D and sourcing.

In short, AI’s integration with e-commerce aligns with the 'essence' and 'pattern' mentioned earlier—heralding a new AI era for e-commerce. As a technological driver, AI can significantly enhance efficiency and experience for users and merchants alike, diving into uncharted 'deep waters' of traditional models and delivering the structural growth the industry has long awaited.

However, effectively integrating AI into e-commerce is no easy task. The industry has reached some consensus when discussing large models: they are more suitable for major players with technological and ecosystem advantages, and they must be applied to industries to realize their full potential.

Few e-commerce platforms meet these criteria. To embrace the AI wave, an e-commerce platform must first possess sufficient large model capabilities and data accumulation, along with a solid ecosystem foundation. Only when a platform has deep accumulation in dimensions like users, merchants, and products can the training of specialized models be sufficiently rich. Moreover, only when the platform's scenarios are diverse enough—with seamless coordination between shelves, recommendations, content, and live streaming—can AI truly integrate into the nuances of e-commerce, rather than merely serving as an external 'plugin.'

These prerequisites explain why Taobao and Tmall have been able to lead in AI adoption. Serving 900 million Chinese consumers and connecting hundreds of thousands of global brands and millions of small and medium-sized merchants, Taobao and Tmall boast a robust 'store' foundation, explosive 'live streaming' capabilities, and rapidly growing 'content.' These advantages have given them a head start, transforming Taobao into 'AI Taobao.'

On the user side, 'Taobao Ask,' which began internal testing in September, has already been used by over 5 million people. Highly active users ask more than eight questions per day on average, with some individuals asking over 4,000 questions. Non-shopping scenarios account for 25% of inquiries, covering diverse needs like travel, lifestyle, and companionship.

According to insights, Taobao Ask currently offers three modes: commands, Q&A, and promotions. The first two focus on lightweight, companion-style search experiences and personalized solutions for long-tail needs, respectively. The promotions mode aligns with special resources like instant discounts and bulk deals. These modes work together to enhance user experience, drive conversions, enrich the product corpus, and facilitate iterative improvements.

As early as May, Taotian launched the 'AI Ecosystem Partner Program' to advance AI adoption in e-commerce. In July, Alimama's 'Wanxiang Lab,' specializing in AI creativity, officially debuted. By mid-October, 4 million merchants had used Wanxiang Lab, with over 100,000 leveraging its zero-cost, 30-second creative material generation feature, boosting productivity fivefold.

In October, Taotian introduced two more AI products—Wanxiangtai Unbounded Edition and Alimama Bailing—and deployed them for the first time during Double 11. Over a million merchants have already used them, with early results showing a doubling of promotional efficiency. Wanxiangtai Unbounded Edition saw participation surpass last year's Double 11 cycle within four days, with over 90% of clients opting for its keyword promotion feature and a 92% repeat purchase rate among industry leaders.

During this Double 11, Taotian also released 10 free AI tools for merchants, covering scenarios like AI-generated model images, scene generation, weekly data reports, trend insights, product title optimization, customer service bots, and store inspections. These tools address critical pain points, proving especially valuable during the busy Double 11 period, with over 200,000 merchant uses so far.

Clearly, under AI transformation, Taobao is becoming the new 'AI Taobao.' CICC's recent report notes that Taobao and Tmall possess rich e-commerce experience, data assets, and leading large-model and computing capabilities, making them well-positioned to pioneer 'AI + e-commerce.' Similarly, China Merchants Securities highlighted Taobao Ask's leadership in AI e-commerce, expressing optimism about Taobao's first-mover advantage and future potential in AI-driven e-commerce.

Conclusion

Few industries are as familiar yet ever-changing as consumer goods. With rapid shifts in social dynamics, cultural preferences, demographics, and consumer aesthetics, the sector continuously evolves. As a key component, e-commerce must keep pace.

Because it is always in flux, the pursuit of 'efficiency and experience' in e-commerce has no end. Emerging technologies offer opportunities, but the key lies in how they are leveraged. Taotian aims to validate the principles of 'user-first, ecosystem prosperity, and technology-driven growth' based on its existing strengths. This is just the beginning, but one thing is certain: Taotian's investment in AI is a microcosm of the e-commerce industry entering a new era.