Introduction#
The European e-commerce sector is on the brink of significant change as advanced AI technology begins to influence how consumers shop online. A recent report from Morgan Stanley highlights the potential of AI to enhance customer experiences, yet raises questions about its long-term effects on profit margins.
The Role of AI in E-Commerce#
Morgan Stanley's report indicates that the use of "agentic AI"—intelligent assistants that help users find products—could lead to increased Gross Merchandise Value (GMV), which measures the total sales value of goods sold through a marketplace. However, the report cautions that as AI takes over the product discovery process, the cost of paid advertising may rise, potentially squeezing profits for established online retailers.
Logistics: A Key Defensive Strategy#
In light of these changes, Morgan Stanley is now emphasizing the importance of logistics in e-commerce. The firm has adjusted its valuation approach, comparing e-commerce companies to logistics firms rather than just tech companies. This shift suggests that a strong delivery network can act as a protective barrier against the disruptions caused by AI.
Market Reactions and Company Insights#
Allegro, a notable player in the market, has been identified as a "Top Pick" due to its robust logistics capabilities, which may help it navigate the challenges posed by AI. Despite recent stock declines, Morgan Stanley believes there is significant upside potential for Allegro. Conversely, the outlook for Kaspi.kz AO has dimmed, with lowered profit estimates reflecting concerns about its marketplace performance.
Changing Checkout Strategies#
The report also notes a strategic shift among major AI platforms like ChatGPT, which are moving away from in-app purchases to directing users to external merchant websites. This change offers some relief to European e-commerce platforms that feared being sidelined by AI. However, the ongoing tension between user engagement and advertising revenue continues to create uncertainty in the sector.
Conclusion#
As AI technology evolves and integrates with traditional retail, the ability of e-commerce platforms to leverage their logistics infrastructure will be crucial in determining their success in this new agent-led economy.