AI Empowers Online Retail: Analysis of Development Status and Trends in 2024
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AI Empowers Online Retail
It is reported that Walmart, the world's largest retailer, recently unveiled its latest AI technology product at CES 2024 in Las Vegas: the company introduced a generative AI tool that allows shoppers to search for products by specific use cases rather than one item at a time.
With this generative AI search technology, shoppers can search for a series of related products and items based on a specific theme or idea. For example, a user could request shopping assistance for a football watch party and might receive suggestions for chips, chicken wings, drinks, and a widescreen TV.
This tool will boost Walmart's online shopping business. Walmart has always placed high importance on the development of its online business, which has consistently outperformed other major retailers. The company has been investing in warehouse automation over the past year and has made improvements to its website and app.
Walmart also announced that it will promote its generative AI tools for employees worldwide. In August last year, Walmart launched the AI tool My Assistant, which helps employees draft documents and summarize large documents. Walmart stated that the company will roll out this tool in 11 countries in the future, with localized language versions for these markets.
The retail industry is inherently a 'demand-driven' sector—where people are, where attention is focused, demand follows, money flows, and goods must be delivered. As retail segments become increasingly specialized and vertical, retail formats and channels are diversifying, enabling consumers to enjoy more and better shopping experiences. Traditional retail enterprises should actively explore the integration of online and offline resources to undergo O2O transformation; e-commerce companies are also beginning to focus on offline channels, seeking physical presence. The accelerated fusion of online and offline will ultimately create an omnichannel shopping experience.
Analysis of the Current Status and Development Trends in the Online Retail Industry
The retail industry's evolution from simplicity to complexity reflects the refinement of commerce, while its shift from complexity to simplicity represents the streamlining of retail processes.
With the development of various forms of internet innovation, the entire retail market has now become a state where three main retail formats—physical store retail, e-commerce retail, and social retail—intertwine and overlap. In other words, retail has transformed into three distinct spaces: offline physical store retail, online e-commerce home delivery retail, and social entertainment retail. This is a significant structural change in the market that all retail enterprises must currently address.
Physical retail enterprises are accelerating their digital transformation, vigorously developing online sales and home delivery services. Large e-commerce platforms are actively promoting C2M (Customer-to-Manufacturer) reverse customization, empowering upstream industries, and adopting flexible manufacturing to meet personalized and diverse consumer demands.
Traditional retail enterprises are actively experimenting with the integration of online and offline resources to drive O2O transformation; e-commerce companies are also focusing on offline channels to establish a physical presence. The accelerated fusion of online and offline, ultimately forming an omnichannel shopping pathway, will be a crucial direction for the future development of the retail industry. The rise of "instant retail" represents one of the most notable changes in China's retail market in recent years. The "China Online Retail Market Development Report for the First Half of 2022" released by the Ministry of Commerce explicitly mentions "instant retail" and highlights its crucial value in "deep integration of online and offline channels."
Instant retail encompasses a complete retail system comprising online trading platforms, offline physical retailers, brand owners, and third-party (or merchant-owned) delivery logistics. It features extremely strong timeliness, with delivery time from consumer online orders to goods arriving at consumers' hands generally controlled within one hour, and in most scenarios, fulfillment can be achieved within 30 minutes. The service radius ranges from 3 to 5 kilometers, enabling online ordering and offline fulfillment. It typically involves point-to-point service, where delivery personnel pick up goods from merchants and deliver them directly to consumers without intermediate links.
Du Guochen, Deputy Director of the E-Commerce Research Institute at the Ministry of Commerce's Academy of International Trade and Economic Cooperation (a national high-end think tank), released the latest research findings from the Ministry of Commerce's research institute: the "Instant Retail Industry Research Report (2023)." The report proposes that instant retail is the product of "retail + technology" innovating local retail and represents a typical model where new supply drives new demand.
Instant retail is a high-timeliness home consumption format based on instant delivery systems, belonging to a typical new retail format and consumption model. Its main feature is "online ordering with offline delivery within 30 minutes," and its supply heavily relies on local stores. Based on this fundamental attribute, the development of instant retail has also created more local employment opportunities.
For consumers, instant retail services mean significant improvements in time, efficiency, and experience. Meanwhile, leveraging network effects and economies of scale, the instant retail model can aggregate massive merchant and brand resources, offering consumers more diverse and abundant product choices. In recent years, although online retail has faced challenges such as the saturation of traffic dividends and rising customer acquisition costs leading to a slowdown in growth, the further penetration of online consumption across more age groups and regions, along with the accelerated development of new consumption models and formats integrating online and offline channels, is expected to drive continued expansion of online sales.
The rapid development and widespread adoption of technologies such as 5G, IoT, big data, and AI are accelerating the transformation of the traditional retail industry. New trends in the industry include the integration of online and offline channels, platformization, localization and community-based scenarios, productization of services, and community-based marketing.
The online retail industry research report primarily analyzes the market size, supply and demand conditions, competitive landscape, and key business operations within the online retail sector, while also providing a scientific forecast for the future development of the industry.