Published on January 7th, 2019 | by Saurabh Pandey
How Alibaba Is Revolutionising Retail & E-Commerce
With over 1 trillion USD spent online which is about half of the global commerce sales, China is at the forefront of commerce and with about 60% market share, Who can be in better position than Alibaba to forge a strategy for the future of retail, which is aptly christened as NEW RETAIL by Jack Ma.
Now we shall discuss New Retail is two parts. In this episode, we shall discuss the O2O (online to offline) and in the next episode, we shall discuss how Data is central to the New Retail Strategy.
So, Future of retail is not a question of online or offline, it will be a matter of integrating consumer touch points for seamless experience in the most efficient way. And that is what ALIBABA is attempting in its new endeavour of the New Retail. Through New Retail, Alibaba is trying to revolutionise 4 areas of retail as of now:
- The supermarket
- The Malls
- Mom and Pop Stores and
- Auto Retail
Before we begin let’s understand that Alibaba group has 3 major pillars from a retail perspective- Taobao- a mass retail marketplace (more like a micro business to consumers or c2c), Alibaba- connecting Chinese exporters with the world (b2b) and TMall -a curated trusted brands marketplace (more b2c)
So, let’s come back and talk about the 1 area of retail to be transformed and that is the supermarket-
The supermarket transformation is christened as HEMA stores. Shopping at Hema is a smartphone-powered experience—you can do it from home or in the store. When you’re in the store, you’re able to scan a barcode with your phone to get product information. Payment is also cashless, done through the Alipay platform embedded in the Hema app.
The fast 30 minute delivery for those who live within three kilometres of the market, is Hema’s key USP. Each store serves as its own warehouse and logistics centre that collects, fulfils, and delivers customer orders as fast as they come in, online or offline.
2. The Car Retail:
china is the world’s largest Car market, and the retail part of it can really become more convenient and effective. Alibaba is creating auto vending machines across the country. It’s a model that lets customers browse makes and models inside their app, choose a car they want to test drive, pick it up from an unmanned vending machine, and drive it for up to three days. After experiencing the car in a no-pressure situation, they can make an appointment to visit a dealer when they’re ready to buy.
3. Mom and Pop Convenience Stores- The local kirana shops, as we call them in India are generally plagued with inventory related insights. There is absolutely no insight into demand prediction, loyalty, up-marketing and inventory management, and RoI. Alibaba launched a program that is called Ling Shou Tong or LST, which digitises the inventory management of each store and integrates these businesses into a central warehousing and logistics system. It also provided them with an analytics platform that anticipates customer preferences and lets proprietors know what they need to order, how much, and when. Ling Shou Tong also modernized the insides and signage of the stores. Early results point to more efficient operations.
4. The Malls- These are the giants that attract a huge volume of footfalls and window-shoppers, but in recent times are witnessing lower volume of shoppers. Alibaba has invested in Malls and the stores in these malls are equipped with “Virtual Shelves,”
As per Google 43% of consumers exit a store without buying in frustration because they did not find what they needed, or lack of information about what they needed.
So with virtual shelves, if you don’t find your size or colour in stock, you can still select the product you want on a screen, punch in your size, colour, and other specs, scan with your app, and have exactly what you want to be delivered directly to your home.
Even the changing room or washrooms of malls can be a New Retail experience. Step into the ladies’ room, and while you’re waiting, check out the “Magic Mirror” on the wall to experiment, virtually, with new makeup colours. And if you Like what you see? You can buy it from the nearest vending machine
So in the next episode let’s look at the DATA part of the New Retail strategy of Alibaba. Thank you and see you soon.