Caught in a moment of crisis, can AI be the gamechanger for luxury e-commerce?

The short answer is, yes.

The global personal luxury market seems to be “in a moment of crisis,” indicated Bain & Company’s Spring 2024 ‘Luxury Goods Worldwide Market Study’. For perspective, according to the study, the personal luxury goods market declined between 1% and 3% year-over-year in the first quarter of 2024.

Yet, the luxury market isn’t going anywhere, emphasised Dmitrii Tikhonov, Chief Technology Officer for Dubai-based luxury e-commerce platform The List.

Even if that is so, one can’t help wondering if this is only momentary blip or indication of a deeper crisis for the luxury market. Amidst macroeconomic pressures, high cost of operating a business, increasing inefficiencies and the resulting need for tech-driven investments, is there a missing piece of puzzle that could be a gamechanger for luxury e-commerce?

Pat came Tikhonov’s response, “I think it will be the adoption of artificial intelligence (AI) solutions to eliminate inefficiencies across the value chain.”

Interestingly, The List was built to showcase that AI can be leveraged to operate a luxury fashion marketplace in a highly efficient manner.

“For example, our AI-based API <GENESYS> is the first viable, market-tested AI solution in the luxury industry, which powers other major retailers as well. It transforms any in-store retail product into a catalog in real-time by mapping ERP data, extracting attributes and enriching data from images, producing dozens of relevant data points to describe it,” Tikhonov shared.

However, for the luxury e-commerce market to stay ahead of customer expectations, there is still need for more tech-driven innovation and investments. Tikhonov agreed and observed that the tech used to power luxury fashion marketplaces is 10 years behind and “extremely” inefficient.

“Even with margins of 50%, many marketplaces can’t make it work. Online marketplaces for luxury brands are weighed down by incredibly high costs in tech development, catalog production, shipping and data architecture,” he added.

At this point, the obvious question is even though a tech-first entity, does The List face certain barriers to tech adoption?

“We don’t face much tech adoption barriers in our business,” Tikhonov responded. “Many of our data scientists are skilled enough to envision how the future of e-commerce could look like and want to build something that operates with efficiency as the number 1 priority. If there’s inefficiency in the luxury value chain, we’re likely already working on the models to fix it.”

To navigate rough waters and stay ahead in the innovation curve, The List is committed to making tech-driven investments. “We’re developing our largest LLM (large language model) library and efficiently combining existing ones to eliminate some of the market’s critical operational inefficiencies,” Tikhonov concluded.

This story is part of our ‘CIO Pulse & Perspectives’ series. Pick up the August edition of IMAGES RetailME Magazine to access our exclusive report featuring opinions and insights from 20+ regional retail technology leads.