E-Commerce Evolution: AI and Live Streaming in Retail, with former Alibaba executive Sharon Gai

“Retail is simple. Retail is just how do you sell something, and make someone’s eye light up. AI or any technology you add to it, is just another way to do that,”

— Sharon Gai, retail tech and AI expert, former Alibaba executive.

Joining me today is Sharon Gai, an expert in AI and innovation, with a focus on retail. She was an executive at Alibaba, where she advised brands and heads of state in crafting their digital strategy with programmatic marketing and AI.

In this conversation, Sharon shares her journey from working at Alibaba to becoming a consultant in AI technology for global companies. She discusses her experiences in e-commerce, particularly the evolution of live streaming and innovative marketing strategies in China. Sharon emphasizes the importance of AI integration in retail operations and the future of shopping with AI avatars. The conversation concludes with insights on simplifying retail to focus on core selling principles.

Sharon was selected as a RETHINK Retail’s Top Retail Expert and a LinkedIn Community Top Voice in 2024. She has two books, E-commerce Reimagined and How to Do More with Less Using AI. For more of her work, go to sharongai.com.

In today’s world, there’s no shortage of information. Knowledge is abundant, perspectives are everywhere. But true insight doesn’t come from access alone—it comes from differentiated understanding. It’s the ability to piece together scattered signals, cut through the noise and clutter, and form a clear, original perspective on a situation, a trend, a business, or a person. That’s what makes understanding powerful.

Every episode, I bring in a guest with a unique point of view on a critical matter, phenomenon, or business trend—someone who can help us see things differently.

For more information on the podcast series, see here.

Chapters

02:27 Experiences at Alibaba: The Global Leadership Program

05:11 E-Commerce Evolution: Insights from Tmall and Live Streaming

07:54 Innovative Marketing Strategies in Chinese E-Commerce

10:23 The Rise of Live Streaming in E-Commerce

31:33 The Evolution of AI Avatars in Retail

34:09 The Impact of AI on Shopping Experiences

41:00 Challenges in Retail During the AI Revolution

43:22 Integrating AI into Retail Operations

48:43 The Simplicity of Retail: A Unique Perspective

Transcript [AI generated]

Grace Shao (00:00)

Hey Sharon, thank you so much for joining us today. It’s great to reconnect with you. We met like, I think four or five years ago back in Shanghai and you were still with Alibaba, right? So why don’t you start with telling us about your journey? Like you grew up in Canada, you worked in Hangzhou, Alibaba. I know now you live in New York. How does it like, how did you kind of bring together all those expertise to what you do today, which is help?

Sharon Gai (00:27)

Sure. So when we met, I was working at Alibaba still. For me, as somebody who was born in China and raised in North America, and then I chose specifically to go back to China to work for a bit, the reason why I did what I did is I just knew that going forward 10, 20 years out, the two major superpowers would be the US and China. And I already had a pretty good understanding of things that were going on in North America.

⁓ Going back to where I was born and getting the chance to work there at one of the tech companies there really opened my eyes to how both countries work. I think in the future it’s going to be a ping ponging back and forth of I’m sure different ⁓ globalized companies and projects between the two places.

⁓ And so that had blended pretty well to what I do now, which is a lot of writing and keynote speaking and consulting for global companies that both have a footing in China and the U.S. So it all ties together pretty well now, but definitely as I was going through my through line or life trajectory, it seemed very confusing in the beginning phases.

Grace Shao (01:35)

Yeah, tell us a bit more about your time at Alibaba, because I know you were part of quite a special cohort. was a of a test and trial group of international cadets, per se.

Sharon Gai (01:47)

I’ve never been in cadets before. But I guess with anyone joining Alibaba, it feels like going into entering some, a ⁓ corporate army of sorts. But the program was originally set up by, or it was a brainchild of Jack Ma’s. He had always, I think he had similar thoughts, which was, you know, eventually you’ll hit the ⁓ bottleneck of about a billion or so. ⁓

Sharon Gai (02:09)

internet users in China, where do you then grow the company beyond the billion users? You have to find it outside of China. And so the first place of external search was Southeast Asia and then into the Middle East, Africa, Europe, and then eventually the US. And so his long-term vision was

to recruit people who came from those places, those corners of the earth, to get them to come to China to be in green with Alibaba’s culture, a way of working, and to bring them back out again, and then ping pong back and forth, just as I thought. So I think his vision and my own personal vision aligned pretty well. So that’s what got me to join the program. And yes, it was definitely an experiment. There were many, what I would call seasons of us or cohorts.

every single year there were new people that came in, from different cultures based on the strategy of the company at the time. think in certain years, they really wanted more, a certain language to be spoken. So they, really hired for that specific language. and it, definitely changed at different versions. but the idea was to bring in.

people who are bicultural, multicultural to eventually lead some of the business units that was trying to expand outside of...

Grace Shao (03:22)

And actually on that point, what were you doing at Alibaba? I believe you were involved with Tmall, right? So the international business, flagship business of Alibaba’s e-commerce sides. Could you tell us a bit more about that?

Sharon Gai (03:34)

So the first sort of business unit I was in was called Tmall Global. Our larger BU was called Tmall Import Export. of course, as you would know, Chinese tech companies always like to change names and just change things. Embracing change is one of the values.

So at first it was called Tmall, import and export. And I was first on the import side. And then I went to the export side, which is what we call Tabout Tmall world, where there’s about 50 million Chinese diaspora around the world. And they also will use Tabout as a shopping app. At the time was also the growing footprint of the Shiians and Tmus of the world, where these local Chinese e-commerce apps were trying to leave China.

And so Taobao Tmall World was also part of that exercise. And so those were my main two. the first was, or sorry, one of them was Taobao Tmall Import-Export. And then I moved to Tmall Classic, which is the domestic side of Tmall.

where the brands, most brands were either Western brands selling into China or Chinese brands selling to local Chinese consumers.

Grace Shao (04:47)

So you’ve really got a good look into how the retail e-commerce digital evolution happened in China. You’re super plugged in. And you were there for like six, seven years, right? So when you left, you published a book, you published E-Commerce Reimagined. And I believe at that time it was COVID, pre-COVID, and just everything kind of changed again. And we saw the rise of e-commerce really.

⁓ being part of the daily lives of North American consumers as well. Tell us a bit about like, I guess, first your book and then tell us about what you witnessed over the 10 decades, sorry, about six or seven years while you were Alibaba.

Sharon Gai (05:25)

Yeah, so in 2017 when I joined, was the height of live streaming starting in China. When I joined T-Mall Classic, I was actually one of the first teams to set up a live stream and take it to the US. So funny today, I’m back in, funny today I’m in Kuala Lumpur, Malaysia where I’m joining you for this podcast, where Jackson Wang had a concert here yesterday.

And he was one of the celebrities that we collaborated with first to do one of those live streams. At the time when we were trying out and testing out live stream rooms, we didn’t know about the flow, how to direct things, what questions to ask him, how do you showcase the products in a very natural, organic way. All of those were tests and experiments that we figured out throughout the process.

But during that time, I mean, in a lot of, so I do a lot of keynote speaking today and in a lot of the keynotes that I do, I always start off with comparing just the size of the consumer economy of China, where it is the largest one in the world. It has the most number of internet users. It also just has a very voracious consumption habit. It also has the highest,

internet penetration in the world, the number of mobile users in the world, and people, and out of those users, people who are buying things online. There’s a high amount of trust online because historically from Tmall, from JD, there’s been very, very high standards by merchants. So when merchants enter a marketplace, there’s usually very demanding.

terms for them to host returns, be able to accept returns, to deliver things on time. And that standardization eventually increases trust in the marketplace that even if there is a new seller, new tab out seller that emerges, the consumer will most likely trust them versus if you had that same transaction happen in the US, there’s a lot less trust in the marketplace.

So 2017, 2018, we’re laying out all of these foundations. And I think what I took away is the immense competitiveness of that space. And so out of competition, naturally there’s more innovation because as a merchant, you’re fighting for the same eyeball that your competitor is. So either you’re going to lower your price or

better your brand or better your quality. There’s some sort of lever that you have to tweak to be better than your competitor. I’m sure you’ve heard the term involution. In China, it’s an involutionary environment in schools, in academia, and definitely in business. And so from a brand’s perspective, there’s just a lot of...

⁓ playful and competitive things that they can do and that’s definitely

Grace Shao (08:20)

Can you give us some examples?

Like what kind of playful gimmicks or tricks would people have to use to kind of draw more eyeball over?

Sharon Gai (08:28)

So back then I was part of ⁓ the Tmall food team and I was in category management at the time. And this is a traditional sort of key account structure in all sorts of countries or categories where your top accounts will produce roughly 70 to 80 % of your total GMB.

And then the next tier, mid-tier type of brands will produce about 10%. And then the long tail produce another roughly 10 % or so. And so in...

Grace Shao (09:01)

So is that just in China for Taobao and Alibaba? Is that like a reflection of the whole industry similar kind of to how the marketplace play out in the US?

Sharon Gai (09:10)

It’s similar in the US for sure. If you look at the large FMCG companies, Procter & Gamble, Unilever and Nestle, the large three will take up about 70 to 80 % of the market share. And then depending on the subcategory or the category that they’re in, they will pretty much dominate the market or they’ll dictate a lot of how the market shakes out.

Grace Shao (09:12)

Okay.

Sharon Gai (09:36)

So during that time, or let me preface by saying that’s what you see in a traditional offline heavy space. So in a supermarket, for instance, where things are a lot more traditional. So in 2017, 2018, around that time, it was when online, there was that huge push into online. And in the...

food space, there was a lot of DTC brands that sprung out of that. At the time, China didn’t have that green light, red light policy. So the consumption sector was really robust. lot of consumption startups, FMCG related startups raise a lot of VC dollars and wanted to IPO. So at the time with their VC dollars in their hands, they were able to create all sorts of new brands.

So the Chagees, the Nice Nose, these sort of tea brands and bakery brands that you see often in Southeast Asia or in China, those were all sort of created around that time, 2017, 2018 time. And I remember...

going back to your earlier question, so what sort of creative things did I see? There was this milk brand that experimented with adopting cows. So in China, depending on where your listeners are, the dairy industry is very traditional. And in China, there’s Meng Niu and Yili are sort of the two very, very archaic, hundred-some-year-old companies.

been in China just for so many years and everyone knows them. And around that time, would not really do much in the e-commerce space because they knew they had that foothold in the market. And so out came this new brand called, in Chinese it’s called Zhinyang Yitou Niu, which translated is Adopt a Cow. Funny name, and I think part of their success was also

the cleverness in developing that name. I wrote about this case study in my book too. Their goal or the goal of their founder was traceability. So a couple of years earlier than that, there was this huge milk powder incident where several babies, I think infants died because of this milk powder was poorly made. And so his...

Focus was could we have every family in China quote-unquote own a cow that they can milk from afar? And that when they get their milk delivery, it’s from that cow that they’ve raised or that quote-unquote they adopted So that was his ultimate vision That’s how that’s how the name came about

⁓ and the things that we did was, selling milk cards. we, so, so traditionally on an e-commerce, have skews where you’re buying the actual product. This was the first time where we’re buying, a, almost a gift card, but this card would just be for this one brand and it would be sold at a much steeper discount. so.

That’s why on the consumer side, you would want to buy it. On the merchant side, you would want to sell it. And we would roll this product out to a lot of other categories for a lot of other products where people knew they would be spending that amount of GMV. So anything like toilet paper, rice, flour, milk, health supplements, any sort of category where you knew you were gonna spend that much.

in a year’s time for you yourself and your family because it’s just one of those products that you frequently shop for. And so that was something that eventually the entire platform rolled out to the entire team all rolled out, but it started with that one company. And the reason why that company did that was because there were two very large incumbents.

And the only way that he could compete is if he was innovative enough to think of something else. And throughout my time, I worked very closely with that team to see them from day one where they had two followers on their store to now if you go and look at that brand, it’s the millions of followers they have. think by now they’ve also IPO’d because they were able to IPO before the red light, green light policy.

and they set a new standard because, out from out of that, there was a new type of, DTC, all sort of mindset that came out of T-Mall where, you know, if you were a no-name brand, if nobody knew who you were, as long as you were able to think of attractive enough and innovative enough things to keep attention and to keep your consumers.

to for you to for first of all your customers to discover you and then for them to come back again and again you you were able to Survive even if you were a newcomer and even if there were very large established incumbents in your category and so that was a slice of what I learned and witnessed and there was many many more examples, but

It’s a that one’s a pretty notable and memorable one for me.

Grace Shao (14:47)

That’s like so interesting. have so many questions, but I don’t know if we’re gonna be able to double click on everything. Number one is, do you think it had anything to, this is like, we don’t have to go fully into this, but I do feel like 2017, 2018, like you said, it was a peak of like also private equity in China. And like, did you see consumer brands were just like going nuts? Like whether it’s like makeup, cosmetics, like FMB, definitely like a lot of brands peaked.

Sharon Gai (14:49)

No.

Grace Shao (15:12)

I’m surprised that this one’s still living, which is great, but it’s just like a lot of the makeup brands, like, you know, Perfect Diary also kind of did this, like they kind of just fizzled out, right? There was like these coffee shops all across the country that were coming up that were selling like specialized filtered coffee, whatnot, right? So it’s interesting to see that this company was able to utilize innovation in their marketing and branding, but actually sustain this business.

Number two, comment is how can they actually track which cow? It seems pretty crazy. Like surely they weren’t actually getting the milk from that specific cow, right?

Sharon Gai (15:49)

Which one should I answer? On the note of the cow, that was his vision. No, today, think, well, I also stopped following the brand after I left the company. To my knowledge, it did not go to that extent. However, the extent that it did go to was the founder did do a lot more beyond just the cart.

Grace Shao (15:53)

Yeah, so it’s not actually like played out, right?

Sharon Gai (16:14)

He also wanted to and I’m sure you also probably covered a lot of it 2017-2018 was a big push in agriculture from a Chinese government standpoint. He also wanted to create these he wanted to turn his factory into like a like a like a touristic activity where people could go visit the cat like your cow or you could go and

Grace Shao (16:35)

Okay.

Sharon Gai (16:36)

and experience how milk was made, how it was pasteurized, the entire process. It’s actually a very, very complicated process before it gets, know, we sometimes take for granted like packaged or milk from our fridge is taken and drink it, but it goes through so many steps. he, so within that sort of touristic factor, you could see,

certain cows were penned off and there was a video camera on each of them and each cow was numbered. So you could technically see it, like see your adopted cow. But to date, I don’t think it eventually, or that model stayed, but there were many, experiments that he did. And I’m sure there were...

Grace Shao (17:11)

Okay. Okay.

⁓

Okay, we’re going way off track.

session with these cows. I’m just like bring it back and I’m going to look up these cows afterwards. But it reminds me also this Alibaba thing where people try to gather points and they can own their own trees and they can plant a tree on Alipay. Right? Okay. So anyway, let’s bring it back. Okay. Let’s rewind and go back to retail and AI. and technology and innovation and retail. So live stream, you mentioned it, 2016, 2017.

Sharon Gai (17:37)

Mm-hmm. That’s happening.

me.

Grace Shao (17:51)

You’re one of the first, you know, part of the teams that were kind of, you know, really, I guess, leading the frontier of live streaming technology or even the strategy. It’s still not that mainstream in the West. So to start with, could you tell us what even is lives from e-commerce and how has live stream shopping really change in e-commerce in China? Is that something that you’re seeing? And like, I guess, ⁓

adoption in the US right now with TikTok or anything else.

Sharon Gai (18:22)

Mm-hmm. So live streams, e-commerce is when a seller and you can be a brand or you can literally be a person who owns something that you want to get rid of on the internet. You turn on your camera and you showcase this product live to an audience. And this audience could be some could be your actual followers or just be strangers. And then this sale is made technically the old in the old days on the in the western side.

The first adoption of live stream shopping was on Facebook live where Facebook live used to be a big thing. People would go live all the time. And then you host a room and then you make a bunch of sales and you’re actually recording a lot of the addresses and whoever bought you bought something by hand. It was very, very manual. And then on tab outside, they started with live streaming in app.

And in the US, think, you know, the Walmarts, Amazons tried their shot at live streaming. They invested a lot of dollars in creating these very posh and professional looking streaming rooms, setting up streaming studios. And all of that didn’t really go anywhere. So it had its spurt of interest. I think I think at the end of the day, it’s a it’s

One, it’s a timing thing and two, it’s sort of the way that it’s done. Yeah, and then I think the third, the host has something to do with it. So first timing in China, when I played with it, it was in 2017. That was still newish in China. China didn’t really take off with it. It didn’t really become mainstream until 2019-ish. That’s when we really understood. That’s when every single.

brand, merchant, you that, and if I’m outsourcing my operations to a TP, my TP better have a streaming room in their company. A ⁓ TP is a team all partner. if you don’t want to run your own e-commerce operations, you can outsource this to a company that knows this space very well. And really,

Grace Shao (20:12)

Sorry, TP is like a, a TP is. T-Mall partner, yes. And to give the audience, sorry to interrupt, but to give the audience some context, like how big are we talking about live stream e-commerce? Like give people like the headline numbers, like a leading influencer during Double Eleven or their annual GMV. What are we talking about?

Sharon Gai (20:40)

I think in total, I don’t know the exact numbers, but it’s north of a couple billion per year for sure for some streamers. Which is crazy.

Grace Shao (20:55)

which is crazy. This is like a single salesperson

if you think about it.

Sharon Gai (21:00)

Well, on camera they’re one person, but behind them is hundreds of people. And I’ve been through their product selection process. I’ve worked with them throughout the night. They do not sleep. Their streams start at 8 p.m. That’s not actually when they wake up. A streamer’s day is at 2 p.m.ish in the afternoon. They’ll wake up.

Grace Shao (21:03)

Yes.

Sharon Gai (21:21)

and they will start getting prepared. Their director will usually tell them today, is the, you know, we’re going through the final list. This is the final price that we’re gonna sell all these products at. At 8 p.m., usually 8 p.m., maybe sometimes six, sometimes nine, the show starts. You’re streaming for about four to five hours, so you usually finish at midnight-ish. And then midnight.

Starting midnight to around 5 a.m. You start to review what you just did because you have literally just talked for 45 four to five hours You sold a bunch of product products during double 11 It might be tons of millions of dollars that you’ve just sold per show And then tomorrow it’s gonna start again. So

You’re going to review everything that’s worked, that’s not worked, what you said was right or not right because some of these products repeat again the next day. So they’re always fixing their script and they’re always fixing how to say it better.

Grace Shao (22:15)

they buy the inventory or they take a cut from the brands? How does a business work?

Sharon Gai (22:19)

They don’t buy the

inventory. Streamers will not buy the inventory. The only fee that’s given to them from a per brand basis is a, is a, a, is is a, like a slot fee. So if I’m a brand and you’re the streamer, I’ll pay you $5,000 for you to show my product. But beyond that, you’ll also take a 10 to 15 % commission per product that you’re selling.

Grace Shao (22:48)

So this is very different

from how Instagram influence is kind of where my point is. Like for Instagram influence, it’s like, okay, you place this product here, that’s one off fee versus a live streamer in China is actually making money continuously as long as like people are buying through their link, right? And people sometimes don’t realize that.

Sharon Gai (23:07)

They don’t. Yeah. So this very traditional financial model for streamers in China is not the same in the US. In the US, it depends. Some streamers are just hired to talk for two, three hours at a time, and they’re almost paid on a per hour basis. Some streamers are paid.

They’re paid a set fee for the entire stream. It’s not even commission based. Their whole job is to, if they’re selling clothes, they just put it on, turn in front of the camera, comments will fly in and say, can you try this on another color? They take it off, put it on the other color. And so it’s almost very robotic and you sort of follow what the comments are saying. It’s not commission based. So they think less. They have to think less. They’re a lot less strategic also with placement of products. Which one goes first? Which one goes second?

because that also changes, that also impact GMB. So the two financial models are pretty different. But going back to your question earlier, is this happening in the US? It is absolutely happening in the US. It’s actually, the last numbers I checked was about $60 billion in the US, and that was last year’s number. So it should be a lot more now. The biggest US player is this app called Whatnot. I think that’s the most successful app.

They’re about as there. think they’re a series D startup now. They started with collectibles and I know some of their early collectible sellers. They sell trading cards. That’s the start of live streaming in the US is trading cards. Like there’s a huge fan base for these trade. There’s this Italian brand that makes this specific card and there’s a bunch of also intricacies with how to detect if a card is fake or if a card is real.

⁓ but, that’s the starter product is very niche.

Grace Shao (24:52)

So still quite niche. It’s not mainstream

and prolific in China right now, like how everyone knows what live stream e-commerce is, like any auntie on the street will know about it. So it’s just a very different kind of model. I wanna bring it back and talk about what that means. Does it mean it’s like...

shopping felt more personalized or did it mean like you said it was more rapid? Did it mean more interaction? Like I just want to see does that kind of foreshadow the future of technology and shopping experience?

Sharon Gai (25:23)

in the US? ⁓ I think it does. does. The way that I look at it is at the end of the day, you just want to be more, you want to reduce your barrier between the merchant and the buyer. The reason why live streaming works so well is because it’s live.

Sharon Gai (25:42)

Um, it’s so the, in some of the keynotes that I do, one slide that I have is the evolution of e-commerce. So in the nineties, you Craig list type listings, where it was just a product title and a description. There were not even photos because you didn’t have to put any photos. So some sellers were lazy and they just wrote down that I’m selling this leather jacket for $200. Um, and then Amazon came along and enforced the a plus content or, um, their, their product detail pages have to be.

put together in a certain way. So it became photos and then there were, was mandatory to have product videos. Then it was mandatory to, well, that part wasn’t mandatory, but then e-commerce became different influencers showcasing it. And then TikTok started Instagram, all of that. And so it’s pretty natural that things will just evolutionize. I think this goes back to competition.

which is China is just more competitive. So they jumped into live streaming a lot faster because we noticed that the merchants that live streamed did better than the ones that didn’t. It was as simple as that. And so the ones that didn’t would start doing it and they would have to, they were forced to learn it even if they didn’t really want to because that’s just what worked. And so in the U.S. it’s

it’s worked for these collectibles, toys companies. And I think other brands see that. now have, now what not has become cross category. Now it’s, they started with collectibles, but now a lot of fashion brands have jumped in, food brands have jumped in. Supplements also. And then in the TikTok shop world, it’s pretty, it’s more and more common for D to C brands to start streaming also.

⁓ to outsource their streaming to. Now there’s a new term called TTPs, which are TikTok Shop Partners, to do this for them.

Grace Shao (27:32)

I have a question. seems like in some ways that the China side, you said, the influencers, like not influencers, the live streamers themselves actually don’t need to be influencers. In many ways, it’s not that people go to them. It’s not like they build any, they bring any extra credibility. They’re just the avatar or, you know, the mannequin in many cases. Whereas in the U.S. it’s e-commerce is so heavily reliant on like the actual influencers, like, know, which celebrity endorses what.

you know, makes a big deal. Do you think we’ll continue to see that kind of divergent path? Or you think, you know, people will actually care less and less about who the influencer is?

Sharon Gai (28:12)

It’s actually kind of the reverse if we’re just talking about live streaming in that in the US, the people who are streaming are sort of no name people. And then in China, it’s the well known streamers, not the celebrities. I mean, on both sides of celebrities, let’s take out celebrities because they, ⁓ you know.

Sharon Gai (28:35)

They’re their own world. Also, some of them do

it sometimes. Yeah, there’s definitely pro, there’s definitely very well known live streamers like the Austin Lees of the world. They’re now a semi celebrity themselves because they’re so famous now. Like that type of profile is non-existent in the US where they’ve just gotten so good at the streaming side of things where they’ve in the branding side of things.

Grace Shao (28:53)

Mm-hmm.

Sharon Gai (28:59)

So will it diverge? think for the US at least, you’ll have more full-time B2C, more traditional Instagram influencers jump in and try it out. And it’s definitely gonna be a word of mouth type of thing.

⁓ like what I see on tech talk today is, there are certain influencers who, who are traditional influencers and now they’ve gotten in, they’ve jumped into the live streaming side. so I think in the U S it’s still a testing the waters type of thing. as for China, I think the big concern is the AI piece, where now if you go to any branded room,

If it’s an off hour, if it’s an off peak time, it’s some sort of AI avatar that’s streaming. To date, I’m sure you’ve heard of the Loyong Hall live stream room in 4.6.18. I think it was this year where he did the AI live stream and he sold X million of dollars. And it was more than he would do when he streamed himself.

in person as a human live. And that in the media space, there was a big wave of, are we going to be replaced by these AI streamers now? I think that was definitely a big, was definitely more of a PR push. Like it’s very easy to tweak those numbers so that you do make it seem like your AI version can sell a lot more. ⁓

Grace Shao (30:24)

Mm-hmm.

Sharon Gai (30:25)

You can play with pricing, the product that it sells, a lot of things. Yeah. So, but so in China, I think the future is going to be, are those big name streamers going to want to employ an AI version of themselves to conduct live streams? I think that is something that a lot of them are thinking about. Like once we let it happen, are we going, is it, how is that going to change the industry?

Grace Shao (30:50)

Actually, that’s where I really want to kind of take our conversation to next, which is like, we’ve talked about live streaming and that was, that’s kind of like the next technological, I guess, breakthrough in e-commerce for the US given that like, you know, Asia, East Asia is already like really, have, e-commerce already really, really, sorry, I want to say is like this live streaming model is already very prevalent across East Asia. ⁓

And like you said, the next stage of technological breakthrough for e-commerce in China or even including East Asia is really in avatars or AI avatars. And we already kind of saw Alibaba with their kind of like fake avatar, like these like cartoon avatars for a while now. Can you tell us a bit more about that? Like actually give us the context of like

how the AI avatar technology within Alibaba has evolved over the years and what we’re going to potentially see in the future. Because what you just said with the loyal health thing is essentially this frees up his actual free time, his time, and his avatar can just sell for him. Then do we still need him? Or, you know, is he going to become the brain behind it? And what’s the future of AI within this, this whole conversation?

Sharon Gai (31:57)

There’s I think there’s a difference to note between a real person creating an avatar of themselves and Being like the the Wizard of Oz the Oz and like puppeteering their avatar Versus I think what you were talking about is the Aya ease of the world where it’s like very futuristic looking She is a completely fictitious person person

Grace Shao (32:02)

Mm-hmm.

Yes.

Sharon Gai (32:23)

Her face is made up, the things that she wears is all made up. That type of, maybe for a better term, that type of sort of metaverse looking, futuristic looking thing is not so much an avatar. But it does happen. There’s also, Lil Mikaela is similar in Brazil.

Grace Shao (32:40)

Mm-mm.

Sharon Gai (32:47)

She’s also like, yeah, she’s like forever 19 years old. She’s worked with all sorts of major luxury brands. We’ll work with her now. So that model is proliferating around the world. I think that way of selling something or the evidence of that in the market was pretty big in...

the 2020-21 time of the world, it’s definitely died down a bit. To date, I have not seen new versions of Ayayi because technically if Ayayi worked really well, there should have been many, many versions of her. from a brand standpoint, we should also see, like each brand would have sort of their own version of Ayayi. think this brand called Florisys.

Grace Shao (33:22)

Right.

Sharon Gai (33:39)

which is this makeup brand. created one too, but she’s also kind of disappeared. So I think that that... Right. It’s like another look. Yeah. Yeah.

Grace Shao (33:46)

It’s almost like mascots, the mascots, right? He had to see like, right? Like, and they kind of just died and yeah, but people actually still want

a human looking thing, whatever, like a human being to try on the product. So to your point, like the Loi Yonghao example, it’s like people still like the fact that it looked like him, like a human, but it’s not him, right?

Sharon Gai (34:09)

Well, I think the Lui Yonghao specific one was just the novelty of it. yesterday, I was trying to buy something directly in Chachi BT because of their partnership with Etsy. I just wanted to see if it’ll get delivered, when it’ll get delivered versus if I just bought from a traditional dot com website. Like there’s a novel and I just came out of Capgemini.

panel a couple of days ago before that where every single panelist was like, we’re all shopping and try GPT right now. like, how, I don’t know how long this actually gonna last.

Grace Shao (34:42)

How good is

experience good? Because I can’t do it in Hong Kong. Is experience good? you... Is the whole...

Sharon Gai (34:47)

Yeah, you can definitely buy things within the app for sure. Not every single product.

Grace Shao (34:55)

But is it a good experience? But is it a good experience? how does it differ from going to a Alibaba.com versus like a Taobao.com versus like Amazon.com?

Sharon Gai (35:04)

I think it’s very dependent on if you’re very sure of this product because the weakness of ChadGBT and just shopping via LLMs is it’s way worse display. Because usually product photos are very beautiful and they hired models and background sets to picture this product very nicely. But in ChadGBT, a lot of these pictures are compressed.

Sharon Gai (35:29)

If they were originally long, they’re like short now. Like a lot of these photos are, there’s no standardization. And then also it cannot show videos. It can show YouTube videos inside a chain of chat, but there’s no, like if there was a product video, it can’t show the video. So if it’s something that you already know that you already buy all the time, then I think that’s, it’s.

Grace Shao (35:29)

Yeah.

Sharon Gai (35:51)

It’s easier to buy through an LLM, but if it’s something that you kind of want to browse and look at and maybe like flip through a couple of pages of reviews or photos, it’s not the best shopping experience. I would still go back to our traditional dot com website.

Grace Shao (36:04)

So basically like the agent will just go from your intent all the way to purchase all like in one go. You don’t have to click through a bunch of buttons. You just say, buy me this using this credit card go. Kind of thing. Okay. Actually tell us about more about that. Like are you seeing more brands that you’re working with right now adopt like AI within their purchasing process?

Sharon Gai (36:28)

⁓ From the perspective of a brand, I think all brands right now, the big to do for all brands right now is AEO, if you’ve heard of that term. So it’s a differentiation from the old SEO world where if I wanted to buy like a winter pea coat, I put it in Google, a bunch of blue links show up. I click through the Macy’s link, the Bloomingdale’s link, maybe another one.

Ralph Lauren or something. And I look at it and I browse through it, maybe at Dakar, maybe at Leave, I go to another site. That type of experience is being changed because now a lot of people are searching for their products through a ChachiBT, a Claude, a Perplexity. And so now as a brand, how do you not show up as the blue link, but how do you show up in the answer? So if I’m putting in the same query,

So I want to buy a winter p-coat and this is my budget and this is my type of style. I want it for this warmth because New York is usually zero to eight degrees in the winter. What are my choices? And then there will be choices that show up and some brands will show up and some brands won’t. So to get your link or to get that skew to show up, that’s called AEL or stands for answer engine or optimization.

Grace Shao (37:49)

And how do you get on that list? How do you make sure you’re on that list?

Sharon Gai (37:50)

There’s a lot of things you have to do. And it’s also something that all brands and also startups are trying to figure out right now. So it’s like an empty space for startups. in, give it another two quarters, you’ll see a lot of seed stage startups that do exactly this, which is an AO. ⁓

AEO product, like use me and I will make sure you show up in an answer engine. It’s not a sort of, a, or fortunately, it’s not a very straight cut thing. Like if you do X, then you will show up. There’s a lot of things you to do behind the scenes from just reorienting your product detail page to make it more crawlable.

Some websites want to wear off bots. Whenever you see the Cloudflare pop up where it says, check if you are a human. Most websites don’t want bots to crawl all over their site by default. And so you have to remove that. You have to also make sure that your product detail pages, or any web page rather, is very, very intricate. So much so that if anybody searched for a certain ⁓ question,

that whatever your product detail page says will pull up. So for instance, even with the example that I just said, a peacoat in the winter for New York, and it’s perfect for zero to eight degrees. That was part of my question. It’s very specific because the way that we search has just changed. We went from typing a couple of keywords to Google to now, even for yourself maybe when you look into China GPT or when you’re looking for an answer, your prompts are getting longer and longer.

Grace Shao (39:15)

It’s so specific.

Mm-hmm.

Sharon Gai (39:32)

just what you are looking for is more and more, because it’s easier and easier to find information that directly hits what we want to find. So in the zero to eight degree example, if one coat seller had that listed, would surface in the answer engine versus the coat seller that just said, this is a beautiful coat. And like providing no additional

Grace Shao (39:49)

Right.

Sharon Gai (39:57)

⁓ intricate detail for an answer engine to pull off of. But beyond that, there’s so much more. There’s more on reviews, how well your brand is guarded, general sort of reviews, Google reviews of your brand. And then back in the day,

Grace Shao (40:12)

the credibility.

Sharon Gai (40:14)

Back in the day, these LLMs pulled a lot from Reddit. This month or these months, they’re removing that Reddit portion more and more because people say random things on Reddit. Also, Reddit is 50 % bots anyway. So they’re cutting down the amount of information they’re going to pull from Reddit. They’re now going to pull more from very more credible sources. But to get your...

Grace Shao (40:18)

Mm-hmm.

Yeah.

Sharon Gai (40:38)

a coat to show up, a lot of brands used to do Reddit campaigns. So they would hire an agency and create a subreddit for their brand and make sure that these skews from their new collection was very well reviewed. a lot of them were fake. But that at least it was talked about in the Reddit community because Reddit content was very highly regarded by LLMs. And it’s sort of a moving target.

Grace Shao (40:57)

Mm-hmm.

Yeah. Would you say like,

yeah, would you say then like getting on the AEO is probably like these retailers biggest pain point or choke point right now?

Sharon Gai (41:11)

It’s definitely on the forefront for a lot of them, for sure. ⁓

Grace Shao (41:15)

What other issues are they kind

of facing during this like kind of this AI evolution or revolution?

Sharon Gai (41:21)

⁓

In regards to, well, right now for retail, it’s just a very tough quarter. Like this year, we had no growth in retail in the US ⁓ and the Q4, we might go backwards a bit. So we might go negative one percentage point, but that’s mainly caused by just people want to cut back on spending. People are buying more private labels instead of original, like being loyal to brands. They just want something more.

Sharon Gai (41:48)

bang for the buck, more quality over or same quality for same dollars that they’re spending. And then with all of the inflation, all the tariffs, it also makes goods. There’s just a lot of instability in the market. So everyone is trying to hold on and just maintain and survive. There’s also so many retail chains that’s closed and

Grace Shao (41:49)

Mm-hmm. more expensive. Yeah.

Yeah.

Sharon Gai (42:14)

just gone

bankrupt in the past year. So 2025 has been just a major shakeup for retail. I think a lot of brands want to, their CFOs are telling them to AI-ify their teams and to start employing agents instead of more people and increasing headcount in their teams. But I think for a lot of retailers,

Grace Shao (42:35)

And what kind of agents?

What kind of agents are we talking about?

Sharon Gai (42:37)

Agents for all sorts of every segment of the value chain from product creation, the merchandising piece to buying. So how can you AI-ify your procurement team? Maybe not completely remove the person, but at least stop them from increasing the team and to start outsourcing a lot of the work to AI. To the redesign of websites, writing, copy, creating.

product detail pages, creating marketing content, how do you sell, how do you market this product better to your consumers. All of that can definitely be, your productivity can definitely increase from ⁓ using AI and that’s what a lot of brands are thinking about doing and implementing this year and probably the next.

Grace Shao (43:08)

And that’s where a lot of the work focused on that you do. You help them integrate a lot of these AI tools and the AI agents into their work processes.

Sharon Gai (43:34)

Mm-hmm.

I think a big, actually, missing link from the retail side is there’s no one... When people learn about AI, it’s through today, I read this headline. Tomorrow, I read that headline. The next day, I took an executive education course with MIT and I got a certificate. It’s all... It’s very...

It’s very sporadic and it’s very disparate and everyone has different information points. There’s, I think there’s an absence in learning the foundations and the fundamentals and the applicability, the application part for your business. think those three core things, a lot of retailers are not formally doing because from the tech company side, now you have AI skills as...

Grace Shao (44:20)

Mm-hmm.

Sharon Gai (44:25)

mandatory, a mandatory piece of your job. But retail is so retail is a very traditional business, actually. So they’re there, unless you’re a D to C type of company, so your your team is naturally younger, everybody’s in their 20s, they’re already playing with Sora on their phone every day. You won’t really be part of that sphere.

Grace Shao (44:39)

Mm.

Sharon Gai (44:48)

So what’s needed is a level set of just learning about AI. Yeah.

Grace Shao (44:53)

Yeah.

So if you are, I like this question and I always, I thought it was quirky, but if you were, if you were given a hundred million dollars to really help revamp a traditional retailer, like let’s say Macy’s right. Or Bloomingdale’s or whatnot. how would you actually,

use and spend that money in terms of adopting AI and technology? What areas would you actually spend the money on if you want to make your company future proof in the next five to 10 years with this whole AI revolution?

Sharon Gai (45:22)

I would, instead of looking at where to spend money first, I think I would look back on our business metrics and what number do we want to shoot up more or tweak? Do we want to build our awareness? I think for Macy’s probably not because everyone’s already very aware of this retailer. Do we want our revenues, revenue numbers to go higher? Do we want to increase the number of locations?

Do we want to increase profit? I think I would zone in into an actual business metric. And then from there, cut into what is our bottleneck? So what part of the way that our current team is oriented, are they spending the most time on? Per role, what part of your job should be? Per role, if you were to do a task organization exercise where

There are, an e-commerce manager for instance, in your day-to-day, there’s definitely things that you do repeatedly because every time you upload a new SKU or you’re onboarding a new SKU, there’s definitely repeated things there. And there’s also things that are never repetitive where, know, if for instance, your SKU was just magically picked up by...

Grace Shao (46:27)

Mm-hmm.

Sharon Gai (46:37)

a Sabrina carpenter and now it’s, you know, floating all over the internet. That’s like a one of a kind thing that AI is not really good with in handling and capitalizing on. And so if we figure out the bottleneck and the repetitive pieces of your job to then find the tools that will take away that repetition.

Grace Shao (46:57)

Mm-hmm.

Sharon Gai (47:02)

to free you, to give that time back to you, and to free you in whatever else you can do to make the business better. I think that’s where, that’s sort of the stepwise sequence of things that I would do. And I think that in terms of a dollar figure standpoint, honestly, a lot of these AI companies don’t really know how to best price their products.

Sharon Gai (47:24)

The whole industry is just in a huge moment of experimentation right now, where a lot of people don’t know whether to price it by the more traditional SaaS models, or should we do this in a... A lot of companies are going for a consultancy, like a consulting services play, because Palantir popularized that, ⁓ or like a per time, per query.

Sharon Gai (47:51)

way a usage number and I get a lot of emails from partner vendors from their partner teams and every quarter or so they’re like, we we changed numbers again. This from now on, our pricing is gonna be this for this many queries that come in. So a lot of things are in flux.

But I think the important things that shouldn’t be in flux or that would stay is that those foundational three things.

Grace Shao (48:20)

That’s a very actually thoughtful answer. I was just looking for a headline. But no, I think that that’s really, really fair assessment. There’s just such an early stage in the whole industry right now that these tools don’t even know how to price themselves. But eventually they will figure out their own business models. And then I think for the users, whether these retail companies that you advise or not, they will figure out how to price that into their business.

Okay, mindful of time, I do want to ask, what do think is the most overhyped idea in retail tech right now? This could be AI related or not, but just in general, where do you think people are putting a lot of attention in and whether it’s overhyped or not? What do you think is an interesting retail tech that people might not know about? Actually, that’s a better framing of the question.

Sharon Gai (49:02)

something they might not know about is, well, I have mixed feelings about this, but in 2017, when I, before I joined Alibaba, well, it was right around the year. They actually set up this traveling road show called, Gateway. If, if you’ve heard of that, they did it first in Michigan. So I’ve ever re used to really want to bounce.

Grace Shao (49:19)

No, I’ve never heard of it.

Sharon Gai (49:24)

bond themselves with the Republican Party and go to all these Republican states and say China is a huge consumption power. We’re going to import so much meat and a lot of chicken and a lot of soy and grain. And so they had this traveling conference called Gateway and it would go through different states. And I remember there, there were these Alibaba developers that would make everyone

do this demo of putting on a VR headset and looking at Taobao, like three dimensional. So you can browse through Taobao and through the headset. I think that is something that people might not know about. It’s not so much hyped, I guess. It’s definitely something in the future, but it’s definitely not something here in the next three to five years. I think what we have.

Grace Shao (50:13)

You think like wearables, like wearables for shopping.

Sharon Gai (50:16)

Yeah, wearables for shopping or anything where it’s like a digital 3d store. Like all of the things that we talked about in the metaverse, like those are very, very far away from us. Yeah.

Grace Shao (50:31)

Yeah, I feel like those like VR

sets just like didn’t really take off. They had like a year of hype and then the technology wasn’t good enough. But I do see your point. Like even for myself, like if I could just wear something, I’m sound so lazy, but I can try out outfits and then like, you know, click order. That would be really helpful because right now it’s like I shop on Net-A-Porter and it comes to me that I have to like send it back, right? If it doesn’t fit, but that technology would really change how to shop.

Sharon Gai (50:57)

I yeah. Amazon has that, where you can change your outfit. And then you can also.

Grace Shao (51:02)

Mm-hmm, but it’s not feel like

as real yet, right? Like it doesn’t fit my body, my changing body and you know, like just like, it’s just like a fixed avatar, right?

Sharon Gai (51:13)

Yeah, it’s two dimensional, you, but you, it’s hard to do that too with a VR headset.

Grace Shao (51:15)

Mm-hmm.

I see what you Okay.

Sharon Gai (51:20)

Yeah, you would need some sort of mirror to do like that sort of, that was, that was a tech that was big too and then also died, which is like in-store interactive displays where guests implemented it, where you don’t have time to try on all those outfits. So they uploaded every single.

Grace Shao (51:36)

Yeah.

Sharon Gai (51:43)

item into this mirror and you can just plop plop the mirror and you’re standing in front of the mirror so you can see, so you can check out your outfit without actually physically putting it on. ⁓

Grace Shao (51:55)

Yeah, Lululemon had the fitness

ones, right? The fitness mirrors. then they kind of, it was the same technology behind it, but it also kind of died after COVID. Although I think a few Chinese companies are trying to make it happen again. They’re saying it’s AI empowered. But right now it doesn’t feel like much more than a big screen where you get to see reflection kind of just following the structures and instructions and that’s it, right? It’s not huge breakthrough yet. Yeah. I have one last question for you. Cause we were kind of going off on our

Grace Shao (52:22)

tangent again, the two of us, they first started with cows and now it’s like the mirrors. What is one unique belief or differentiated view you may hold about industry that you think is quite different from others in the industry?

Sharon Gai (52:35)

on the note of retail, I think.

Grace Shao (52:37)

on the note of retail and or retail and technology.

Sharon Gai (52:40)

I think retail is pretty simple. I think people complicate it too much with all these bells and whistles. At the end of the day, retail is how do you sell something and make the other person interested? That’s all. How do you take any product that you have, you can put any sort of shell over it, and someone’s eyes light up.

That’s what retail is. I think all the AI that we add, the VR things, the personalization and this or the other, those are all ways to do it. But I think it’ll just change. So I think...

I think not enough retailers go to the heart of what they’re selling or what they’re doing. And they often, it’s also understandable because, know, it’s most like in any Pyramidic industry, you always look at what the top key account or top brand is doing and they’re usually producing the most GNV. So you say, ⁓ they’re selling a lot. I’m going to do what they do.

And then everyone kind of swarms in that direction. And it’s not that, I think that’s for any industry, that’s just how I guess the world works. But I think the right way to approach it isn’t to look at that model. I think it’s more just to answer the question of what are you selling and how are you gonna sell in a way that attracts attention.

Grace Shao (54:06)

I think that’s like pretty applicable to like every industry. Like when you’re saying that, like really I was just thinking about like the business of media content or anything, right? Like fundamentally go back to like what, what is the problem you’re trying to solve? What answer are you trying to provide? What are you solving? Right? Like, and then, you know, go find your core versus all the kind of frivolous things outside of it.

Those are just tools. anyway, really, really appreciate your time. And I actually really love that you just walked us through the evolution of technology and retail, the intersection of technology and retail from, you know, what we know of e-commerce marketplace to live streaming to, you know, AI adoption. And we kind of even touched on our VR.

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