Professor in computer science and Engineering and co-director of the artificial intelligence research institute at Singapore’s Nanyang Technological University, Bo An, said the use of AI in e-commerce has influenced traditional physical commerce in different ways such as the decline of foot traffic and sales volumes in brick-and-mortar shops.
“Consequently, to avoid the risk of bankruptcy, many brick-and-mortar shops have tried to change their business framework by combining online and offline sale strategies, which could be more efficient,” he said.
This could impact urban layouts in the region.
Prof Bo opined that e-commerce companies can establish distribution centres on the city’s edge, especially in a city-state like Singapore.
“This would greatly reduce the cost, which could be extremely high when considering setting up the distribution centres within the central business district (CBD) area.
“Second, compared to traditional brick-and-mortar commerce, the office space requirement for e-commerce can be largely reduced as many works such as advertisement, consultation, and after-sale service can be done online,” he pointed out.
He thinks Singapore has a unique feature compared to other countries or regions, which is the co-existence and balance between e-commerce and physical commerce.
“As a highly developed country, its improved transportation system enables consumers to buy their desired products within a short period – within several hours – from brick-and-mortar shops.
“In contrast, online shopping, though convenient, would still require several steps before consumers receive the products – order placement, payment, order confirmation, and product delivery, which is typically the most time-consuming part of the online shopping process,” he said.
He also pointed out that as a small country, there is limited space for modern e-commerce companies to set up their large storage centres in Singapore.
“Given these facts, although AI has been widely used in e-commerce and there are many online shopping platforms such as Shopee and Lazada, brick-and-mortar shops are still an important part of the whole commerce framework in Singapore,” Prof Bo surmised.
However, other markets face different challenges.
Jakarta-based urban planner Mdm Elisa Sutanudjaja said to keep people coming to shopping centres, premium malls in Southeast Asia have quickly adapted by holding events at their premises to attract visitors.
She said this could include events such as a meet-and-greet with a pop star.
Those types of malls are not much impacted by the rise of e-commerce, and AI.
However, she noted that e-commerce has brought a new urban planning challenge to Southeast Asian megacities and suburbs, which is the need for many warehouses.
Some cities may not be prepared for this.
She believes the demand for warehouses could have increased by 90 per cent in recent years with the rise of e-commerce companies.
AI is likely to fuel the e-commerce boom. Thus, the need for more warehouses could continue to be a trend in the next few years.
“But the proportion of warehouses in cities or industrial planning is small. So the demand and availability are not balanced,” said Mdm Elisa, the executive director of think tank Rujak Center for Urban Studies.
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