Generative AI and E-commerce: Opportunities and Challenges for Small to Medium Businesses
The world of e-commerce is constantly evolving, driven by rapid advancements in digital technologies. Among these, generative Artificial Intelligence (AI) has emerged as a powerful new tool, offering both exciting opportunities and significant challenges for businesses, especially for small to medium-sized enterprises (SMEs). But how are these smaller e-commerce players actually using generative AI and what impact is it truly having on their operations?
This article is based on a Master’s thesis study by Aydin (2025), which explored the implications of generative AI on marketing strategies, product development and the competitive landscape for small to medium-sized e-commerce businesses. The study surveyed 49 SMEs to understand their current adoption rates, perceived benefits and challenges when integrating generative AI.
Generative AI’s Role in Marketing: Content is King
The study reveals that while many SMEs are aware of generative AI, its full integration into their core marketing strategies is still in its early stages. Approximately half of the surveyed businesses are currently using generative AI tools, primarily for content creation. In fact, a remarkable 95% of respondents identified content creation as their main application of generative AI in marketing, with 77% reporting significant efficiency gains in this area. This highlights how generative AI is becoming a valuable asset for automating and enhancing tasks like generating text and images for marketing materials.
However, the impact of generative AI on other crucial marketing areas, such as personalized customer experiences and deeper customer engagement, appears to be less developed. The study found a relatively low perceived impact on personalization, suggesting that implementing advanced personalization strategies with generative AI might require more complex data integration and resources than many smaller businesses currently possess. This often points to a ”learning curve” for SMEs trying to utilize the full potential of these advanced tools.
Product Development: Speeding Up the Design Process, Less So for Breakthroughs
In product development, generative AI is primarily being adopted in the initial technical stages. Over 70% of businesses using generative AI for product development leverage it for design and prototyping and half use it for idea generation. The research also highlighted its growing role as a coding assistant, especially for software development and improving code quality.
One significant finding is the moderate positive impact of generative AI on reducing the time-to-market for new products, with nearly 70% of respondents reporting a positive contribution. This indicates that generative AI can indeed accelerate development cycles. However, its influence on truly groundbreaking innovation appears to be more mixed. While it helps with efficiency and incremental improvements, the study found no statistically significant correlation between generative AI integration and a major impact on innovation itself. This suggests that while generative AI is excellent for operational efficiencies, it may require more than simple tool adoption to drive transformative change.
Competitive Landscape: Lowering Entry Barriers, Limited Impact on Larger Players
A key takeaway from the study is the perception among 63.3% of respondents that generative AI lowers the barriers to entry into the e-commerce market. This is likely due to AI’s ability to automate fundamental business tasks, making it easier for new businesses to get started with product descriptions, marketing materials and initial operations.
Interestingly, despite lowering entry barriers, the study found that generative AI is not perceived to lead to a major increase in overall competition, with around 78% reporting only a minor increase. This suggests that the technology might be helping existing SMEs operate more efficiently rather than creating a flood of entirely new competitors. Furthermore, its impact on the ability of SMEs to compete with larger organizations remains limited, with most respondents observing no significant change in their competitive standing against bigger players. This indicates that the structural advantages held by larger e-commerce organizations, such as scale, data and resources, are not easily overcome by generative AI alone.
Moving Forward: Strategic Adoption and Training are Key
The research offers crucial recommendations for SMEs looking to effectively leverage generative AI. Prioritizing its use in marketing content creation is advised, as this area offers the fastest efficiency gains with lower barriers to entry. However, successful implementation requires a strong focus on internal capability building and training to overcome the learning curve and maximize benefits.
In product development, generative AI should be viewed as a powerful support tool that complements human creativity. Establishing clear validation processes for AI-generated content is also essential to ensure quality and reliability. From a competitive standpoint, SMEs should focus on using AI to build stronger brand marketing, enhance personalization and offer unique customer experiences, rather than solely aiming to match competitor efficiency.
Ultimately, the study emphasizes that integrating generative AI is not a one-time event but an ongoing process that requires continuous monitoring of AI developments and competitor behaviour. SMEs that strategically align their technological initiatives with their business goals and actively involve their workforce in the process are most likely to reap meaningful and sustainable benefits from this transformative technology.
References
Aydin, J. (2025). Implications of generative AI on small to medium sized e-commerce businesses. Master’s Thesis. Turku University of Applied Sciences.
https://urn.fi/URN:NBN:fi:amk-2025052013769
Main photo
Freepik, Anthropomorphic robot that performs regular human job. Accessed 25 May 2025. https://www.freepik.com/free-ai-image/anthropomorphic-robot-that-performs-regular-human-job_94938305.htm#fromView=serie&position=2