Published on January 15th, 2019 | by Saurabh Pandey0
How Alibaba Uses Data To Revolutionise E-Commerce & Retail
Within 20 seconds of the kick start of Alibaba group’s annual 11.11 Global Shopping Festival, TOTAL GMV of gross merchandise value surpassed USD155 millions, in 2 minutes it crossed USD1 Billion and the day closed with over USD30b of gross merchandise sales value.
Now, Just let that sink in, appreciate the number of users, transactions, customer care calls and emails and maybe hundreds of terabytes of data generated at an unimaginable speed.
Singles day is a clear example of success with data.
Data by itself is of little use, and Big data even more useless, unless you leverage High-performance computing to process this data, use analytics tools and AI to get actionable insights and deliver action and impact.
Alibaba’s TMall, B2C e-commerce marketplace with top brands and over 600m users have an abundance of data on consumer buying habits and sellers’ marketing strategies and decided to put this data to use in 2017.
And as a result, Tmall Innovation Centre (TMIC) was started as dedicated research and development (R&D)
Some of the world’s top brands like P&G, Johnson & Johnson, Mars, Samsung and the likes have partnered with TMIC to create new products and variants for China based on consumer transactions and behavior captured on the platforms.
Let’s look at 2 examples of how TMIC used data to help sellers and brands. Listerine is a well-known brand but it was facing difficulty in cracking the Chinese market, where the users reacted poorly to its antiseptic formulation.
So, Johnson and Johnson worked with TMIC to learn that Listerine’s target audience—young Chinese women—prefer mouthwash with fruit and floral flavors. As a result, Listerine debuted two new products in China during Alibaba’s 11.11 Global Shopping Festival, or Singles Day.
Similarly, TMIC and MARS chocolates worked together to find that Chinese consumers would be willing to Try chocolate with some spice AND LAUNCHED SNICKER- SPICY IN CHINA.
From its debut in Mid 2017 till mid-2018, sales of snickers spicy surpassed USD1.4m
Not just with the big brands, but Alibaba repeated this success with smaller brands as well. The watch division of TMall studied consumer behaviour of users and invited young watch designers from the Alibaba ecosystem to create and launch 17 new designs on the singles day.
So, Alibaba group is using data in 3 ways here :
- help sellers sell more, both small and large
- help brands develop new products
- speed up R&D, innovation and go to market.
Now, the story of new retail will be incomplete without Artificial Intelligence or AI.
In the words of Jack Ma DATA AND HPC are the mother and father of ai.
So, AI helps Alibaba ecosystem in 5 major ways:
- Recommendation system- Alibaba has developed a software called “E-commerce Brain,” which uses real-time online data to predict consumer wants, and the models are constantly updated for each individual through AI to take into account purchase history, browsing history and online activities. Now, this recommendation system also works across digital kiosks and magic mirror installed offline in delivering consistent user experience.
2. Customer care- Any common queries and questions asked are automatically redirected to a computer system called Ali Xiaomi (Ali Assistant). Other than answering frequent questions and delivery status, it can help users find the right products when provided with a text or voice description or even a photo. It is said that during singles day sale- the chatbots handled 95% of the customer service queries.
3. Pervasive Personalisation- what if each brand and seller on a commerce platform could personalise its store as per individual users based on their taste & preferences? Of course a rise in conversion rates, and that’s what is exactly happening here
4. Supply chain & logistics- from predicting what products will sell more, appropriate pricing strategies, inventory preparation to best route and transportation for deliveries- for online and offline sellers – just about everything a seller could want.
5. Security – Face recognition coupled with pattern mapping and predictive analytics is already helping secure the marketplace and install more confidence in users.
So, this was the story and strategy of Alibaba which is slated to revolutionise and transform retail as we know, and everything that we have observed and discussed in these 2 episodes point to just one thing- Alibaba is focused as hell on improving and unifying consumer experience and helping sellers be more innovative, efficient and profitable.
That’s what we call as NEW RETAIL