Home » Latest News » E-commerce & AI News Flash Collection (Jul 8): Amazon Faces EU Scrutiny, Walmart Bets on AR

E-commerce & AI News Flash Collection (Jul 8): Amazon Faces EU Scrutiny, Walmart Bets on AR

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Amazon Faces Continued EU Scrutiny Over Compliance

Amazon is under ongoing scrutiny by the EU, which has issued a Request for Information (RFI) regarding its recommendation algorithms, advertising transparency, and risk assessment measures. The EU Commission aims for Amazon to demonstrate compliance with the Digital Services Act (DSA) by July 26, detailing measures taken to adhere to the act. Information requested includes the functionality of recommendation systems, metadata, user opt-out options, and details about the design and maintenance of Amazon’s advertising library interface, along with supporting documents for its risk assessment report. While it remains to be seen if this review will lead to a formal investigation, Amazon faces significant regulatory risks, with potential penalties up to 6% of its global annual revenue, amounting to $574.8 billion in 2023. Amazon responded, stating it is reviewing the request and working closely with the EU Commission, emphasizing its investment in protecting its store from bad actors and illegal content, building compliance on this strong foundation.

TikTok’s Ad Spending Slows Amid Potential US Prohibition

Since the US announced a potential prohibition in March, TikTok’s ad spending growth has slowed, with a decrease in the proportion of young users. From January to May, TikTok’s ad spending exceeded $1.5 billion, up 11% from the same period in 2023, though the growth rate has declined from March to May. Top ten advertisers in April saw reductions in spending, with Target, DoorDash, Bayer, and Procter & Gamble reducing their ad spend by 30%, 25%, 20%, and 10% respectively. Brands have shifted focus from brand awareness to performance-oriented goals for maximizing ad spend efficiency amid potential prohibitions, with CPM increasing by 15% year-to-date. TikTok’s user engagement has increased, but the proportion of weekly users aged 18-24 has dropped from 35% in 2022 to 25% in 2024, while users aged 35-44 have increased from 16% to 19%.

Walmart Bets on AR and Emerging Technologies to Boost Shopping Experience

Walmart is leveraging augmented reality (AR) and other emerging technologies to enhance product discovery and social shopping features. The retailer has implemented virtual try-on technology across beauty, hair, furniture, and eyewear categories, along with a ‘Be Your Own Model’ feature for virtual clothing previews. This summer, Walmart plans to launch a ‘Shop With Friends’ feature, allowing users to mix and match outfits and seek friends’ feedback on virtual models. Interacting with AR features has shown higher conversion rates, increased add-to-cart rates, and lower return rates, prompting Walmart to explore more AR experiences. Amazon is also experimenting with new online shopping methods, including virtual stores showcasing electronics and home goods curated by influencers.

Inflation: Walmart and Chipotle Criticized Over Prices

Inflation may be stabilizing, but consumer frustration over high prices remains intense. Walmart has faced criticism for implementing digital shelf labels that allow for quick price changes, fueling suspicion of dynamic pricing practices. Chipotle customers have recorded employees to ensure their burrito bowls aren’t being shortchanged, reflecting widespread anger over perceived shrinkflation. Despite grocery prices rising just 1% in the past year, the long-term increase since 2019 has left many feeling financially strained. To regain customer trust, many retailers and restaurants are offering more discounts and value meals, but consumer skepticism persists.


Shopee Tests New Policy Allowing Order Cancellations During Transit

Shopee is testing a new policy that allows customers to cancel orders while goods are in transit, aimed at enhancing user experience but raising concerns among sellers. The policy is being tested in Ho Chi Minh City and Hanoi with selected sellers using Shopee’s standard SPX Express shipping service. Previously, cancellations were only allowed before the seller dispatched goods to the warehouse, now buyers can cancel during transit to the warehouse. While buyers welcome more control, sellers worry about increased risk of lost or wrongly returned goods, requiring more management effort and costs. Shopee asserts the policy aims to benefit both users and sellers by reducing return waiting times, delivery return costs, and management burden, with compensation for sellers if canceled goods are still delivered.

Consumers Cut Spending on Electronics and Apparel, Favor Luxury Beauty Products

Despite a decline in spending on electronics and apparel, consumers are splurging on luxury beauty products like perfumes and lipsticks. From January to May 2024, online spending on cosmetics rose to $16.3 billion, an 8.8% increase year-over-year, while spending on electronics and apparel grew by 3.2% and 2.9% respectively. Luxury beauty products have seen significant demand as consumers seek enjoyment amid inflation, with cosmetics sales, including perfumes and lipsticks, up notably. In contrast, consumers are opting for cheaper alternatives in other categories like groceries and apparel to manage inflation impacts. Brands like Sol de Janeiro, Clinique, Charlotte Tilbury, Summer Fridays, and Laura Mercier have been popular, with high-end fragrance online sales nearly doubling those in physical stores.

India’s Nykaa Expands Into Middle Eastern Market

Indian fashion e-commerce platform Nykaa’s subsidiary Nessa International Holdings has established a wholly-owned subsidiary, Nysaa Cosmetics Trading, in Qatar to expand in the Middle East. The new company will manage international exports and omnichannel retail of beauty and personal care products, including women’s cosmetics, toiletries, perfumes, and beauty soaps. Nykaa’s move into the Gulf Cooperation Council (GCC) region follows its 2022 partnership with a UAE apparel group and plans to open 70 stores under the Nysaa brand over the coming 5 years. Nykaa aims to capture 7% of the GCC’s high-end beauty market, driven by strong demand for beauty and personal care products. The platform’s FY2024 revenue grew by 24% to ₹6.385 billion, with a 28% increase in gross merchandise value, anticipating continued success in the GCC market.


China Promotes Global AI Cooperation with New Shanghai Declaration

The Shanghai government introduced the Shanghai Declaration on Global AI Governance at the World Artificial Intelligence Conference. The declaration is a 5-point pledge aimed at promoting open AI development and international cooperation across sectors like healthcare, transportation, and agriculture. It emphasizes AI safety, preventing disinformation, and the cooperative transfer of AI technologies. Chinese Premier Li Qiang highlighted China’s commitment to AI security and global collaboration. The declaration also aligns with international AI governance efforts, expanding China’s role in global AI safety and trustworthiness.

Tesla Optimus Humanoid Robot Draws Crowds at World AI Conference

Tesla’s Optimus humanoid robot captivated audiences at the World AI Conference with its advanced capabilities and futuristic design. The robot, showcased at the event, demonstrated its potential in various applications, attracting significant attention from attendees and media. Tesla’s presentation highlighted the Optimus’ ability to perform complex tasks and its implications for the future of AI-driven robotics. The conference served as a platform for Tesla to display its technological advancements and reinforce its position as a leader in AI innovation.

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