"On platforms that adopted artificial intelligence (AI), the cancellation and return rates for small merchants' products dropped noticeably. The effect was especially larger for sellers with little online sales experience."
Professor Kim Tae-kyung of the Department of Big Data Applications at Kyunghee University announced these findings at the "Online platforms and digital merchants: cooperation and growth seminar" held at the National Assembly Members' Office Building in Yeouido, Seoul, on the 18th.
At the seminar co-hosted by Democratic Party of Korea lawmakers Kim Byung-joo, Lee Eon-joo and Lee Geon-tae, and the Kookmin University Platform SME Research Center, Professor Kim gave a presentation on "How advanced platform services affect the performance of digital merchants."
Kim said, "E-commerce has become commonplace, but information is still lacking compared with offline, leading to inaccurate decisions," and added, "Because of this, small merchants incur cancellation and return expense, so a solution is needed."
As a solution, he proposed introducing AI to e-commerce platforms. He explained, "AI helps with optimized decisions through algorithms," and "By providing information tailored to each customer, it can raise decision accuracy and greatly reduce dissatisfaction and the likelihood of returns."
As a concrete example, the AI-applied "Naver Plus Store" was mentioned. According to Kim, cancellation and return rates on platforms with AI decreased significantly. Kim said, "Notably, even in normal consumption conditions after controlling for consumer sentiment variables, cancellations and return rates fell after AI adoption."
In addition, AI adoption was found to increase sales per click. Kim explained, "Artificial intelligence is helping people find what they want quickly." Sales of digital products also increased. Kim predicted, "Digital products have the characteristic of easy information comparison," and "As data becomes more sophisticated, sales may rise in other product categories as well."
Professor Lee Geon-ung of the Korea University Business School presented "The impact of early settlement services on seller cash flow." He noted, "Most small merchants operate under poor conditions with limited cash flow," and pointed out, "With only 27 days of cash-flow buffer, the existing system of settling payments five days after 'purchase confirmation' threatens the survival of small merchants."
Lee analyzed the data of online platform users to verify the effect of early settlement services. As a result, it was found that even an early settlement service that settles payments one business day after order processing can improve sellers' stability in fund management and predictability of cash flow. The cash buffer days for corporations using early settlement were 97.4 days, an increase of 21.7 days compared with nonusers (75.7 days).
Jeong Ji-su, Deputy Director at the Small and Medium Venture Business Ministry's Small Merchant Policy Office, said, "Early settlement services are still being introduced only on certain platforms, so government support efforts are not very active," but added, "After the T-MEP incident, we fully recognize small merchants' concerns and will discuss improvement measures."