This week’s podcast is about my visit to Alibaba Cloud headquarters in Hangzhou.

You can listen to this podcast here, which has the slides and graphics mentioned. Also available at iTunes and Google Podcasts.

Here is the link to the TechMoat Consulting.

Here is the link to our Tech Tours.

Here are the main points:

1-Social and community platform commerce. 

• Livestreaming (entertaining plus impulse shopping)
• Community platforms. Interest based social commerce.

2-Discovery-driven customer experiences and conversational search. Not keywords.

• Focus on discovery phase and impulse purchases.
• AR/VR (image search is easy version)
• Hyper personalization
• AI0driven browsing and conversational search

3-Tools to level the playing field 

• Chatbot for CSR
• LLMs
• Content generation for marketing

——–

Related articles:

• GenAI Playbook (Step 3): How to Build Barriers to Entry with Intelligence Capabilities (9 of 10) (Tech Strategy)
• AutoGPT: The Rise of Digital Agents and Non-Human Platforms & Business Models (Tech Strategy – Podcast 163)
• Why ChatGPT and Generative AI Are a Mortal Threat to Disney, Netflix and Most Hollywood Studios (Tech Strategy – Podcast 150)

From the Concept Library, concepts for this article are:

• Generative AI
• Cloud Services

From the Company Library, companies for this article are:

• Alibaba Cloud

———transcription below

Episode 244 – Alibaba Cloud.1

Jeffrey Towson: [00:00:00] Welcome, welcome everybody. My name is Jeff Towson, and this is the Tech Strategy podcast from TechMoat Consulting.  and the topic for today, lessons, slash updates from my visit to Alibaba Cloud in Hangzhou. Now the AI Cloud Giants of China. Kind of my top priority, just because I think they’re the center of the action in terms of, you know, developing all the new gen AI tools and then deploying ’em at the same time.

You, you can look at the apps, but they come and go so quick and you don’t really know who’s going to win. So, this gives you a real good, well it gives you some degree of visibility into what large organizations are actually implementing. If you look at the AI cloud stuff, so, I did a podcast a week or so ago about Baidu.

AI Cloud leader, Alibaba Cloud is today, [00:01:00] and really Huawei and Tencent Cloud are, sort of on deck. So that’s the topic for today. Little housekeeping, we are going to have. A tour in likely September, which will be sort of a merchants and brands, retailers, tour of China, everything in that area. So, e-commerce, media, a little bit of logistics, but you know, the things that a merchant or brand selling online, whether.

In China, but more likely in their home countries.  sort of lessons for those groups.  yeah, that’ll be September I’ll, I’ll provide more details about that. If you’re interested in that, send me a note. Or you can go over to techmoatconsulting.com. There’s a tourism link there. You can find it. And it’s got some information in a contact number anyways.

Okay.  standard disclaimer, where is my standard disclaimer? There it is.  nothing in this [00:02:00] podcast or my writing or website is investment advice. The numbers and information from me and any guests may be incorrect. If views and opinions expressed may no longer be relevant or accurate, overall investing is risky.

This is not investment, legal, tax or advice. Do your own research. And with that, let’s get into this topic. So, we basically, flew out of Beijing down directly to Hangzhou, which is Hangzhou is really interesting. It, you know, I can remember, let’s say 2009 ish. Hangzhou was really sort of quiet and sleepy tourist town really.

And you know, you, you take the train back then outta Shanghai, three hours, three and a half hours, lots of stops, get out to Hangzhou and it was all tourists. Well, I mean, there was a city too, but it was, it was mostly a tourist place with the lake and everyone would walk along the lake and it was very pretty.

And you know, you could do the little paddle boats on the lake. Okay. Completely different. Now. First of all, you can get there in, I think, [00:03:00] 50 minutes, 45 minutes on the high-speed train outta Shanghai.  fantastic. You know, 295 kilometers per hour. Pretty amazing. The cities completely developed. It looks like a first-tier city now.

modern architecture, modern buildings everywhere. Now, the old part of town near the West Lake is. Okay. It still looks a little bit like it used to, but it’s all been massively upgraded, which is not a surprise given how good China is at building and upgrading, development. So, the, the lake, you know, the paddle boats are gone.

the little walk along the lake is no longer just sort of a couple bushes and some bridges that go No, no, it’s. It is really pretty. It is cafes and musicians performing and, LED lights everywhere. I’m not quite sure why China does this, but especially Hangzhou, they put LED lights on everything, the trees, the buildings, [00:04:00] the restaurants.

I mean, if you can stick an LED light on something, it’s, it’s going to have an LED light. So yeah, there’s a lot of, anyways, beautiful place, head out there and we bounced around, went to a unit tree robotics, which I’ve talked a little about. A couple other places I’ll talk about in subsequent ones. But then obviously I have to go over to Alibaba, which has campuses everywhere.

They’ve been building a lot in the last, two years. So, lots of new campuses, a new greeting center for visitors, which is actually not that interesting. But this time we went to the Alibaba Cloud, headquarters, which is pretty cool and met up there and just sort of went through the basics of what’s been going on recently.

there were some big announcements end of 2024, so sort of getting up to date, what the focus is, what the new tools are, where they’re being deployed, stuff like that. So, here’s kind of, the basics, like, okay, Eddie Wu, CEO, [00:05:00] who’s a, who’s a technologist, okay. He announced. About 300 billion RMB in new investments going into basically AI stuff.

You know, they are betting big on this whole thing and 300 billion RMB, so let’s say 45 billion US dollars, something like that. And this is going to be over three years. So yeah, that’s a lot of money. And basically, it’s going three places. Okay. AI Cloud. Building out the computing infrastructure.

Everyone’s building data centers. Everyone’s building the infrastructure such that you can offer a cloud and AI cloud in particular as a service. Okay, not a surprise there.  building out models and apps, I’ll talk about that. And then transforming their internal operations, which I’ll also talk about.

So, one of the reasons I like Alibaba Cloud. Is because it’s not just a major AI cloud company, [00:06:00] it has a massive e-commerce business. So, the first use cases you can look at are deploying these tools for all the merchants and brands that work on their platform, and for the consumers as well, the buyers.

But you know, there’s a natural user group that you can start to go to with your new tools and see how they go. So, things are going to move faster. Then when you’re going out selling AI Cloud services to client after client, after client, so they have that. So, transforming internal operations, well that’s going to be e-commerce.

That’s going to be logistics sign now, and it’s going to be staff, internal productivity, internal tools, things like that. So, we got those sorts of three buckets that look like where they’re putting the money. Now, if you actually look inside Alibaba, Alibaba Cloud, um. There’s, there’s a couple groups that are doing this.

There’s the sort of AI cloud group itself, which does the connectivity and the compute and the [00:07:00] storage. You know, you’re, you’re sort of cloud services, and then you have Tongyi Labs, which does all their generative AI stuff. That’s who’s developing all these large languages models. That’s why they’re all, they all start with the name Tongyi, right?

Tongyi Chen. Chen means like a thousand questions, but. Their names aren’t very awesome, so they call it, you know, Quinn, QN, that’s short for Chen when, but honestly, their names are not awesome. There, their new one is WanX. Like also they’ve kind of taken Chinese words and sort of.  directly put them into English.

yeah, not really good with the naming, apparently. So anyways, they got Tongyi Labs doing the LLMs, they got AI Cloud, and then they have all their business units, which are sort of building their own, but they can draw on the other units as they choose. So, they’re, you know, three different groups basically working on parts of this at all times.

You know, if you say sign out, that would be a different one. So [00:08:00] that’d be four groups. If you consider Lazada, they have their own. Generative AI capabilities they’re building. So, there’s more than that, but I, for me, there’s three big ones. Okay. Now, if you look at their sort of cloud offering, it’s three to four layers.

you know, obviously they have the infrastructure layer, servers, data centers, all of that, can be on premise, can be directly in the cloud. Fine, fine, fine. Then you get to their model layer. Most of that is basically Qwen and WanX. Pretty much everything within their large language model is like that.

WanX is there, the one they use for video generation. They just released a new one, which I’ll talk about.  but yeah, they’re, they’re basically, it’s a little bit like Baidu. They’re playing across the board. They’re building models, multimodal, image generation, video generation, large language models, reasoning models, multimodal [00:09:00] models.

They’re building very, very large, super powerful ones. They’re building very, very small, cheaper ones. Some of ’em are proprietary more and more. They seem to be going open source, so they’re basically putting chips across the whole table.  pretty much the same thing Baidu said. Now to access their models.

Then they have sort of client tools and developer tools. So, they have model scope, which you’ll hear about a lot. That’s kind of their version of hugging face.  it’s, I’m not sure how well it’s doing. If you go onto hugging face, you’ll see lots of Quinn models.  people are using the open-source versions to create derivatives and things like that.

They have model scope and then they have another one called platform for ai. So, these are kind of two ways you can engage and build. It really just depends on what’s sitting on their side versus what’s sitting on your side is the client. If the, you know, the vector database and the LLM is all in their cloud, okay, that’s model scope.

If [00:10:00] the vector database is on your side, on premise, okay. Then it’s, you know, platform for ai, but you can also move everything onto your own as well. So anyways, there’s a couple different ways you can engage with them and as you’d expect, the smaller companies are all using sort of model as a service.

They’re just doing everything as a cloud service and the larger companies are moving quickly into building their own. That was the story for a long time. And now it looks like with the sort of. The development of these very low-cost open-source models, like Deep Seek, we’re, we’re seeing everybody start to put it on their own platforms.

Now that’s really kind of interesting that, this is not developing like at least I thought it was going to develop and I think a lot of people thought it was going to develop. Like these low-cost open-source models are really shaking things up. Okay. So, you got sort of the infrastructure layer, you got the model layer, you got these.

Application services, these [00:11:00] model customization services platform for ai, Alibaba Cloud model studio platform for AI is, is called PAI. You’ll see that too. And then on top of that, well then you’ve got all things that sort of the app layer, specific tools for specific functions.  there’s a whole ton of those as well.

Anyway, so that’s kind of the picture. That’s what they’re building. Nothing terribly different than what we’re seeing from others. Okay, so what’s the update infrastructure layer?  no major new announcements in the last couple months. You know, they have their own servers, they’re doing chips, things like that.

Haven’t heard anything new there, other than there, they’re spending a lot of money. The model layer. Yeah, there’s a lot of action at the model layer. As mentioned, lots of models are on hugging face now. They mentioned the hundred derivative models on Quinn. So, we are seeing pretty [00:12:00] solid adoption as far as I can tell in terms of getting people, not just in China, but internationally to start using Alibaba models.

And I think that’s like a really interesting question cause Baidu is almost over. It’s basically China. They’re not thinking about anything outside of China for their models.  but Alibaba really is, they’re going global and if, if they’re not going global, they’re going Asia. You know, this fight for Asia, where we’re going to see three or four major cloud service companies, and at least at the infrastructure layer, Alibaba’s in number one Now for Asia, it’s not Google Cloud, it’s not AWS, it’s Alibaba.

Okay?  they’ve got their new one video generation one. Basically, you can put in a jpeg, it’ll turn it into a video.  the interesting thing there is they’ve open sourced it. That’s interesting and they’ve made it apparently small enough that you can basically download and run it yourself. So that sounds a lot like deep seek. [00:13:00]

Very, very interesting. They have a reasoning model. QWQ. It’s called 32 B. Again, the names not awesome.  that one is also apparently going open source and it operates in English and Chinese. That the language thing is interesting. Like I mentioned this before with Baidu, MiaoDa, new model, which is basically a coding agent or a coding ai, but it lets you speak into it in Chinese and then it translates into code.

And code is all English. Well, reasoning models. Yeah. Being able to have a reasoning model in Chinese, I suspect that’s going to make a difference. Search engines that have done well, let’s say in Korea, uh. They did well because they were in Chinese native language and they drew on text that was overwhelmingly, I’m, no sorry, not Chinese, Korean language, and they drew on text that is overwhelmingly Korean.

So as these things get more into thinking and [00:14:00] reasoning, they do seem to become, not language specific, but ones that are language specific seem to be smarter. So that’s kind of an interesting question to see how the, the reasoning model sort of, uh. Progress language by language and whether they’re going to sort of diverge.

I suspect they probably are, but we don’t know. Okay, so that’s the model layer. Pretty cool.  the app layer, couple interesting things going on there.  they have, you know, there’s apps everywhere. Fine, fine, fine. What are the ones that everyone is using? Okay, Ding Talk, which is their. Their version of WeChat, which is Alibaba’s version of WeChat, that was always sort of enterprise focused.

You know, they got into the Messenger game late. They couldn’t really compete with WeChat in the B2C world, the C two C world. So very early on they went after Enterprise and DING Talk has done [00:15:00] quite well. So that’s an in turn. Then from there it goes on to become more of an enterprise tool, collaboration, document sharing, video calling, things like that.

It becomes an internal tool fairly widely used. Okay. There, gen AI is going into that in a major way, and that appears to be getting significant usage, at least within Alibaba.  that’s interesting. The one that’s sort of outside, external is Clark, which you may have heard about. Yeah. That’s sort of their B2C tool.

That’s your sort of everything tool just for using on a day-by-day basis. You know, for me, my sort of everything tool used to be like chat GPT, you know, not for major projects, not for serious composition or writing or research, but just sort of like asking questions, doing little meme videos, things like I used to do chat GPT now I pretty much use. [00:16:00]

Grok, Twitter XI use that. I find that to be very good. And it’s sort of right in Twitter, so there you go. Anyways, that’s Cork. They say they have 200 plus million users on Cork. Now that’s China, including Hong Kong. And those two apps are kind of the ones I’m playing with right now. I mean, there’s others, but those are, you know, fairly widely used.

So interesting. Anyways, so interesting updates. What’s going on? I, I don’t think there was too many surprises there. At least not nothing that shocked me. They’re playing across the board; they’re placing fairly large bets.  they’re going international. I think that’s pretty important. Specifically, Asia, I’m kind of watching what they’re doing around, Malaysia and Singapore, things like that.

the, the shift into more open source I think is interesting and I, it’s all about adoption as far as I can tell. You know, open source, the low price helps, but probably the open source is more [00:17:00] important. Yeah, you’re just going to see a lot faster rate of adoption. That seems to be happening with everyone.

So, we heard the same thing from Baidu. You know, definitely people are at least leaning that direction. It doesn’t mean they’re abandoning them. Proprietary, and the line between open source and proprietary is not always, you know, clearly demarcated. It can be a bit gray, but yeah, the rate of adoption. The rate of advancement, I think everyone’s got to have a foot in this.

It’ll be interesting to see if open AI goes that way too. Okay, so there’s a basic update on what they’re building, but. That’s interesting, but it doesn’t actually help you if you’re a merchant or a brand or a business trying to adopt this stuff. So, let’s talk about what’s actually being deployed in practice, and where they think the action is.

So, this is where we look at, okay, what, what ai, generative AI tools are going into e-commerce. cause they’ve got both engines within the Alibaba ecosystem. So, there was a pretty decent, paper written about use cases for ai, generative AI within [00:18:00] e-commerce. And what Alibaba is deploying and why they think it makes business sense.

Like what numbers does it move? Does it increase engagement? Does it increase retention? That sort of stuff. And they have sort of a short list. They talk about that, you know, where they’re focusing. I thought that was really helpful. And we can put these into basically three buckets. So, the first bucket would be social or more community-based e-commerce.

And the idea there is, you know, you want to move past just having a merchant talking to a customer and vice versa. The more you can have more conversations, say, going between different customers or in community forums, things like that, the more that it’s a social phenomenon, it makes it a more robust experience.

So that’s kind of the first bucket, we’ll call it, social and community platform, social and community e-commerce. The second [00:19:00] bucket is basically discovery driven experiences, and this is where you start to use tools not only to make the customer experience better content, things like that, but you actually kind of change the nature of the customer experience.

Where if you go into a Walmart, you know you’re there to buy something, you probably have a list, you probably know what you’re going to buy. So. You know, it’s all about efficiency. How can I find the goods at a good price? Things like that. Discovery driven experiences. Discovery driven consumption is more like you’re playing around at the mall and you’re having fun and things get teed up to you that maybe you weren’t thinking about buying and you buy it now.

That’s a very different sort of experience. You could argue that’s richer in many ways. Well, things like conversational ai, conversational search are more like that. You’re not just doing a search based on keywords. I am looking [00:20:00] for shoes that are red, that are Nike keyword search. Get the answers. Look at the options.

No, no. Your kind of having a conversational search. I’m thinking about getting some Nike shoes.  do you have any recommendations for what type of Nikes and maybe other types of shoes I should be thinking about? That opens up the conversation into lots of topics. One, they can answer your, the AI could answer your primary question.

Here’s a Nike shoe that fits your criteria. Here it is. You might also consider these niche shoes you’ve never heard of before, and it’s a new brand and it’s coming up. You might also consider socks or whatever, but it, it allows you to sort of open up the long tail of product a lot more. So conversational search is very, very different than like what we consider search within an e-commerce site.

So, we can put that under, you know, discovery based, experiences for consumers. And now the third one is pretty basic, which is let’s level the [00:21:00] playing field. Let’s give a lot of tools to small, entrepreneurs, micro businesses, small businesses. Let them do the things that the big businesses have always done.

Well, e-commerce has always been doing that. That’s not new in per se, but in this case it’s going to be a lot more about content generation, marketing capabilities, doing all, you know, content generation for marketing, making videos, making posters, making promotions, whatever. It’s pretty labor intensive actually.

So, you know, hiring models, well, you can do all that with tools now. So, this is going to be more in that category of content generation that’s going to give small merchants and brands the tools that only the big boys have had. Okay. We’ve been seeing that for 20 years. This is just a new version of that. Okay.

So, within those three buckets, there was some pretty good information on why they think this makes sense, what numbers it moves. Okay. So, the first [00:22:00] bucket there is this idea of social community platforms, community commerce, and the simplest version of this has got to be live streaming. Now live streaming’s big in China.

It’s big in Asia. It’s kind of hit and miss outside. It appears to be doing better than it was, but you’re trying to turn basically a shopping experience into something more. You want it to be more social if possible. If nothing else, you want it to be more entertaining. Looking at a feed, you know, a list of search results for various products is not that much fun.

Well, for some people it is for, for a lot of people it’s okay. Live streaming’s, fun. It’s live. There’s a lot of back and forth between the people watching and the presenter, the influencer. And there’s a lot of back and forth between the people watching everyone’s, you know, throwing up comments in the chat.

It’s pretty fun actually. So why does that matter? Well, you’re increasing user engagement. [00:23:00] You’re somewhat fostering a community sense.  that’s pretty, helpful. And probably the, the first thing you need to do is you want to be entertaining. You want to get away from this idea of shopping at Walmart, and you want to be more like the shopping mall where we’re all having fun.

Okay, that’s a really good idea. The problem there is the entertainment value. The popularity is pretty much dependent on the popularity of the influencer. So, when you get into this game as a merchant, a brand, or even Alibaba, you’re pretty dependent on the popularity of the influencer. And you can always see that in the terms, and you can see it in the gross margins of live streaming and all that stuff.

if you go to the West, you see these influencers, they tend to be on the social platforms.  in China, they tend to be on the e-commerce platforms as well. So that, that’s a little different. I think that’ll probably happen. Uh. [00:24:00] As well outside of China over time, so, okay. Number one, you add a level of entertainment, you add a level of social engagement that should get you greater user engagement and community sense.

IE retention. Second, and this is a big thing people are going for, you know, a lot of this is about impulse shopping, right? So many of these initiatives you’ll, you’ll look at like, how does this move the numbers? Oh, it, it, it creates impulse shopping. I. That’s a big lever to pull if you can pull it. So, the idea, Hey, here’s a deal.

I’m a live streamer. We’ve got this special deal today. Right now, it’s a, a Japanese toilet with, you know, 600 different functions and we’re offering it 20% off. It’s right from to, you know, but you only got 30 seconds or you only got two minutes or we’ve only got a hundred in stock. Right. Anything you can drive do to drive impulse shopping is great.

But you can also do stuff that’s a little bit lower down. You can do things to stimulate engagement. [00:25:00] You can say, hey, we have free samples. If, you know, whoever puts a chat in the com or comment in the chat in the next 30 seconds, we’ll get a free sample. Things like that. You can do a lot of these sort of prompting behaviors, ideally to get purchases.

Impulse purchases is the goal, but you can also get engagement. You can get signups, you can get memberships, a lot of things. So that’s all. Pretty compelling as a relatively well-known first step into this more sort of social and community-based e-commerce. Now for, for Alibaba, you’re really talking about Taobao.

Everybody knows they have Taobao Live. It’s absolutely huge. It’s live streaming all the time.  Xianyu is not as well known. That’s sort of a used goods platform.  pretty interesting.  pretty interesting. Taobao Live launched in 2016. It was kind of one of the first to [00:26:00] really do this. Now, another approach to this sort of social based e-commerce is you can start talking about community platforms, which I really, really liked.

Community platforms, and it’s, it’s the opposite of the influencer thing. The influencer thing is we find someone with a big audience. We sort of go top down from them, with the product. We try and go from there. Okay. It works and it’s powerful, but it, you know, it’s pretty expensive. Actually. This is the opposite.

This is where we start. At the bottom. We get sort of community groups and community discussion forms, and the sales sort of generate upwards. We let it sort of organically foster these discussions. And as I kind of mentioned before, the goal here is you definitely want to go be. Beyond a two-way interaction.

The company talking with the customer and back and forth, okay. Influencers expands that, right? You can go top down with an influencer, plus you get [00:27:00] a lot of chats on the side, so there’s a bottom-up part as well. Okay? This is even more robust. This is where we get lots and lots of customers and other people talking about your products and, you know, organically sort of growing the discussion.

IE the engagement around what you’re doing.  that’s really quite cool. So, an example of this would be Xianyu, which started in, well, 2023. Xianyu is the secondhand marketplace, the used goods marketplace. They started a seafood market, which was a discussion forum back in 2023, and you, you could kind of, you know.

Talk about whatever you want now, secondhand products, collectibles, services, fitness, you know, seafood, fitness guidance, whatever. And, you know, it moved the platform [00:28:00] away from a marketplace that was just about trading to more of something that’s community engagement. Now, why do you want to do that? Well, one, you get better engagement.

Better engagement gets you better data, very important. Second, you get much more retention. You know, I’ve kind of said like the holy grail of retention is a community. People do not leave their church easily. It takes a lot.  people do not leave something. They’re participating. Gamers who are dedicated to a community where they all talk about the game they don’t leave.

Communities are very, very powerful things in terms of retention. Okay. That gets you some of this and, revenue growth. So those are kind of the three metrics, at least three of the metrics you’re looking for.  yeah. GMV took off pretty good for Chen U and additionally you start to get [00:29:00] pretty good generation of content, so you start to get libraries, which may or may not be useful depending on what you’re doing, but.

You know, when something comes from someone you’re chatting with, it’s just much more trusted than when it comes from a, a merchant, almost always. Influencers are pretty good too, but communities talking about things, you, you have a higher level of trust across the board.  so if you can choose in life, you would rather customers be talking about you than you’d be talking about yourself as a business, assuming you’re good.

The other thing to think about here is when you start to operate this way, you’re really changing how your customers, how they do things. I mean, this is how do they discover a product? How do they evaluate the product? How do they purchase the product? Well, this is a completely different process. It is very different than going into Alibaba or [00:30:00] Amazon searching for keywords and then, you know, evaluating, oh, this is completely different process.

So, the customer journey changes pretty significantly. That’s important. Now China, it’s a little simpler because this kind of happens often in one platform. So, you, they will have the e-commerce marketplace and they have the discussion forms. In most of the world, that doesn’t happen in most of the world.

You kind of link from e-commerce to a social media site or something else where the discussion is taking place. So, you know, then you want to build discussion forums. There are people still do, they build a lot of discussion forums within WeChat and then link over. Things like that. So outside of China, you’re, you’re linking between two sites most of the time.

And again, that makes the discovery, evaluation and purchasing process, pretty different than what we’re used to within sort of an e-commerce site. So, it’s a bit of a different game to play. Anyways, those are kind of the two ideas. [00:31:00] this idea of social and community platform commerce live streaming would be one version of just sort of.

Be more entertaining, stimulate impulse purchases and decisions. Community building’s, a bigger play, arguably more powerful, but takes a bit more time. Okay, so that’s kind of bucket number one. Let’s move on to bucket number two now. Bucket number two is call that discovery driven customer experiences, which is this idea that we’re going to kind of change how customers interact.

Now, the. A lot of what I’m talking about is from an Alibaba report, so I’ll, I’ll sort of summarize how they explain this. They made a pretty cool point, which basically said, look, Chinese e-commerce is different than the west. The West, you could argue on average is a lot about the Walmart example. It’s a lot about providing a lot of goods and then maximizing efficiency.

[00:32:00] We’ll get it to you fast, we’ll get you a good price. The process will be seamless.  click here, buy now, all of that very, very sort of efficiency focused. It does other stuff, but I think that’s a lot of where the attention is, and there’s a big benefit to that. When you go into Walmart, your intention is to buy, you have a very clear consumer customer intention.

You’re in consumption mode. So, these sites like Amazon, yes, they’re hyper efficient at helping you buy, but. That’s why people are coming there. So, it’s, it’s a little bit more linear, in my opinion, a little simpler. Now, Chinese e-commerce sites, they don’t really do that. They. They don’t function like the Walmart model.

They’re more like a carnival or they’re more like a shopping mall.  they want to provide a better shopping experience, and they’re always trying to raise the bar on this. How can we make it better? How can we have more experiences? Let’s add live video into this. Let’s have live streaming. Let’s have short videos. [00:33:00]

You know, there’s a lot of this. Let’s have pop-up malls. Let’s have a festival. There’s a festival every month. Pretty much. So. It’s a very different experience, and I think long term it’s a better strategy because there’s always opportunity to raise the bar on the customer experience. Eventually, you do run out of efficiency to capture.

Now the downside, as I kind of said, is people are coming in with different intentions. You can’t sell a lot of stuff on TikTok shop because people don’t go to TikTok. With the intention of buying stuff, they go to be entertained. And if you hit them with a lot of buy this, buy that, they get annoyed.

Certain areas like beauty, cosmetics, it works pretty well. Other areas, it’s pretty annoying. So, the customer, intention, the customer objective is a lot messier when you do this experience game. But I do think that is kind of the, uh. The goal and what you get [00:34:00] with the experience game, the customer improvement game is you generally get better loyalty, you generally get better sort of retention.

people come back more frequently, you know, people don’t go online to shop 20 times a day, but they go on to TikTok 10 to 20 times a day. So, you get more engagement, you get more, yeah, it’s, it’s a different game. Now. Those are, that’s a simplification, but. I think that is broadly true. So, this second bucket of, you know, discovery driven customer experiences, that’s, that speaks more to the China approach, pretty clearly.

And they talk about basically three, let’s call it use cases within this, that they’re focused on. And, you know, discovery driven retail, it’s kind of like. We want you to sort of play around, have fun, do things, and you’re going to discover products in a more [00:35:00] sort of organic, a more authentic and a more maybe engaging manner.

So, it’s not the product evaluation step, it’s that discovery phase than evaluation, then purchase. They’re really trying to enrich that first step, and that’s a lot better than searching for keywords on Amazon. So, one of the areas they focus on is let’s try to blur the lines between the offline and the online real world.

now in theory, that could be augmented reality, which would be quite powerful. Doesn’t really exist yet. Most merchants can’t do it. There’s some exceptions, Pokemon Go, things like that. But in theory, you know, that would be a very sort of powerful form of this. Okay. Okay. Not really realistic right now.

Then they, they argue, oh, look, but there’s a simpler version of this that you can do right now, which is image-based search. And that’s pretty much true.  as you go through the world, as you [00:36:00] go through a store, as you go through a shopping mall, as you watch a television show, you can click a photo of anything.

Just run it into Taobao. It will image-based, search the thing, and it’ll give you option to see if you want to buy that. Okay. It isn’t ar but it’s actually a pretty decent, what we would call, discovery driven experience. And generative AI is good at this stuff. So now Tau is seeing, they say 50 million daily image-based searches.

So, you’re changing that first discovery phase of how you do things. And to some degree, it does let you operate between the real world and the online world in sort of a combined manner. I. Now if augmented reality ever takes off, okay, that would be amazing, but we’re not there yet. So that’s kind of number one example.

I thought that was pretty decent. Now, the second example would be hyper personalization, which I talk about a lot, but this is not [00:37:00] normal personalization. This is generative AI empowered personalization, and that changes that first step in the buying process, the discovery phase. Think about like. How you go online.

Let’s say you’re going to go camping. I need a tent. So you go on Amazon, you type tent for camping, camping tent, something like that. That’s one type of sort of process. The other process you could use is, I’m going camping for the first time. What do I need? Well, that’s a very different process. And the results you can get from that are quite different.

And not only can they answer that question in detail, well, you need these things, you need, but if they know a lot about me, they can do all sorts of hyper personalized things to me. You should bring a portable coffee grinder because we know you like to have coffee in the morning. Here’s two that are very good and cheap that are, you know.

Portable grinders, and here’s a coffee. You know, they could do a lot of interesting stuff, but you have [00:38:00] to change that first step in the process to do this. And generative AI just open up the door to all of this stuff. So, yeah, it broadens the question from, do you have this product, which is a typical search to what does this customer really want?

Do they even know what they really want? It sort of becomes a conversation. And that gets me to the third bucket, which is, I think the coolest one, which is what they’re calling AI driven browsing or a better term conversational search. So, if you’re a merchant or a brand on Alibaba, you can sign up for their when, when, tool, which is basically a conversational search, ai.

So similar to the last example, you, you start engaging with e-commerce by having a conversation. I. I’m going camping for the first time. I’m going skiing for the first time. What do I need? What should I think about?  things like that. Okay. That opens up [00:39:00] the conversation. Now there’s couple compelling reasons for that.

Like, number one, as I’ve been kind of saying for a while now, the number of products and services is exploding. Trying to get ranked in a search engine is getting harder and harder and harder. You know, the number of products is off the chart, so the solution to that problem, my argument has always been you’ve got to dramatically increase your value, your value to customers, and you want to have a relationship with them.

Now, a conversational search agent is a way to have an ongoing conversation with your customers. And to keep them with you as opposed to them searching in a search engine and then whatever they click on, go somewhere else. cause you’re, it’s going to get harder and harder to get found in the search engine.

So that’s part of it. The other interesting part about this is, one you can do personalization, as just mentioned. It opens up, [00:40:00] it opens up the search to more than just what you asked. You can provide other ideas. You can suggest things outside of the box. You can suggest long tail products, all of that. You can’t really do that with a standard search.

You can’t put in a bunch of random stuff like, hey, you know you need a tent. Oh, you should also, you might also consider coffee grinder and you can kind of put that at the bottom. Customers who bought this also bought that, but you’re pretty limited in what you can do there. This can open it up to everything.

You can have a free-flowing conversation going about all the things you might need, and, hey, do you have, paracetamol tablets? Because sometimes when you go up in the upper altitude, you can get headaches, you know, do you have, you can see that conversation just sort of ongoing. So, this idea of sort of AI enabled conversations, AI enabled browsing, you know, this is a very, very [00:41:00] big idea and it completely transforms.

The customer experience. So that’s kind of what we’re talking about. That first step gets changed and people have been sort of struggling this for a lot of time. Years ago, people thought this was going to be Alexa, that we’d all sit in our condos or houses and we’d talk to Alexa. Alexa, I need shampoo. And it would suggest, and it totally didn’t work.

Like nobody buys stuff that way. It was too slow. It took forever. It turns out you really want to see the products. You don’t want a, a voice response. Well, so what Win-Win does is you have a, you install this, you’re a merchant. You start to let your customers have a conversation with you. The response is multimodal.

You don’t just give them an answer. You give them pictures, you give them videos, you give them links.  you know, basically you’re bringing in the whole multimodal LLM all sorts of stuff so you can [00:42:00] really have, I wouldn’t even call it a conversation. I mean, it’s, you’re really up at the experience level when you can do all sorts of content.

So that’s kind of where this is going. So that third one for me is really kind of the big one.  I don’t have a great name for it. They call it AI driven browsing, conversational search. I’m not quite sure that’s the right term but getting close. Anyways, those are the two. The third bucket I, which I won’t go into because I’ve been talking for a while, is this idea of, let’s use gen AI tools to level the playing field for small merchants, micro merchants, things like that.

That’s mostly about content generation, which in things like apparel, when you’re making, you know, you have one dress. You can have, you can have it shown on 25 different models and create all the images and put them up and, you know, it’s, it’s a very powerful productivity tool, no doubt, especially for smaller firms.

but that, that’s nothing new. We’ve talked about that before. Anyways, that’s kind of the content for today. I know that was a bit much, [00:43:00] I’ve got a ton of notes on this, so I’m, I’m, I’m still sort of getting my thoughts together. I’m going to write this up into a, probably a pretty long article. I’ll be sending that out to subs.

Um. Yeah, probably today or tomorrow. But yeah, Alibaba Cloud, super important company in, in my view, to keep an eye on, and not necessarily because you’re going to go to China, most people aren’t. It’s because it’s almost like they’re playing a different e-commerce game than we see from players in the West, and they’re far ahead in this game of, our goal is to continually and rapidly improve the customer experience on every dimension.

That’s how we compete in China. I think that’s the right solution to a lot of things in the west.  so anyways, something to keep in mind and Alibaba in my view, is probably the best at that, that I’ve seen. Okay. That is the content for today. I’ll put the list of ideas in the show [00:44:00] notes because I know I kind of talked through a lot there.

I’ll, I’ll list them out so you can see it as for me, just a normal week working away. Pretty good mood actually. I. I’ve been, I’ve been getting into fights with people online, which is really stupid. I shouldn’t do it. Like I do tend to, I guess shit post a little bit.  I got to stop doing it. But this was kind of fun this week because the whole China us thing, the Trump tariffs, it was kind of a big event.

So, I, I did a little bit of it. I went kind of pretty viral, actually. I was getting a million plus views on a couple posts. Basically, just saying something. That I think is pretty obvious to everyone who lives in China, Asia, but that Americans seem to not be aware of, which was this game that’s been coming out of the west.

Hey, here’s a super big tariff.  do you want to negotiate with us or not? And everyone says, yeah, yeah, yeah. We’ll negotiate every country pretty much. [00:45:00] That was never going to work on China. Like it was so clear it was never going to work. So, everyone’s like, China’s going to come and negotiate. China’s going to come and negotiate.

A hundred percent tariffs or whatever it was 145 and now it’s like two 45% tariffs. And I’m like, they’re not calling, they’re not going to call. Do you not know this? Like you can take it through the roof. They’re never going to call. Like, you kind of should have known this. So anyways, I always throwing that out there when people were arguing, it was kind of fun.

But so, I’m of two minds of this either. They just don’t understand how Beijing really, but all it really China, they are never going to respond to that sort of brute force tactic or, so they either didn’t know that, or I’m talking about US government really the Trump White House, or they did know that and they [00:46:00] expected them to do this because that’s their play.

Now if that’s true, the second one is true. If the first one’s true, what I think is going to happen is there will be this tariff standoff and China will just wait five years and they’ll take the hit, it’ll be an economic hit, they’ll take it, and five years they’ll see what’s what. But I think they believe, I’m guessing here.

That they can outlast political and economic pain, I’m sorry, political and economic pain, far more than, in this case, the Trump White House and the American consumer base. And I think that’s probably true. So, let’s call that scenario A. Nothing’s going to change. It is what it is. Scenario B, this is actually some sort of 3D chess thing where they knew China was going to do this, and the real play is about to drop.

And that would be now [00:47:00] that the Trump White House knows who will bend the knee in the face of significant tariffs, they will now go back to those same countries and say, okay, one more condition. You have to lower your tariffs on our goods. We will lower our tariffs on you. So, we’ll maybe have almost no tariffs, re reciprocity, and you can’t do business with China anymore.

They will try to expand this from the US to an alliance or what people are calling the Americana trade free trade zone.  that would be a pretty gangster move and I’m not sure how that one plays out, but you’ve already, but you can already hear rumblings of this happening and that this is somewhere in the mix right now.

So, I’m waiting for that shoe to drop and. I don’t know what happens after that. I, I, I feel like I understand. Scenario A, scenario B. Oh, no, this, we’re, we’re in, we’re in uncharted territory on this one [00:48:00] because then we’ll have to see what every country’s going to do. What will Malaysia do? What will Indonesia do?

Well, trade in Asia is overwhelmingly within the region. It is not across the Pacific to the US anymore. China’s exports. About 15% of Chinese exports go to the US directly. Now there’s some secondary routes through Mexico and Vietnam, but 15% is direct.  it’s about three 3% of their GDP. China’s exports to Asia are 50% of their exports.

So, who’s going to choose what team? If it comes down to, everyone needs to choose a team and you can’t play both sides anymore. Which might happen, who’s going to choose who? I don’t know. It might be the G 20 versus the global south. We’ll see what happens. Anyways, that’s kind of where I’m on that, so I know I was, I was just playing around with this mostly just kind of [00:49:00] trolling fellow Americans who were alike.

China’s going to bend any day. I’m like, no, they’re not. They’re really not. At least not under scenario A. So anyways, that was my week. I got to stop doing that. It’s a waste of time, but kind of fun this week, and I gave myself an exception this week. So, we’ll see. Anyways, that is it for me. I hope everyone’s doing well.

Talk to you next week. Bye-bye.

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I write, speak and consult about how to win (and not lose) in digital strategy and transformation.

I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.

My book series Moats and Marathons is one-of-a-kind framework for building and measuring competitive advantages in digital businesses.

Note: This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.