Taobao and Tmall Place Heavy Bets, Alibaba Aims for a Comeback with AI
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In a recent interview with foreign media, Alibaba Chairman Joe Tsai made the above declaration.
Over the past year, Alibaba's situation has been far from smooth: its market value was once surpassed by Pinduoduo, losing its long-held position as the leader in China's e-commerce sector. The 1+6+N organizational restructuring had widespread implications, with Daniel Zhang stepping down amid challenges, and the newly formed leadership team now facing intense competition from rivals like Pinduoduo and Douyin. Against this backdrop, Joe Tsai's move to boost morale among investors and employees is undoubtedly the right decision.
According to Tsai's vision for Alibaba's business landscape, e-commerce and cloud computing will remain the two primary focuses. E-commerce, as Alibaba's core business, will always be the top priority. When discussing industry competition and Alibaba's strengths, Tsai highlighted one key term: AI. In Joe Tsai's view, e-commerce presents the richest scenarios for AI applications, and Alibaba is significantly increasing its technological R&D investments. While AI is said to bring about a productivity revolution and transform business thinking across industries, does this logic equally apply to the e-commerce sector?
At least from Alibaba's perspective, the answer is affirmative. The comprehensive transformation of AI in enhancing user shopping experiences and improving merchant operational efficiency might offer an alternative strategy to counter competitors like Pinduoduo and Douyin.
(Image from UNsplash) As is well known, Alibaba and Baidu are among the earliest Chinese internet giants to board the AI large model express, and they were also the first to apply this technology to various front-end business operations.
On the user side, Taobao and Tmall have launched multiple new features, serving as intelligent assistants for users while enhancing shopping fun and fostering a positive interactive atmosphere.
As early as April last year, Taobao Festival introduced the "AI BUY" feature, accessible through the main page of Taobao Maker Festival, offering basic text-to-image generation services. Users simply need to enter product functions, appearance, dimensions, and other details on the corresponding page, and the system will generate the corresponding renderings. To promote this new feature, Taobao has launched offline exhibitions in ten cities including Shenzhen, Hangzhou, Chongqing, Xi'an, and Wuhan for the first time. Images generated through 'AI BUY' will be automatically uploaded to a public gallery for interaction. To encourage user participation, the platform has set up a likes ranking system, with top-performing creators eligible to receive universal red envelopes worth up to 1,000 yuan.
In September, the AI assistant 'Taobao Ask Ask', trained on Alibaba's Tongyi Qianwen large model, was officially launched. The feature is now fully available, though it doesn't have a dedicated entry in the homepage submenu. Users need to upgrade to the latest app version and search for keywords in the search bar to access the experience interface.
The 'Taobao Ask Ask' interface is quite minimalist, featuring only scrolling recommendations and frequently asked questions, clearly drawing inspiration from ChatGPT's concept. Users can directly input their queries, and the system will automatically generate answers, recommend products, and provide expert notes. The later version of 'Ask Taobao' demonstrates greater proactivity by actively inviting user interaction, such as voting on products and fashion trends, and daily updates on trending news. It's evident that Taobao positions this new feature as an 'intelligent shopping guide,' aiming to further enhance user search efficiency and recommendation accuracy.
On the merchant side (B2B), Taotian Group has prepared numerous operational support tools, promoting them intensively during major sales events like 618, Double 11, and the Chinese New Year shopping festival.
In May last year, Taotian Group launched the 'AI Ecosystem Partner Program,' offering merchants seven services including store setup and decoration, product image creativity, marketing and promotion planning, content organization and creation, customer service, financial management, and order management to help reduce costs and increase efficiency. During the Double 11 period, Taotian Group introduced 10 AI-assisted tools for merchants to use free of charge. After the conclusion of Double 11, Taotian Group wasted no time in hosting the Taobao Tmall Ecosystem Partners Conference in Hangzhou, where they unveiled a series of updated AI tools. This time, the AI revolution has penetrated the entire lifecycle of store operations: new merchants can utilize the AI-powered one-click store opening feature to bypass all cumbersome processes; for performance reviews, there are AI-generated weekly reports and document analysis tools; even product listing and delisting can be assisted by AI.
As Joseph Tsai pointed out, the applications of AI in e-commerce scenarios are indeed extensive, with numerous approaches to explore. Taobao and Tmall have made substantial attempts in this regard.
However, the effectiveness of these attempts and whether they can generate real benefits are not for the platform to judge, but rather for the merchants and users to decide. It is well known that the e-commerce industry is vast, involving countless upstream and downstream enterprises. However, the main players in this industrial chain are always three core forces: platforms, merchants, and users. Platforms, as the leading promoters of AI technology, are undoubtedly confident in its application prospects. But on the side of merchants and users, the attitudes are more complex.
First, let's talk about merchants. Shops of different sizes, industries, and target positions have varying views on AI tools.
Taking merchant size as an example, for small and medium-sized merchants who have been operating stably for years, backend management tools like smart weekly reports and business consulting are not very attractive. This is because these merchants have simple internal structures and limited staff, and they can manage daily operations well without relying on AI tools. On the other hand, large-scale and complex organizations, particularly those in fast-changing industries such as fashion apparel and beauty skincare, have a stable demand for these tools. For newly settled merchants, the one-click store opening feature can save a lot of hassle. Unfortunately, this one-click store opening is a one-time function and lacks the foundation for repeated use. Moreover, Taobao is a platform dominated by small and medium-sized businesses, which greatly diminishes the necessity of AI-assisted operational tools.
According to Alibaba's financial report, in the 2023 fiscal year (the 12 months ending in June 2023), 5.12 million new merchants were added, the vast majority of which were small and medium-sized businesses. For these merchants, AI tools are more of a novelty, only sparking their interest during free trials or busy periods like major promotions. The AI-assisted content creation feature heavily promoted by the platform is indeed helpful for marketing-focused categories such as sportswear, cosmetics, skincare, and jewelry. However, it provides limited assistance to merchants selling daily necessities, which rely more on cost performance and have low profit margins rather than marketing.
Official data shows that during last year's Double 11 pre-sale period, the platform's AI tools were called over 200,000 times—a decent achievement. But compared to the vast number of merchants on Taobao and Tmall, this proportion is not significant. How to get more merchants to embrace AI tools is a question the platform needs to address next.
On the user side, attitudes vary. Opponents mostly believe that Taobao and Tmall's various AI features are too gimmicky and offer little help in product selection and shopping guidance. Although 'Ask Taobao' has strived to be concise and user-friendly, it still clashes with modern shopping habits—the primary complaint being excessive text. Social media comments reveal most users criticize this feature for requiring too much reading, especially when consumers are accustomed to image-based, short-video, and live-stream formats.
AI-generated images and digital models, which help merchants reduce costs and improve creative efficiency, have also sparked consumer dissatisfaction—primarily due to authenticity issues. While consumers accept retouched images, meticulously designed makeup, and expected color discrepancies in clothing or cosmetics, AI applications amplify the disconnect between advertised and actual products. Moreover, repetitive modeling and styling accelerate consumer aesthetic fatigue.
Interestingly, after Taobao and Tmall merchants widely adopted AI for content creation, platforms like Xiaohongshu saw a surge in posts teaching users to distinguish between real and AI models. This indirectly highlights persistent consumer resistance to AI applications, indicating a long road ahead for AI adoption. Of course, many people appreciate the convenience brought by AI, particularly the AI try-on and outfit matching features that help beginners solve styling dilemmas and visualize how clothes would look when worn.
These two new features were officially launched in August last year. To support their promotion, Taobao simultaneously introduced a fashion promotion offering ¥20 off for every ¥200 spent, covering millions of products. Users only need to upload their photos and select their body type, and the system will automatically generate an AI digital avatar to showcase how the clothes would look when worn. Additionally, the AI styling feature, trained on large models, can recommend matching accessories from different stores based on users' past purchase records and personal style preferences.
Opinions vary—while some criticize, others love these features, and Alibaba surely anticipated this outcome. It's safe to say that AI tools still have a long way to go before becoming essential for merchants and consumers, but promising signs are already emerging. In an internal discussion organized last year, Jack Ma talked about the opportunities in AI e-commerce and the overarching strategy of 'returning to Taobao, returning to users, and returning to the internet,' which largely dictated Taotian Group's series of changes this year. Recently, reports indicate that Taote's merchants and products are gradually being migrated to Taobao, signaling that Taote will soon officially exit the stage, with the group's resources and talent fully concentrated on Taobao.
These changes are ultimately driven by the immense pressure Alibaba's e-commerce business is facing—pressure that is comprehensive, spanning market share, growth rate, user base, GMV, and other dimensions.
While Pinduoduo remains a formidable challenger, Douyin's e-commerce arm has also accelerated its pursuit of Alibaba. According to LatePost, Douyin E-commerce prioritized 'price competitiveness' as its 2024 strategy and set a GMV target of 3 trillion yuan at the beginning of this year. Although these messages have not been officially confirmed by Douyin, the rise in the proportion of shelf field GMV and the significant increase in the number of active products over the past year indicate that Douyin is indeed becoming more like a comprehensive e-commerce platform. Direct competition with Taotian Group will only become more frequent.
So, what is the attitude of other platforms on the path of AI+e-commerce?
Overall, most platforms have made some arrangements, but none are as comprehensive or as deep as Alibaba's. For Douyin's e-commerce, AI currently plays its most significant role as an auxiliary tool for traffic distribution. The platform utilizes AI to decentralize and disrupt the original traffic distribution logic, encouraging users to employ keyword-based intelligent searches. Stores can leverage tools to track platform traffic distribution trends, adjusting products and pricing to gain more exposure.
However, the AI technologies applied on both the user and merchant sides of Douyin's e-commerce have their imperfections. For instance, the "Worth a Look" feature, upgraded from the "Little Yellow Cart," presents users with related product links on short video pages, but requires pausing the video to trigger recommendations. On the merchant operation side, Douyin introduced an automatic short video generation feature in December last year, though currently, the available templates are limited and come with quantity restrictions.
In comparison, JD.com, Pinduoduo, and Kuaishou are more cautious in their approaches. JD's flagship product, the 'Jingyan' intelligent shopping assistant, offers basic functions such as product recommendations, personalized customization, and price comparison, but lacks distinctive features. Compared to smart assistants on other platforms, it can only be considered average. Pinduoduo and Kuaishou have established large model teams, but have not yet launched products specifically for e-commerce business. The former's application of AI technology is still concentrated on some 'old tools': dynamic algorithmic pricing, traffic distribution, personalized recommendations, etc. It can be said that they have not truly entered the era of large models.
Speaking of which, Alibaba's advantage is obvious: As the largest comprehensive e-commerce platform with the largest scale of third-party merchants and user base, and with both content and shelf core fields, it provides the richest testing ground for AI. Other platforms either lack sufficient conditions for experimentation, such as Pinduoduo's lack of technology and Douyin's lack of merchants; or lack urgency, such as JD, which is still mainly self-operated, and has unknowingly fallen behind in this AI competition. However, despite Alibaba's rapid progress on the path of AI e-commerce, it is essentially feeling its way forward. The concept of AI + e-commerce may not be new, but it is the first time it has received such widespread attention and promotion. Whether this path will succeed and truly revolutionize productivity is something even Alibaba may not be entirely sure about.
The good news is that Taobao and Tmall have moved faster than competitors like JD.com, Pinduoduo, and Douyin in this wave of AI. After missing out on the social and lower-tier market trends, they have finally seized the pole position again and regained the initiative. For Alibaba, which is often criticized for its bloated organization, slow decision-making, and loss of entrepreneurial spirit, this is already a positive change.