I’m sure, like me, most of you find China a bit of an enigma. Therefore you probably also don’t really know what Alibaba is all about.
Neither did I until I recently had the privilege to attend Singles’ Day – or 11/11 as it’s known locally (now re-branded as the ‘global shopping festival’).
With over 140,000 brands, of which 100,000 are international, and with $25.4bn of sales from more than 200 countries (in one day), I think that’s an appropriate title.
“I previously thought Alibaba was a Titan that would disrupt retail and potentially destroy lots of established retailers. I fundamentally got that wrong”
I previously thought Alibaba was a Titan that would disrupt retail and potentially destroy lots of established retailers. I fundamentally got that wrong.
While they both provide a platform for us to sell through, and they bring traffic and potential customers, in my humble opinion Amazon wants to sell us stuff while Alibaba wants to provide an environment for others to sell us their products.
Alibaba has a strong community aspect to its business.
A good example of this is Ling Shou Tong, which is an Alibaba business that provides small independent retailers with a POS system, analytics, digital ordering, supply chain, merchandising and mobile payment solutions.
It also provides a team of advisers who are able to help them maximise various aspects of their operations, such as promotions and in-store merchandising.
I’ve been asking myself for a while why Alibaba hasn’t visibly stepped up its presence in the UK or US. There are a couple of key reasons for this:
Its objective is to get to two billion customers. It already has a customer base of more than 600 million in Asia. There are 1.4 billion consumers in China, nearly the same number in India and another 1.6 billion or so throughout Asia to go after.
“Shopping carts even have kids’ toy cars built into the frame. There is a gym, nail bar and other community-based services, all of which increase footfall, dwell time and potential spend per customer”
These emerging markets have fewer barriers to entry, mobile-first consumer behaviour, a significant middle class with high levels of disposable income, and they also provide a physical retail infrastructure lacking in legacy issues around technology and store footprint.
This all provides an opportunity for Alibaba to extend its HEMA grocery concept. Unencumbered by legacy, HEMA has created a highly experiential retail space with a fusion of live produce, multiple in-store dining options and solutions such as home delivery trollies.
Shopping carts even have kids’ toy cars built into the frame. There is a gym, nail bar and other community-based services, all of which increase footfall, dwell time and potential spend per customer.
Alibaba is reinventing retail. Executives call it ‘the new retail’. I call it ‘customer first’. The business is taking its immense technical capabilities and marrying these with consumer needs and use-cases to deliver convenience and experiential retail on a level previously unseen before.
This is leading digital innovation globally. ‘See now, buy now’ allows customers to order items worn or displayed during its gala countdown show in the lead-up to 11/11.
It is leveraging artificial intelligence to drive more efficient and effective customer service. Its mobile virtual fitting rooms enable customers to ‘virtually try on outfits’. And Alipay is revolutionising payment solutions.
It’s a shame Alibaba is not currently focused on the West for expansion. As consumers, we would definitely benefit from having it here.
Martin Newman is founder and executive chairman of multichannel consultancy Practicology