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Artificial Intelligence and Asian Platforms are Changing Online Retail

Artificial intelligence is used by the majority of online retailers to create content, text for products, and translations. Asian platforms such as Temu are intensifying competition and putting many market players under economic pressure. Following the COVID-19 boom and subsequent weak growth, most online retailers are forecasting sales growth again for 2024.

One major trend in e-commerce is the use of artificial intelligence. This is confirmed by the seventh edition of the Online Retailer Questionnaire 2024, conducted by ZHAW and FHNW. Over half of the online retailers surveyed already use AI for text creation and translation. Forty-two percent of online retailers also create product texts with generative AI. “AI not only saves time and money but often leads to better quality information and product data. This, in turn, often results in improved reach for search engines and increased sales,” explains Prof. Darius Zumstein, head of the study at FHNW. AI is also frequently used for search engine optimization and for creating images and videos. 

AI has huge potential in e-commerce

AI is still used relatively little in personalization and customer service, for example, by digital sales advisors and service chatbots (9%). However, it is striking that a high proportion of companies are currently planning and testing various specific AI applications. According to Zumstein, “AI has arrived in the digital economy in a short space of time and is not just a buzzword. Alongside the many opportunities it creates, 44 percent of retailers still view AI as a challenge.”

AI and market dynamics challenge online retailers

A lack of specialist knowledge and use cases coupled with difficulties integrating AI into existing business processes are among the biggest hurdles. Some also criticize the lack of quality and accuracy of AI. 

“Almost a third of online retailers do not invest in training or developing their employees, which could lead to a competitive disadvantage in the long term,” explains Fabian Oehninger from ZHAW.

The trend towards marketing products using search engines and social media such as TikTok stores, Instagram, and YouTube continues unabated. The high dynamism and speed in digital marketing and sales affect not only the technology but also markets and marketing. While price and cost pressures are on the increase, resources remain scarce in an increasingly complex and demanding market. 

Increasing competitive pressure from Asian platforms

Competition in Swiss e-commerce is intensifying owing to Asian platforms such as Temu and Shein. Since Temu entered the market in 2023, more and more retailers have faced substantial price and cost pressures, with four out of ten retailers reporting a squeeze on prices and margins, among other things. Those affected are now trying to differentiate themselves through high-quality, exclusive, or sustainable products, branding, and superior customer service. Sixty-one percent of the online retailers surveyed said they had not yet noticed any impact of these Asian platforms on their businesses. However, this could change if Temu and similar outfits expand their product ranges and further strengthen their European presence. 

Downloads

Study(PDF 11,9 MB) (German)

Contact

Prof. Darius Zumstein, Institute for Competitiveness and Communication, University of Applied Sciences Northwestern Switzerland, +41 (0) 62 957 26 46, darius.zumstein@fhnw.ch 

Fabian Oehninger, Institute of Marketing Management, ZHAW School of Management and Law, +41 (0) 58 934 74 94, fabian.oehninger@zhaw.ch

Valerie Hosp, Communications, ZHAW School of Management and Law, +41 (0) 58 934 40 68, valerie.hosp@zhaw.ch