AI, Metaverse, and IoT: Disruptive technologies powering China's global E-Commerce dominance

China's e-commerce landscape is rewriting the rules, outpacing traditional models and paving the way for a digital future. Its strength lies in cutting-edge algorithms and breakthrough technologies that have propelled giants like Alibaba and JD.com onto the global stage.

So, what are the key technological pillars driving China's e-commerce success and helping it lead the global market?

1.1. What Technologies Laid the Foundation for E-commerce?

The evolution of e-commerce is a compelling story of innovation—shaped by advancements in technology, shifts in business models, and changes in consumer behavior.

It all started with two pioneering technologies: Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT), which emerged in the 1960s and 1970s. These innovations laid the groundwork for a digital economy, gradually reducing the reliance on paper-based transactions.

The 1980s and 1990s marked the rise of the Internet and the World Wide Web, which ignited a new era of global connectivity. Information began to flow faster and more efficiently. This period marked a turning point—businesses now had to take the initiative to reach customers through the right channels, at the right time.

In 1994, the first recorded online transaction took place when Dan Koh sold a Sting CD to a friend over the Internet for $12.48. This moment signaled a historic breakthrough in the commercialization of the web.

By the early 2000s, e-commerce had transformed from isolated online transactions into a viable business model. The emergence of large-scale e-commerce platforms brought comprehensive digital sales systems to life.

At that point, the global e-commerce market reached around $150 billion, driven by the rise of platforms like Amazon and Alibaba. These companies went beyond simply selling products—they built robust ecosystems with advanced inventory management systems, optimized logistics networks, and data analytics tools to personalize customer experiences. This marked a clear evolution from basic online selling toward holistic e-commerce ecosystems.

A major turning point came in 2007 with the introduction of smartphones, especially the iPhone, which accelerated the rise of mobile commerce (M-Commerce). For the first time, consumers could shop from anywhere, at any time. That year, the global e-commerce share in retail saw a significant jump to 3.2%, up from 2.8% the year before.

The Journey of E-Commerce Development

The advent of smartphones brought tremendous benefits, most notably by dramatically expanding access to the Internet. People were no longer tied to desktop computers or fixed locations—now, they could go online anytime, anywhere. This shift pushed businesses to optimize the online shopping experience through responsive websites and dedicated mobile apps. With simplified interfaces, intuitive designs for small screens, and touch-friendly navigation, conversion rates improved significantly, while cart abandonment rates declined.

Equally important was the rapid growth of mobile payments, which played a critical role in fueling the rise of mobile commerce (m-commerce). Solutions like Apple Pay and Google Wallet gained widespread adoption, offering users fast, secure payment options directly on their mobile devices.

However, the convenience of mobile commerce truly became essential with the onset of the COVID-19 pandemic. Lockdowns and surging demand for online shopping accelerated digital transformation for both businesses and consumers. What was once a convenient option became an everyday necessity.

As offline activities slowed, online transactions soared. In 2020, global e-commerce revenue jumped by 19% in the period before and after COVID-19. Additionally, in the first four months of 2020 alone, mobile transactions surged by 189% in volume and 166.1% in value compared to the same period in 2019.

This explosive growth compelled e-commerce companies to invest heavily in enhancing the mobile user experience—from app interfaces to seamless, streamlined payment processes.

GRAPH: Global eCommerce Revenue Forecast (in Billion USD, 2021)

Source: International Trade Administration

Over time, core technologies such as EDI, EFT, the Internet, smartphones, and mobile payments have done more than just change the way people buy and sell—they have fundamentally redefined the entire modern business ecosystem. These innovations have laid a solid foundation for borderless commerce, driving globalization and supply chain optimization.

For consumers, e-commerce has evolved into a habit, a lifestyle—deeply integrating shopping behaviors with the digital environment for the long term.

1.2. Top 5 Modern Technologies in Today’s E-commerce

Digital transformation in e-commerce is impossible without a strong technological foundation. Technology acts as the backbone that drives continuous growth, enabling new ways for businesses to engage with consumers and deliver enhanced experiences.

The emergence and adoption of advanced technologies stand as clear evidence of the industry's relentless innovation and evolution.

Artificial Intelligence (AI) and Machine Learning play a pivotal role in enabling businesses to “decode” and predict consumer behavior—paving the way for tailor-made shopping experiences. Smart chatbots and virtual assistants—AI’s standout innovations—are gradually replacing human agents, delivering 24/7 customer service while reducing operational costs and increasing customer retention.

Even more compelling, a recent report on AI in Southeast Asian e-commerce revealed that 83% of customers are willing to spend more on transactions assisted by AI, and 92% trust personalized recommendations generated by AI technologies.

AR and VR technologies are transforming the way consumers shop—offering immersive, interactive experiences that were once unimaginable. Today, shoppers can try on clothing, preview furniture, or even tour a store—all from the comfort of their own homes.

Shopify, one of the world’s leading e-commerce platforms, reported a 94% increase in conversion rates after integrating AR into the shopping experience. Similarly, IKEA launched the IKEA PLACE app, allowing users to virtually place hyper-realistic 3D furniture in their living spaces to visualize how products would look and fit—before making a purchase.

Blockchain and cryptocurrency are reshaping the way transactions are conducted in e-commerce, providing secure, transparent payment systems and reducing the risk of fraud. Notably, in 2025, the Politburo approved plans to establish comprehensive financial centers in Ho Chi Minh City and Da Nang to test a digital currency exchange platform. This presents a unique opportunity to expand global customer reach, while also posing a challenge for businesses that are not yet prepared for digital transformation.

Blockchain: The Technology Revolutionizing Electronic Transactions. (Source: Internet)

Beyond information security, the ability to connect and manage smart devices in e-commerce supply chains and warehouses is critical, and the Internet of Things (IoT) plays a key role.

A prime example is Walmart, which pioneered the use of the Alphabot IoT robot to optimize warehouse management. This system enables near-instant order processing, with 95% of orders being picked and prepared for completion within just 12 minutes at the fulfillment center.

Alphabot is a unique combination of AS/RS (Automated Storage and Retrieval Systems), which acts as the "brain" of automated storage and retrieval, optimizing space and increasing productivity, and AMR robots (Autonomous Mobile Robots) equipped with advanced sensors and algorithms that allow for flexible movement and autonomous transportation of goods within the warehouse.

What sets Alphabot apart is its ability to move multidirectionally along a pre-programmed warehouse layout. These robots operate continuously and safely, with a direct charging mechanism during operation, minimizing reliance on batteries.

Once Alphabot completes order picking and transports items to designated stations, Walmart further enhances the process by implementing the Pick To Light system. This technology uses lights to visually guide employees on which products to pick and where to place them in the bags, significantly reducing time and labor compared to traditional manual searching and packing processes.

ALPHABOT by Walmart – an IoT robot for warehouse management (Source: Internet)

Electronic payments and mobile wallets are rapidly becoming an inevitable trend. Compared to traditional cash transactions—which carry risks such as fraud, high operational costs, and limited customer reach—e-wallets represent a breakthrough, offering faster and more convenient payment experiences.

Not bound by geographical limitations, digital payments enable businesses to tap into global markets and significantly accelerate the growth of e-commerce. It is projected that by 2025, the total transaction value through e-wallets will reach USD 4.8 billion, a sharp increase from USD 2.8 billion in 2020, clearly reflecting the explosive growth of this payment method.

2. Current state of E-commerce in China

2.1. E-commerce 2024: Explosive Growth & China's Dominance

Global e-commerce is experiencing remarkable growth, particularly in developing economies. According to the Digital Economy Report 2024 by UNCTAD, the e-commerce market share in these countries has surged from 37% in 2022 to 45% in 2024—an impressive leap. Experts predict that global sales will exceed 8 trillion USD by 2027.

Grandview Research also projects that China's e-commerce market will hit USD 3.48 trillion by 2030.

China’s dominance in e-commerce has had a significant impact on international markets. Chinese e-commerce companies are rapidly expanding their global footprint, with over 50% of Amazon's marketplace share in 2024 belonging to sellers based in China. Brands like Temu and Shein are actively penetrating overseas markets, including the United States and Latin America.

China’s cross-border e-commerce transaction volume reached approximately 1.22 trillion yuan (USD 170.95 billion) in the first half of 2024, marking a 10.5% increase compared to the same period the previous year. This international success is strongly supported by China’s robust and diverse domestic e-commerce ecosystem.

This dynamic ecosystem operates under three primary models: B2C, C2C, and Social Commerce. In the B2C segment, Alibaba dominates with its platforms Taobao and Tmall, accounting for 50.8% of the market share in 2023. This model allows businesses to sell directly to consumers, providing full control over the production-to-distribution process, ensuring quality and service standards. However, a major challenge lies in the substantial investment required for marketing and brand building to attract and retain customers.

B2C E-Commerce Market Share in China, 2023

(Source: Market Research.com)

In contrast to the B2C model, C2C (consumer-to-consumer) focuses on transactions between individual consumers, allowing people to sell products and services directly to other buyers.

The greatest strength of the C2C model lies in its low entry barriers—sellers can easily enter the market with minimal upfront costs, while buyers benefit from a wide variety of choices. However, a key drawback is the inconsistency in product and service quality, which requires buyers to exercise greater caution when making purchases.

The C2C model is rapidly becoming a mainstream trend, particularly appealing to Gen Z consumers—those drawn to Y2K and 1980s fashion styles. In 2023 alone, this model generated USD 434 million in revenue.

The growing popularity of secondhand goods not only helps reduce waste but also contributes to environmental protection, aligning with China’s Net Zero commitment by 2060.

In addition to B2C and C2C, the rise of social commerce is playing a pivotal role in propelling China’s e-commerce market onto the global stage. This model blends e-commerce with social networking, enabling users to shop directly within apps without leaving the platform.

Its key advantage lies in leveraging community interaction and connectivity to enhance the shopping experience while encouraging product sharing and discovery.

To succeed in this space, businesses must craft effective marketing and advertising strategies tailored for social media. In China, platforms like WeChat and Douyin (TikTok) have become trailblazers by integrating in-app shopping features, creating seamless and optimised connections between brands and consumers.

2.2. What Makes China a Global Leader in E-commerce?

Firstly, China boasts advanced digital infrastructure and a high internet penetration rate. As of December 2024, the number of internet users in China had reached an impressive 1.1 billion, with a penetration rate of 78.6%.

This vast user base is supported by the rapid expansion of both fixed and mobile broadband networks nationwide, effectively covering both urban centres and rural areas. The combination of a massive online population and high-speed connectivity provides a strong foundation for the widespread adoption of e-commerce across different demographics and geographic regions.

Additionally, China is accelerating the development of its 5G network. By November 2024, the country had built a total of 4.19 million 5G base stations, accounting for over 60% of the global total.

Secondly, the rapid adoption of digital payment solutions such as Alipay and WeChat Pay has significantly facilitated the growth of online shopping. By 2024, these two platforms had emerged as the dominant players in China’s digital payments landscape, collectively controlling over 90% of the mobile transaction market.

Alipay proudly boasts a global user base of more than 1.3 billion, reinforcing its position as the most widely used Chinese mobile payment app.

WeChat Pay, seamlessly integrated into China’s hugely popular WeChat ecosystem, also commands a massive following with over 1.2 billion monthly active users.

The near-total dominance of Alipay and WeChat Pay has created an exceptionally efficient and user-friendly payment infrastructure. Their widespread adoption and high level of user familiarity have established a trusted payment environment drastically lowering barriers to entry for both consumers and businesses engaging in e-commerce.

Thirdly, the Chinese government has played a pivotal role in driving e-commerce growth through supportive policies and initiatives aimed at advancing the digital economy.

China has introduced a range of tax incentives and streamlined customs procedures, particularly within free trade zones such as Shanghai, Hainan, and Xinjiang. These regions benefit from preferential tax rates and simplified administrative processes, helping businesses reduce costs and expand more easily into international markets.

In August 2023, China’s Ministry of Finance reaffirmed its commitment to supporting enterprises by introducing a preferential VAT policy, reducing the rate from 3% to 1% for micro, small, and individually owned businesses. These measures have significantly eased financial burdens, empowering e-commerce enterprises to invest more in product and service development, ultimately enhancing their global competitiveness.

The Chinese government’s consistent and proactive support through targeted policies and national strategic planning has been instrumental in creating a favourable environment for the sustainable growth and expansion of e-commerce across various sectors and geographic regions within the country.

Fourthly, China’s logistics system continues to evolve rapidly to meet growing demand for fast and efficient delivery. In 2024, the country’s express delivery industry handled over 150 billion parcels an impressive figure that highlights its massive operational capacity.

To streamline logistics processes, China is accelerating the integration of AI, robotics, and IoT technologies. These innovations are improving inventory management, automating warehouse operations, and optimising delivery routes.

Data from the Ministry of Transport in 2024 revealed a clear rise in drone and robot-assisted deliveries, with an estimated 2.7 million parcels transported across the country through these methods. Additionally, Linksum Digital Industry Institute forecasts that China’s smart logistics market could reach a value of 120 to 150 billion yuan by 2025.

E-commerce giants like Temu and 1688 have also demonstrated remarkable logistics capabilities, reducing shipping times from China to Vietnam to under one week an impressive benchmark for cross-border operations.

Lastly, the power of attractive promotional campaigns and the booming trend of livestream shopping cannot be overlooked. These have become highly effective tools for businesses to engage and convert customers at scale.

Beyond infrastructure optimisation, Chinese e-commerce platforms continuously roll out enticing promotions and discounts, turning online shopping into an exciting “hunt” for the best deals. A prime example is Singles’ Day (11 November), where major platforms like Taobao, Tmall, and Pinduoduo offer dramatic price reductions—often between 50% to 80% across a wide range of products.

Pinduoduo, in particular, has made waves with its “team purchase” model, which incentivises users to form buying groups—the more participants, the lower the price. Alongside this, e-commerce platforms regularly introduce various promotional formats, including discount codes, gift vouchers, cashback offers, and more allowing consumers to optimise costs while shopping.

These strategies not only help platforms drive revenue growth but also foster a highly competitive environment that encourages innovation and continuous improvement in service quality.

In parallel, livestream commerce has emerged as a dominant trend, providing consumers with a more immersive and visual product experience. Popular KOLs and KOCs frequently host livestream sessions where they test and review products in real-time, building trust among their audience.

Remarkably, China has also launched free livestream training programmes to support the sector’s growth. As a result, in the first half of 2023 alone, livestream e-commerce generated revenue of 1.27 trillion yuan (approximately USD 176.9 billion), with over 110 million livestream sessions conducted.

2.3. China’s E-commerce Empire: Solid but Not Invincible

The Chinese e-commerce market remains a dominant force globally. However, its vast scale does not make it immune to challenges. The potential saturation in major cities, combined with increasing competition and legal factors, could impact future growth rates, particularly when compared to the global average.

Competition in China’s e-commerce sector is fiercer than ever. While Alibaba and JD.com, which account for approximately 69% of the market share (according to DBS, 2024), continue to lead, they are facing strong competition from low-cost platforms like Pinduoduo and Douyin. In Q3 2023, PDD Holdings reported an impressive 123% revenue growth, driven by the success of the international e-commerce platform Temu and its domestic counterpart, Pinduoduo.

With its strategy of deep and continuous discounts, Pinduoduo has attracted a large consumer base, but this has also posed significant challenges for premium brands such as L’Oreal and Estee Lauder. As a result, industry giants like Alibaba have been forced to ramp up offers, doubling down on discounts and promotions to retain customers. However, if this trend persists, the profit margins of these platforms could continue to erode, threatening the long-term sustainability of the market.

Competition in e-commerce is no longer confined within national borders. Chinese e-commerce platforms are aggressively expanding into international markets but must also contend with formidable rivals such as Amazon. Amazon's presence in China, with its diverse range of high-quality products, creates significant pressure, forcing Chinese companies to innovate continuously in order to maintain their competitive edge.

Delivery speed and shipping costs have also become urgent issues. To address this, China has introduced the TP1000—a drone capable of transporting over 1 tonne of goods, which is expected to be operational commercially in the coming year. This innovation underscores the constant "Wartime" mentality of Chinese businesses, as they seek to adapt and expand their market share.

In addition to the aforementioned challenges, China’s cross-border e-commerce market faces significant obstacles from the tough regulatory policies in the United States. The rapid expansion of platforms like Shein and Temu in the US is under increasing scrutiny, particularly with the potential removal of the "de minimis" rule. This rule currently allows goods valued under $800 from China to be exempt from import taxes. If abolished, the export costs for platforms such as Shein and Temu could rise considerably.

Moreover, the United States has imposed an additional 10% tariff on imports from China and tightened controls over technology exports. These moves have had a significant impact on sales: according to Bloomberg Second Measure, within just five days after the new tariffs took effect (5th February 2024), Shein's sales in the US dropped by 16-41%, while Temu saw a 32% decline. In response, these platforms are adjusting their strategies by building networks of sellers with warehouses in the US and adopting a "Half Ownership" model to optimise product management.

Price pressures and profit margins are also weighing heavily on e-commerce platforms. Continuous discounting strategies may attract customers but pose a tough challenge for profitability. If consumers gradually become accustomed to low prices, future price increases will be difficult to implement. Ms Lin, an e-commerce store owner selling diapers on Pinduoduo, complained, "The platform keeps urging me to lower prices. If I discount further, I won't make a profit."

This trend may lead to a wave of businesses leaving e-commerce platforms to build their own "empire", a strategy known as "Private Domain Traffic". By doing so, stores can control customer data and reduce reliance on large e-commerce platforms.

Additionally, deep discounting may raise concerns about product quality. When shopping online, consumers often ask, "Is this product really of good quality?" Especially with cross-border transactions, the complaint and return processes can be complicated and time-consuming. According to a report from Search Engine Journal, 96% of customers search for negative reviews before purchasing, and 99% of online shoppers read product reviews. If e-commerce platforms do not strictly monitor product quality, they risk losing consumer trust, which can severely impact long-term growth.

China's economy is facing prolonged deflationary pressures, with consumer inflation reaching only 0.2% over the past two years (2023-2024). Additionally, China's vast production capacity, as the "world's factory", is surpassing what both domestic and international markets can absorb. By Q3 2024, more than 23% of listed companies in China reported losses, up from 20% in 2023. As the economy slows, consumers tend to cut back on spending, negatively affecting the revenues of e-commerce giants like Alibaba and JD.com.

China's retail e-commerce growth is slowing down (Source: Internet)

In conclusion, while Chinese e-commerce remains a global powerhouse, it is no longer the easy-playing field it once was. Businesses within the industry are facing multiple challenges, including intense competition, international policies, and the ongoing struggles with profit margins and product quality.

It is crucial to continuously innovate, optimise costs, build trust with consumers, and expand business strategies in a sustainable manner to adapt to the ever-changing market dynamics.

3. Disruptive Technologies Driving China’s E-commerce: AI, Metaverse, IoT

To maintain its leadership and overcome challenges, China is placing a strong emphasis on developing and applying disruptive technologies in e-commerce, including AI, Metaverse, and IoT.

3.1. IoT Powers JD.com's Ultra-Fast Delivery Race

In the race for ultra-fast delivery, JD.com – China’s e-commerce giant – has emerged as a leader by leveraging the Internet of Things (IoT) in its supply chain and logistics. Not only has JD.com optimized order processing speed, but it has also built a nearly fully automated logistics ecosystem, including smart warehouses, autonomous vehicles, and highly precise sorting systems.

JD.com’s Smart Warehousing with IoT Technology (Source: Internet)

Every day, JD.com handles millions of SKUs (Stock Keeping Units), a massive challenge for any logistics system. Previously, sorting goods was a difficult task due to issues like bulky, irregular packaging. Now, with the integration of IoT-enabled smart plastic bags, this issue has been completely solved. No longer reliant on traditional barcodes, these smart bags can be automatically identified and sorted, reducing errors and increasing order processing speed by five times, achieving an accuracy rate of up to 99.99%. Each package is tracked in real time for location, content, and status, allowing the system to automatically route and deliver goods to the fastest distribution area.

Moreover, JD.com has pioneered the deployment of autonomous delivery vehicles, blending Artificial Intelligence (AI) with IoT. The core of these delivery robots is an autonomous driving system developed by JD.com, which uses AI and IoT to allow the vehicles to operate, connect, and transmit real-time sensor data.

Thanks to this intelligent management platform, JD.com can remotely monitor and control multiple self-driving vehicles simultaneously. Notably, a single operator can manage up to 50 autonomous vehicles, and according to Dr. Kong, this number could increase to 100 as the technology continues to improve.

With over 400 patents in the field of drone delivery, JD.com proves that their focus isn't just on accelerating delivery speeds but on building a smart logistics ecosystem where AI and IoT are seamlessly connected and highly efficient.

The new era of autonomous delivery is the powerful combination of AI, providing intelligent navigation and awareness for vehicles through the IoT system. This has helped JD.com create a groundbreaking autonomous delivery solution, opening a new chapter for smart logistics and meeting the increasing demand for fast delivery, fueling the growth of the e-commerce industry.

3.2. AI Storm on Douyin: Rethinking KOL/KOC Strategy

The rise of Artificial Intelligence (AI) is rewriting the playbook on online platforms, and Douyin, the short-video giant with 880 million active users per month (as of January 2025), is no exception. ByteDance, the parent company of Douyin, is actively integrating AI into the platform, ushering in a new era of user interaction.

One key move is the introduction of the Doubao AI chatbot into the app, allowing users to interact directly with Doubao through the messaging feature, creating a seamless AI communication channel. Additionally, Douyin is experimenting with the "V Project," which introduces AI-powered virtual avatars capable of live-streaming 24/7. These avatars are operated by the Doubao AI model and designed to simulate the personality of their creators. After testing, this feature officially launched in November 2024, offering continuous interaction with users.

These moves are part of a broader trend among China’s tech giants, all aiming to enhance their platforms by integrating AI into their ecosystems. Experts believe that this deep integration of AI will significantly improve the user experience.

So, what does this mean for business strategies on Douyin and TikTok, particularly in collaboration with KOLs (Key Opinion Leaders) and KOCs (Key Opinion Consumers)?

AI Chatbot Doubao: Challenges and Opportunities for Businesses
Source: Internet

Challenges for businesses:

The battle for attention: The emergence of AI-powered avatars that operate 24/7 has the potential to capture a large audience, particularly with entertainment or basic information content. This creates significant competitive pressure for KOLs/KOCs and businesses in retaining customer attention.

Changing user interaction behavior: AI chatbots like Doubao offer instant, convenient conversations, quickly addressing user queries. This can make traditional interactions with KOLs/KOCs less necessary for simple requests.

Need for flexible content strategies: Businesses must consider blending KOL/KOC-generated content with AI-supported or AI-generated content to optimize effectiveness and costs. AI tools can be used to create social media posts, including both text and images, and even generate hashtags for posts. In China, livestreams featuring virtual influencers supported by AI are attracting significant attention.

AI can partially replace KOLs/KOCs: Providers such as Baidu and Silicon Intelligence claim they can generate virtual livestream hosts in just a few minutes. This indicates that AI could replace or complement KOLs/KOCs in certain interactive activities. 

Opportunities for businesses:

Expand customer reach 24/7: Utilizing AI avatars enables businesses to maintain a constant presence on platforms, interacting with customers anytime and anywhere, beyond the time constraints of traditional livestream sessions.

Optimize marketing costs: In some cases, AI tools can save businesses money compared to hiring KOLs/KOCs for basic interactions or repetitive content.

Enhance engagement efficiency: AI chatbots can handle FAQs, provide product information, and support sales effectively. Research from Glassix shows that AI chatbots resolve issues 18% faster, with a success rate of 71%.

Personalize customer experience: AI can analyze user data to offer personalized interactions and product recommendations, boosting engagement and conversion rates.

The explosion of AI on platforms like Douyin presents both challenges and opportunities for businesses to adapt and grow. Instead of viewing AI as competition, businesses should proactively integrate this technology into their marketing and sales strategies.

An effective approach is combining human and AI elements in livestream sessions. For instance, businesses can use AI for automated responses to handle simple inquiries, while KOLs/KOCs focus on deeper, more personalized interactions. This optimizes the user experience, reduces workload for KOLs/KOCs, and enhances business performance.

In a highly competitive market like Douyin, innovation is key to standing out. Businesses that strategically leverage AI and integrate it with their content strategies will gain a competitive edge and achieve success.

3.3. Alibaba's “City” of AI, Metaverse & Blockchain

Not only is Douyin leading the way, but Alibaba is also at the forefront of integrating advanced technologies such as Artificial Intelligence (AI), Metaverse (Augmented Reality - AR), and the untapped potential of Blockchain into its e-commerce ecosystem. By synchronizing these technologies, Alibaba is shaping the future of digital commerce and offering innovative solutions that have the potential to revolutionize the industry.

Alibaba Group's Qwen AI Model
Source: Internet

Alibaba is making significant investments in Artificial Intelligence (AI), viewing it as a platform to enhance operational efficiency and deliver superior customer experiences. Chairman Zhang of Alibaba has emphasized, “When sellers find business operations easier to manage and AI tools deliver outstanding performance, they will be ready to let AI take on those tasks.”

One example of Alibaba’s application of AI to optimize business operations and reduce costs for e-commerce businesses is the Aidge project (AI for Digital and Global Entrepreneurship) and the AI search tool Accio, launched in November 2024. Powered by advanced AI models, Aidge and Accio provide APIs that support businesses across several key areas, including:

Customer insights: Analyzing data to gain a deeper understanding of consumer behaviors and preferences. Thanks to Accio’s “inspiration” feature, there was a nearly 30% increase in the number of users submitting quote requests to merchants.

Content localization: Automating the adjustment of content for different markets and languages, helping eliminate barriers and opening the door to global market access. Accio’s ability to handle queries in French, German, and other languages enhances trust between buyers and sellers in large-scale international transactions.

Design and customer service: Improving the user experience through intelligent support solutions.

Alibaba’s AI-driven initiatives are setting a new standard for e-commerce and business operations, demonstrating the transformative power of AI in driving global growth.

AI is becoming a tool that simplifies global operations for small and medium-sized enterprises (SMEs), addressing challenges related to language barriers, marketing costs, and workforce limitations. Alibaba is leveraging its existing e-commerce infrastructure to develop its own AI products, such as the Qwen project, while also supporting other AI companies in China.

Alibaba is actively leveraging AI to personalize the shopping experience through machine learning algorithms and data analytics. This helps provide relevant product recommendations, enhances customer satisfaction, and drives sales. AI is also being utilized to optimize logistics and inventory management, aiming for faster and more efficient delivery.

Alibaba’s Metaverse Applications Across Industries
Source: Internet

At the same time, Alibaba is expanding multi-dimensional interactions and shopping experiences for consumers. China is a promising market for the Metaverse, with high interest and understanding from users. Online shopping powered by AR and VR technology currently accounts for 22%. A recent IPSOS survey on Extended Reality (XR), a comprehensive term including Augmented Reality (AR), Virtual Reality (VR), and Mixed Reality (MR), revealed that 78% of Chinese citizens have a positive outlook on XR. This figure far exceeds the global average of 28%.

Alibaba has shown early interest in the Metaverse by implementing XR, 3D technologies, and virtual influencers during the Global Shopping Festival (11.11). Over 70 brands participated, offering nearly 700 products supported by XR, allowing users to stroll through a virtual shopping street. According to Bo Leifeng, Director of the XR Lab at DAMO Academy, Alibaba believes that XR technology can revolutionize online consumer trends and create numerous new business opportunities for brands.

Alibaba’s luxury shopping platform, Tmall Luxury Pavilion, has also created a virtual influencer named Timo. This character manages and organizes exhibitions on the platform, including digital 3D collections from luxury brands. Data from Tmall Luxury Pavilion shows that luxury goods with 3D and AR features have seen double-digit growth compared to the previous year, with consumers spending twice as much time viewing these products.

Alibaba Cloud plays a crucial role in providing the technological infrastructure for the Metaverse. According to Alibaba Cloud, the Metaverse is the next generation of the internet, based on Virtual Reality (VR) and Augmented Reality (AR). Alibaba Cloud has identified four key technological pillars for the Metaverse: Holographic Construction, Holographic Simulation, Virtuality-Reality Integration, and Virtuality-Reality Linkage.

Like other markets and industries, the Metaverse faces its own unique challenges. Developing virtual worlds requires significant investment in both hardware and software infrastructure. Technological barriers from current AR/VR devices are expensive and not yet user-friendly enough to achieve widespread adoption. The virtual world, as a mirror of the real world, also faces the challenge of ensuring security within a decentralized ecosystem when there are large numbers of users controlling it. The application of the Metaverse in activities such as enhancing customer experiences with immersive digital technologies or developing new products can help businesses conduct virtual experiments, optimize processes, and reduce risks.

In addition to driving sales and increasing user interaction, Blockchain technology is a key solution that provides transparency, security, and efficiency across many industries. Alibaba is also participating in this technology. March 16, 2020, marked an important milestone for Alibaba when they integrated Blockchain into the Koala import e-commerce platform to enhance transparency and traceability for consumer goods.

Now, online shoppers on Koala can easily track detailed logistics information of purchased products by scanning a QR code through the Alipay app. Koala’s ambitious plan is to continue expanding the use of Blockchain for sellers on the platform and services for direct mail from overseas, with the goal of covering 62 countries and regions, offering 2,897 product categories and 7,432 brands.

An Alibaba representative shared that integrating Blockchain technology into the import e-commerce platform can solve traditional "bottlenecks" in the industry, including difficulties in tracking, discrepancies between goods and logistics information, and the ambiguity in determining accountability within the supply chain. According to Zhao Jiechen, Koala’s supply chain manager, this technology plays a significant role in helping consumers know the origin, shipping process, and current location of their goods, while making the information more transparent.

4. New Trends in China’s E-commerce

E-commerce in China is undergoing a profound transformation, driven not only by technological advancements but also by shifts in consumer behavior. Major players like Alibaba, JD.com, and Douyin are continuously leading the charge in adopting innovations to expand their global reach. At the same time, sustainability has become a core focus, enabling the industry to thrive while maintaining a strong commitment to social and environmental responsibility.

E-Commerce Trends in China

In this context, green e-commerce is increasingly being prioritized in China, with a focus on sustainability across all aspects. Industry giants like Alibaba and JD.com are actively implementing a series of practical initiatives: from using renewable energy in operations and minimizing packaging waste through recyclable materials, to adopting environmentally-friendly delivery systems using electric vehicles and efforts to reduce carbon emissions across the entire supply chain. This trend not only responds to the growing demand from environmentally-conscious consumers but also aligns perfectly with the green policy directions that the Chinese government is promoting.

Meanwhile, Big Data is playing a crucial role in personalizing the shopping experience. Tmall, Alibaba's platform, has leveraged this technology to launch its Flagship Store 2.0, where each customer sees products tailored to their preferences. Customizing content, store layouts, and product recommendations based on shopping behavior helps brands enhance the user experience and increase customer loyalty.

Moreover, the rise of voice commerce is transforming how consumers engage with online shopping. Tencent has integrated an AI voice assistant into WeChat, allowing users to place orders using just voice commands. As this technology continues to improve, optimizing voice shopping experiences will become a significant competitive advantage.

Beyond urban areas, rural e-commerce is also gaining attention. The Chinese government has introduced several initiatives to connect remote regions with online markets, creating opportunities for businesses to reach this potential customer base. Platforms like Pinduoduo and JD.com have quickly adapted to this trend, launching projects such as Duo Duo Farms and JD Farm to support local farmers and producers.

In addition, Artificial Intelligence (AI) is becoming an indispensable element in the growth of e-commerce. By 2025, it is predicted that over 60% of e-commerce businesses will adopt AI to optimize production and operations. A survey by Bain of 500 merchants using e-commerce platforms in China revealed that 56% of them reported significant positive impacts of AI tools on productivity, while 39% saw impressive reductions in operational costs.

Not limited to domestic markets, Chinese corporations are fully capable of leveraging AI to forecast consumer trends in Vietnam and other markets, thereby crafting more effective business strategies. Moreover, AI has the potential to become a "personal manufacturer," capable of designing custom products based on user data, opening up opportunities to create products that closely meet individual customer needs and preferences.

In the fiercely competitive landscape, JD.com has chosen a unique path by focusing on the luxury market. Instead of competing on price cuts, JD.com has integrated the Toplife platform with Farfetch China, expanding access to over 1,000 luxury brands for 300 million customers. This strategy reflects a shift in the needs of Chinese consumers, with a segment now willing to spend more for better quality and shopping experiences.

This is not just a partnership; it’s a revolution, allowing JD.com to offer a seamless "end-to-end" luxury shopping experience. It could shape the future of shopping as consumers' demands diversify, with a segment willing to pay a premium for luxury products to ensure superior quality and experience. Especially in markets like China, economic growth and rising personal income have created a new class of consumers with the financial capacity for luxury items.

Finally, cross-border e-commerce is emerging as a powerful growth driver. Already the largest e-commerce market globally, accounting for a third of the market share, China is increasingly asserting its international influence through well-known platforms such as AliExpress and JD.com, alongside rising stars like Temu and Shein.

In tandem with the expansion of cross-border e-commerce, the Chinese government is taking proactive steps to support this growth. Upgrading logistics infrastructure, encouraging the development of overseas warehousing systems, and creating favorable conditions for businesses in the cross-border e-commerce sector are clear examples of this support. The growth of e-commerce not only strengthens China's position on the global economic map but also generates millions of new jobs and significantly accelerates technological innovation.

The pioneering trends in Chinese e-commerce stem from relentless creativity, a key factor that helps the "Dragon of Asia" maintain its leading position in the e-commerce field. From AI, Big Data to green e-commerce and cross-border e-commerce, these trends not only shape the future of the industry but also open up many opportunities for global businesses. Keeping up with and applying these changes will be the key for businesses to fully harness the potential of the digital economy in this new era.

5. Challenges for Vietnamese Enterprises in Application

The rapid development of e-commerce in China, driven by technological trends and advanced policies, offers valuable lessons. However, in order to take advantage of these opportunities, Vietnamese businesses must face and overcome distinct challenges in the context of the local market and infrastructure.

First, in terms of infrastructure and technology, while Vietnam has made significant strides in internet access and mobile devices, the technology infrastructure is still fragmented, particularly in rural and mountainous areas, which makes it difficult to implement technologies like AI, IoT, or VR/AR. Additionally, there is still a shortage of high-quality human resources, while the initial investment costs for new technologies are relatively high, posing a significant barrier for small and medium-sized enterprises (SMEs). At the same time, the increasing risk of cyberattacks and data breaches demands that Vietnam take strict security measures to protect the information of businesses and consumers.

In addition to technical challenges, the legal framework also presents an obstacle, as regulations on e-commerce—particularly in new fields like blockchain and cryptocurrency—are still incomplete, making implementation and management difficult. The lack of effective oversight mechanisms could affect transparency and consumer rights. Therefore, policies that support businesses and encourage investment in new technologies to enhance competitiveness are needed.

Additionally, a significant portion of the Vietnamese population is still accustomed to traditional shopping habits and cash payments, which makes the transition to e-commerce a process that requires more time and effort. Moreover, the widespread issue of counterfeit products, along with substandard product quality, has eroded consumer trust.

According to a report by Cisco & IDC, only about 3% of SMEs in Vietnam have fully completed their digital transformation process, showing that Vietnamese businesses are still lagging in the digital transition. Meanwhile, the Vietnamese e-commerce market is becoming increasingly competitive, with many major players both domestic and international entering the space. Shopee dominates 60-70% of the e-commerce market in Vietnam, and TikTok Shop has emerged as a strong competitor, surpassing Lazada in revenue. This forces local businesses to devise differentiated strategies to survive and grow.

The impact of cultural and social factors cannot be overlooked. When expanding cross-border e-commerce, businesses need to overcome language and cultural barriers to reach international customers. Domestic businesses must enhance their competitiveness, product quality, and, most importantly, their ability to tell compelling stories that showcase Vietnamese culture, traditions, and values to attract international consumers.

Furthermore, the strong development of automation and AI could reduce labor demand in certain industries, raising concerns about employment and social welfare. The digital divide between regions is also an issue that needs to be addressed to ensure all citizens have access to and benefit from e-commerce.

In conclusion, to successfully apply advanced e-commerce technologies, Vietnam needs close coordination between the government, businesses, and the public. The development of infrastructure, policies, human resources, and digital culture in a synchronized manner will be the key to fully leveraging the opportunities that technology provides while overcoming the challenges in the digital transformation process.

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Dung Tran