E-commerce is always changing to adapt to the different needs of consumers.
In 2024, as shoppers rely more on artificial intelligence to help them find answers and narrow down their searches, they will want merchants, brands, and marketplaces to keep up.
Generative AI features that were launched last year, such as chatbots and content-generation tools, will become more popular among users and merchants — and this is just the beginning — as new hard use cases to imagine now will be introduced in the future.
“The technology is far from reaching its full potential; when it does, the changes are going to be huge,” said James Yang, a partner at Bain & Co, a consultancy.
We asked Alibaba Group’s businesses, marketplaces, and sector experts for their opinions on consumer trends that will influence the industry in 2024 and how AI can help meet demand.
“AI’s presence will keep growing, creating a more seamless and efficient global commerce experience that benefits businesses of all sizes,” said Kaifu Zhang, Vice President of Alibaba International, who leads the company’s AI initiatives.
Check out the top e-commerce trends
Generative AI created a lot of possibilities for merchants and brands to become more effective and offer consumers a more customized shopping experience in 2023.
As Franck le Moal, Group IT Director and CIO of LVMH, recently said to Alizila: “For LVMH Maisons, having this close intimacy and strong interaction with customers to create a personalized experience is very important. We think that technology can give us this special opportunity.”
In 2024, consumers will continue to explore generative AI’s abilities and they want brands to do the same, said Euromonitor, a consultancy. The retail industry must adopt continuous experimentation to keep ahead.
Take chatbots as an example. The well-known software app that simulates human conversation is having a revival as generative AI makes the way it talks more natural.
Shoppers think their actions to stop climate change are not enough, and they’re ignoring messages that blame their behavior, said Euromonitor International.
Instead, they are putting the responsibility on retailers to prove they are green. More than 75% of consumers would like information on how to make online purchases that are good for the environment, a report by Alibaba Group revealed earlier this year.
As a result, merchants and marketplaces are increasing their efforts on green labeling and certification.
Many China experts who hoped that the world’s second-largest economy would recover quickly from the pandemic were let down by 2023. That hope dwindled during the year as economic challenges hurt consumer confidence.
But long-term structural trends keep progressing, and China’s economy is gradually becoming more driven by consumption.
When Chinese policymakers met in Beijing recently to talk about the year ahead, they stressed steady economic growth in 2024 and said the long-term positive outlook had not changed. While 5% growth may not be as exciting as the 7%-plus a decade ago, China’s economy is much larger now.
McKinsey expects the country’s retail sector, which includes both products and services, to grow by 5% this year, with similar forecasts for the next few years. Given China’s huge market size, this incremental growth would mean an extra RMB10 trillion ($1.4 trillion) in retail sales in 2027.
Shift to Thrift
Euromonitor International reported that consumers lost confidence in 2023 due to economic instability and high living costs. They will prioritize saving money and look for new ways to make their household budgets go further in 2024.
The consultancy said that value hackers will find smart ways to reduce spending without sacrificing quality.
These consumers will actively look for lower-priced alternatives, use credit cards or rewards points, switch to high-quality private-label brands, and join free activities. Deinfluencers also gained popularity on social media this year, where they reveal products that they think are too expensive.
In China, consumers are still feeling the psychological effects of a slower-than-expected recovery from the pandemic, and they showed strong value-seeking behavior during the 11.11 shopping festival.
Bain’s Yang said that this value-seeking behavior is not a temporary phenomenon, but will last for at least the next one to two years.
Surprise and Delight
After several years of turmoil, consumers want some fun in their shopping experience and will connect with brands that offer it.
This explains why retail formats that are interactive and joyful were a big hit in 2023. Livestreaming e-commerce and short-form videos delivered to shoppers’ mobile phones are examples of this.
“Mobile phones have taken over the TV as the focal point of the living room in China,” said Daniel Zipser, who heads consumer and retail efforts in Asia at McKinsey, a consultancy.
Zipser views China as a pioneer in retail innovation and a leader in combining livestreaming with commerce. He closely watched the livestreaming trends during China’s 11.11 shopping festival, the world’s biggest shopping event that spans from late October to mid-November. This is when merchants invest in marketing campaigns and embrace the latest innovations in commerce.
He noticed the emergence of a more diverse and rich array of live streamers.