The coronavirus outbreak has sparked fears and headlines worldwide since emerging in the Chinese city of Wuhan at the start of the year.

  • Alibaba opens cashier-less store constructed in one day at hospital
  • Ant Financial, owned by Alibaba, says it will lend ¥20bn to Chinese companies
  • JD.com launches new channel to connect farmers directly to consumers

But the challenges brought by the virus, including a nationwide shutdown of factories and schools, widespread store closures and people staying at home, have also spotlighted the agility and prowess of China’s etail giants.

Digital goliaths such as Alibaba and JD.com have stepped up to the plate with jaw-dropping speed and scale. Their corporate good citizenship also throws into relief their vast capabilities, which many retailers elsewhere can only dream of.

The variety of initiatives is breath-taking. At the Huoshenshan hospital, for instance, which was built in just 10 days in response to the health emergency, Alibaba opened a cashier-less store constructed in one day.

The 24-hour shop, which enables customers to minimise interactions with other people, was created by Alibaba’s fresh food delivery division Taoxianda.

Supporting small businesses

Alibaba’s Ant Financial also said it would lend ¥20bn (£2.1bn) to Chinese companies as they seek to ride out the disruption. Preferential terms are being made available in Hubei, the region in which Wuhan lies.

Coronavirus supermarket 2

The virus has disrupted food suppliers’ usual routes to market

They will be offered one-year loans at zero-interest for the first three months and at a 20% discount for the remainder of the term. The tech giant is also waiving service fees for traders on its Tmall marketplace for the first half of this year and will make ¥2bn available to support businesses in fields such as logistics.

Meanwhile, JD.com has unveiled an initiative that connects farmers to consumers as coronavirus disrupts supply chains. The etailer’s specially created Green Channel enables farmers to sell their goods despite road closures and similar disruption associated with the outbreak.

JD said in a blog: “Many farmers had lost their sales channels and risked their seasonable produce becoming unsellable. At the same time, with the epidemic, demand for high, fresh quality produce that can be bought online is at an all-time high.

“JD’s Green Channel leverages JD’s strengths in supply chain, logistics, platform operations, online marketing and omnichannel retail to address these challenges.

“Open to both existing and potential partners of JD Fresh, JD’s online fresh food business, the initiative provides 25 supportive policies to merchants, including fast enrolment, extra traffic, discounts or fee-free use of the platform, and more. Furthermore, JD Logistics will establish a special transportation channel to prioritise the delivery of produce and ensure it arrives in a timely manner.”

The Store WPP chief executive and China retail expert David Roth says the various responses illustrate the adaptability, strength and determined mindset of the country’s etail titans, as well as their instinct to play their part at a moment of national crisis.

He says: “I used to think that ‘Chinaspeed’ was 10-times that of anywhere else; now I think it’s 20-times faster. There’s this ability to move very quickly and that’s to do with scale, resources, energy, vision, digitisation, the idea that anything’s possible.

“They’re also doing this for the greater good of China, which mustn’t be underestimated. Clearly, there’s a commercial imperative, but there’s an imperative to help the Chinese dream be realised, supporting China in its hour of need and a necessity to be seen as part of providing solutions.”

Epidemic roots

There is a strange symmetry in the etailers’ involvement in combatting coronavirus – JD’s origins lie in a previous epidemic, Sars in 2003.

At the time, JD founder Richard Liu had a small chain of electricals stores, but as frightened shoppers stayed away during the Sars outbreak he started selling online. Today, JD is a Fortune 500 business that generated sales last year of $67.2bn.

Sars also played a part in the rise of Alibaba. As now, foreign businesspeople avoided travel to China during the outbreak, which created a big opportunity for Alibaba to build its presence as a B2B platform, enabling Chinese and foreign businesses to buy from and sell to each other.

Now, Alibaba encompasses everything from retail marketplace Tmall to financial services arm Ant. In its last Singles’ Day, a promotional extravaganza it created itself, it sold goods with a gross merchandise value of $1bn in just over a minute.

In recent years, Roth says, there has been an effort to enable farmers to sell their goods on Singles’ Day, using the technology infrastructure and architecture that is taking on urgent importance now for health rather than purely commercial reasons.

Danger and opportunity

The stories exemplify the much-quoted fact that the Chinese word for crisis comprises two characters, one of which signifies opportunity. And as with Sars, the same is likely to prove the case this time.

Retail analyst Tiffany Lung believes the outbreak will further shift consumer behaviour. For instance, the use of online delivery is likely to grow among consumers who in many cases wanted to choose products themselves in [food] markets. “[Alibaba and JD] are doing all this now for the good of the people. But this is the point where a lot of Chinese consumers are testing new platforms and that opportunity will be leveraged.”

Alibaba

The outbreak could further shift consumer behaviour online

Business adviser Hot Pot China’s founder and chief executive Jonathan Smith, who has worked with brands such as Ted Baker and Urban Outfitters to build their Chinese operations, says that etail giants such as Alibaba and JD have applied skills and know-how they already had to the coronavirus crisis. Cashier-less stores already existed, rapid fulfilment was a battleground, and real-time data informs decisions.

“They need to be super-responsive, super-reactive and able to turn on a sixpence because there’s always a competitor around the corner,” he observes. “They can pull everything together in real-time.”

That intensity of competition and sky-high ambition have powered their progress. Their ability to set new retail standards has enabled their intervention on coronavirus and that will establish their power further.

Roth says the Chinese etailers are examples of outstanding flexibility and of “trying to use assets in different ways”.

Their response to coronavirus shows all the attributes that have made them great and which would be applicable in many businesses – “speed, flexibility, technical fluidity and an old-fashioned can-do mentality”.

The contrast with the slowness and indecision that has afflicted the UK for years over Brexit and the operational challenges is stark compared to the pace and versatility displayed in China.

The reaction to coronavirus reflects how retail skills can be used to benefit society and how, in the longer term, they are likely to help the retailers reach new heights. Any retailer in need of inspiration or a reminder of the art of the possible need only look East right now.