Retailers Adjust to the Pandemic

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Covid-19 wreaked havoc with models that predict retail sales — but China’s biggest annual e-commerce event showed that they’re back in business.
What’s new: China’s two biggest retailers, Alibaba and JD, used AI models trained on pandemic-era consumer behavior to make sure warehouses were stocked and deliveries arrived on time during the annual Singles Day shopping bonanza, according to MIT Technology Review. Alibaba’s sales of $74.1 billion doubled those of last year, while JD’s $40.9 billion exceeded the 2019 take by 33 percent.
Revised models: Covid-19 hit China just before the surge of holiday shopping for Chinese New Year, on January 25. Normally, major retailers use sales data from that day to prepare their models for Singles Day. Instead of gifts, however, consumers were making runs on pandemic essentials like masks, toilet paper, and hand sanitizer, throwing the models off kilter.

  • Alibaba’s logistics subsidiary Cainiao refined its models to rely less on seasonal shopping patterns, and instead focused on short-term forecasting based on factors such as sales from the week before a major promotion, and the number of active Covid-19 cases in a given province.
  • Social media influencers have become more important than ever during the pandemic. So for Singles Day, Alibaba tailored models to predict how fans would respond to promotions by hired influencers.
  • JD adapted its models to factor in data from public health officials, the news, and social media.

Behind the news: The pandemic has driven an ecommerce boom worldwide even as it has taken a tragic toll on people across the globe. Online sales across China jumped 17 percent for Singles Day in 2020 over last year. In the U.S., online sales during this year’s holiday shopping season are already 21 percent higher than the same period in 2019.
Why it matters: These companies’ moves show the critical role AI can play in helping businesses respond to today’s fast-changing, utterly unprecedented market conditions.
We’re thinking: Covid-19 has accelerated digitization in retail, and is intensifying a division of the sector into AI haves and have-nots. Retailers that are struggling to survive lack resources to invest in AI and tech; those that are doing well are doubling down on their AI investments. Unfortunately, we think this will accelerate concentration of power.

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