How Alibaba is bringing AI to its shoppers

Alibaba (BABA) is hosting it's second annual co-create event in Las Vegas, where the Chinese e-commerce giant is releasing new products to enhance operations in both the US and around the world.

Alibaba.com president Kuo Zhang joins Yahoo Finance reporter Akiko Fujita to discuss Alibaba's plans and newest innovations.

Zhang describes the current situation as "a perfect scenario" to assist individuals globally. He notes that the company launched AI capabilities for sellers on the platform last year, reaching over 30,000 customers. The new rollout, however, focuses on enhancing the buyer experience with AI capabilities.

Regarding expansion in the US market, Zhang reveals plans to launch new financial services in partnership with Mastercard (MA). This collaboration aims to streamline transactions by offering users 3% cashback on online purchases through Alibaba and allowing hassle-free returns when using the card if received items don't meet consumer expectations.

Zhang outlines three strategies the company will implement over the next three years. First, they plan to enhance AI usage on the platform to "lower the barrier for more buyers and suppliers to come in" and facilitate easier business interactions. Secondly, they aim to improve the B2B supply chain "to make sure the buyers and sellers can trust each other." Lastly, they intend to implement initiatives to help buyers easily cope with supply chain disruptions.

With US presidential election campaigns underway, talks around Chinese tariffs have heightened. Zhang notes tariffs are only "one part" of global trade, noting that companies will have to account for these changes. Though he notes Alibaba will try to help sellers by diversifying suppliers globally.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Angel Smith

Video Transcript

Chinese e commerce giant Alibaba is doubling down on the US.

Its global business to business arm is rolling out a slew of products at its second annual core event in Las Vegas.

Among the announcements, a tie up with mass card to launch a new credit card for businesses and a new sourcing agent driven by generative A I. Akiko Fujita spoke to the president of alibaba.com, Kuo Zheng about why he thinks generative A I will accelerate global trade on the platform.

We think that it is a perfect scenario since the first, the process is complex and the people are using different languages in different time zones with different cultures in as a background.

We first launched our A I tools for the sellers last October.

And now we have more than 20,000 of uh customers seller site from China and 10,000 customers outside China who's using this A I tools.

And today we are announcing the tools for the for the buyer part.

So we are providing tool which is not a kind of traditional uh passive search engine.

It's a kind of a conversational search engine, it will get you through, you can start from a scratch to describe about your ideas or you can through a bunch of a list of questions or even a quotation documentation to the engine and the engine will get you through step by step.

This partnership that you are um you have with mastercard, you're launching a credit card.

I'm looking at the terms of that.

Um Certainly you can see the multiple use cases here, obviously increasing access to capital for the small media price, medium sized enterprises that you serve.

Also though pushing to the alibaba.com platform as well.

I mean, what opportunity do you see particularly in the US market beyond what you already have.

How significant is that growth opportunity we want to launch new uh financing services, for example, give you a more kind of payment terms like 30 days to 90 days.

So you can manage your cash flow better.

The second part is can give you th 3% of the cash back if you pay it online.

And after that, we are providing after sale services.

The let's say if the product you receive have a defect or not as disrupt that you make before then you can return the product to 4700 different locations for free.

So, so the ease of transaction as you laid it out, but clearly there's an opportunity that you see here given the launch that's happening today.

Um How big is that market for the US?

Is the US for Alibaba right now, how much more growth do you see potentially?

So currently US is around 30 to 40% in total from the GMV of the transaction perspective.

And that's only cover part of the business in daily basis.

You think about the global trade is a $20 trillion business.

So now the penetration of the digital penetration is a single digit.

So we believe there's a lot, there's a lot potential to grow if we lower the barrier and less more M BS to come to this network, alibaba.com, of course, um just a AAA part of the larger Alibaba company, um you know, looking at your most recent earnings, um certainly a slowdown in the economy back home in China.

Um creating headwinds particularly on the consumer facing side of the business, the international arm, though a bright for the company, I'm looking at international digital commerce that was up more than 30% year on year.

To what extent does the slowdown you're seeing in China increase the importance of the international arm, particularly B to B for Alibaba as a whole.

We have three major uh strategies I think not only for this year but also for the next three years.

The first thing that we already mentioned is about technology like the A I so A I can lower the barrier for more buyers and suppliers to come in to do businesses with each other.

And this is our mission to set up this business to make it easy to do business anywhere.

So we talked about that before.

The second part is about to build the digital supply chain to make sure the buyers and sellers can trust each other can pay easily to pay and deliver the product.

The third part is uh we are helping the uh buyers to coping with uh supply chain disruptions, especially we are introducing more and more global supplies into this network.

So the supplies including from the Europe, Southeast Asia, North America and Mexico, Latin America as well.

So these we can prove with uh with the effort of this, the buyers are easily to select their partners, not only from China, but from all over the world.

And these three strategies actually is driving our growth.

Yeah, let's talk about what's playing out in the Chinese economy.

Certainly a lot of our viewers very interested and you've got a good pulse on this.

Given that sme these are a real driver in the Chinese economy.

About 60% of GDP.

You have conversations with the small and medium sized businesses.

How would you assess the health of those businesses?

We speak with many of the manufacturers, with the suppliers in China.

I think for this year, one thing is that more and more kind of suppliers would like to participate in the global trade, take the Eu and Guangdong Guangzhou as an example.

So suppliers, there are actually the new suppliers come to the marketplace actually is 30 to 40% of growth comparing for the last year.

So which means that more and more suppliers would like to join this global trade that push to export more though, I mean, how much of that is a symptom of what's happening in the domestic market and wanting to seek out opportunities in more high growth areas?

I think both.

So previously, it is very hard for them to understand what's the real demand and how to kind of ship in time and how to collect the money.

And then now with the help of digital, I think it is more and more easier for them to, to kind of lower the barrier and participate in the global trade.

You talk about global cross border trade, certainly fraught with risks increasingly on the political side of things.

Um you know, global here in the US.

Um you've got the potential for the return of former President Trump who has already talked about um uh the possibility of 60% tariffs on all Chinese imports starting at 60%.

We should say, I mean, you're increasing your supplier base, but you've still got what roughly 90% in China, I mean, how big of an impact would this be for alibaba.com and how are you preparing for the possibility?

So first of all, if we talk about the global trade, actually, the fundamental rule is demand and supplies.

So I think from the US, buyers perspective is the SMB want to buy some stuff.

So there are a lot of things they need to consider like what product I I produce, what are the market, what are the cost and what is the kind of uh inflation straight and et cetera?

And the tariff is only one part of that.

And you could argue that it's not just the US anymore.

I mean, Europe has also launched some investigations of their own potential additional tariffs coming on that front as well.

We see different areas actually have different type of demand like in developing countries, in developed countries.

Actually, they are buying different stuff.

And what we, what we can do here actually is the first we can lower the barriers so more people can participate.

And the second is that we can make the supplies more diversified from all over the world.

And we have plan to kind of uh invest more than 100,000 kind of uh suppliers all over the world to participate in this uh in this network.

So more and more sme s can get beneficial from this globalization.

So that is uh our view and our effort.

That was the president of alibaba.com, Ko Zhang.

The platform itself has roughly 40 million small and medium sized businesses, 200,000 suppliers on board connecting with each other.

But as we said in the piece, it's still very heavily exposed to China.

Now, Quo Zhang says specifically that the company is looking to diversify their supplier base outside of China including through M and a last year, Alibaba acquired a German B to B platform visible to pick up some of that footprint in Europe as well.

But even with that guys, the breakdown is 80% China 20% outside right now.

So you can imagine any additional tariffs likely to create some significant risk for that platform.

Great stuff.

Thank you so much Akiko.