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Alibaba Ties Up With Guess to Boost Presence in Fashion World

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Alibaba Group Holding Limited (BABA - Free Report) is leaving no stone unturned to fortify its presence in the retail industry.

The company has extended its partnership with Guess?, Inc. (GES - Free Report) , deploy its FashionAI technology to deliver enhanced and smart shopping experience to customers.

Alibaba’s FashionAI project was launched last week which strives to showcase the future of fashion retail by leveraging the power of artificial intelligence (AI).

Moreover, the technology will provide insights on latest fashion trends, based on the images captured by the fashion expertise of Taobao and Tmall on more than 500k apparels.

The latest move of the company will strengthen client base. Moreover, adoption of Alibaba’s AI technology will aid top-line growth.

Increasing Focus on Fashion Retail

Alibaba’s strong efforts toward innovation of retail strategies will continue to aid its position in the retail world of fashion, particularly in China.

Per the latest data from Statista, the fashion retail market in China is anticipated to generate $246.9 billion in 2018. Further, it is projected to grow at a CAGR of 13% between 2018 and 2022 and to reach $402.6 billion by 2022. The apparel segment remains a key catalyst.

We believe Alibaba is well poised to reap benefits from this rapidly growing market on the back of its robust AI retail techniques. In fact, the utilization of AI bodes well for the interests of both customers as well as fashion houses.

As per the report from Research and Markets, the use of AI techniques in the retail market is expected to generate 26.2 billion of revenues by 2025.

FashionAI is capable of recommending products that match the personality and taste of customers. Consequently, this will enable the fashion brands to modify their production model and business as well.

Further, the deployment of this technique via smart mirrors, smart racks and smart lock in the store will provide enhance experience for both the buyer and seller.

Additionally, it features the concept of online-to-offline shopping which will add strength to Alibaba’s “New Retail” strategy, consequently strengthening its e-commerce platforms as well as providing the ease of shopping to the customers.

We believe all these endeavors will continue to aid the company in gaining momentum in the fashion retail.

Rising Competition

Although the latest partnership and strong retail strategies will support Alibaba in sustaining its competitive edge in the e-commerce space intensifying competition has become a major headwind.

Recently, JD.Com (JD - Free Report) announced the funding of $550 million from Alphabet’s Google. This will allow the e-commerce company to list its products on Google’s shopping site. It will be also sold in Europe and the United States. This will help it to expand customer reach and market size.

Beyond China, Alibaba faces tough competition from Amazon (AMZN - Free Report) which is the dominant player of the global e-commerce market. Amazon’s aggressive retail strategies and robust shopping services will be hindrances to Alibaba’s aim of global expansion.

Currently, Alibaba carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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