Why AI must be grounded, not hyped, to serve Europe’s SMEs

At a time of rapid technological change, scepticism is healthy. Across Europe, small and medium-sized enterprises - typically the backbone of European economies — are rightly asking whether artificial intelligence delivers real value or simply adds noise.

Will it create new risks? Can it be trusted with critical sourcing decisions? The answer lies not in grand promises, but in practical results.

The true potential of AI lies in solving real, high-stakes challenges. For a manufacturer in Stuttgart sourcing precision components, or a fashion brand in Lisbon launching a sustainable line, every decision involves cost, quality, compliance, and logistics. In B2B commerce - a $32 trillion global market - accuracy isn’t optional. It’s essential.

That’s why Alibaba.com’s AI is built differently. It’s not trained on generic internet data, prone to hallucinations. It’s grounded in decades of real-world trade history, verified supplier profiles, product specs, certifications, and logistics records.

When our system recommends a supplier, it doesn’t guess, it verifies. It checks for REACH or RoHS compliance, confirms ISO standards, calculates exact landed costs, and identifies the correct HS code. This is ground truth AI, intelligence rooted in reality.

Our next evolution, AI Mode, launching this December, takes this further. Powered by agentic AI, it interprets natural-language questions like “Who can make biodegradable packaging with FSC certification and ship to Germany in six weeks?”

It analyses technical drawings, scans compliance documents, and compares suppliers across pricing, lead times, certifications, and production capacity. It doesn’t just list options, but highlights the best-fit matches.

Think of it as a quiet but highly capable co-founder: one who never sleeps, shows up ready to handle the hard work of sourcing.

For a solo entrepreneur or cash-strapped business, this means freedom and allows them to focus on design, branding, and customers rather than spreadsheets and endless vetting.

From automation to empowerment

Let’s be honest: most small businesses can’t afford a sourcing expert. If you’re starting out alone, with little cash and no team, finding the right supplier is risky and overwhelming.

And that’s where AI Mode comes in. It doesn’t replace a person; it steps in when there is no person.

It checks certifications, calculates real costs, and flags red flags so you don’t have to guess.

For small teams, onboarding new hires takes time most SMEs don’t have. Instead of waiting months to gain experience, AI gives them instant support. They make better decisions from day one.

It’s about making growth possible. When routine work gets faster, founders focus on building their brand, not chasing quotes. And as they scale, they hire more people, because now they can.

In the end, AI doesn’t ask questions for you. It helps you ask better ones.

Building on momentum: Europe eyeing AI-driven trade

The surge in European order volume on Alibaba.com reflects a broader shift in the region’s business landscape.

Today, 90% of European SMEs cite product innovation as critical to their growth strategy, according to Alibaba.com research by Censuswide, and 62% express confidence in using AI tools for design, sourcing, and production.

Fueled by sustainability rules, supply chain complexity, and rising competition, European businesses are turning to smarter, faster, more transparent sourcing. AI Mode is designed for this environment; it helps buyers navigate compliance, identify sustainable partners, and bring customised products to market faster.

AI Mode stands as both a technological milestone and strategic enabler which empowers businesses to compete globally, innovate efficiently, and source with greater intelligence.

We’re not chasing hype. We’re building AI that works for real businesses, real supply chains, and real growth.

The future of trade won’t belong to the flashiest model, but to the most reliable one. And that future starts now.

Kuo Zhang is President of Alibaba.com, the B2B E-commerce platform of Alibaba Group, serving millions of SMEs worldwide.