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What Can Chinese E-Commerce Teach Us About The Future Of Retail?

Executives tend to be far too West-focused when benchmarking (stealing ideas) and brainstorming (panicking).

Alibaba 101

For many of us, Alibaba is the website where we go buy cheap junk when we don’t mind waiting for a couple of weeks longer than if we’d ordered on Amazon. This is however not how the giant sees itself: Alibaba currently operates in over 200 countries, is technically the largest retailer, one of the largest Cloud and A.I company, one of the biggest venture capital firm, and one of the biggest investment corporation in the world. The company operates 5 e-commerce and retail service platforms (including Alibaba.com), owns 3 cloud computing and A.I technology businesses, and controls more than half of the Chinese online payment market through Alipay. Furthermore, its media empire is rising by triple percentage points year on year, while its messaging, health, software and sports businesses are doing rather well to say the least.
Metro, Walmart, Tesco and Carrefour are however not losing much sleep over this. What they worry (or should worry) about is the company’s foray into analogue retail.

Alibaba’s retail efforts

Alibaba has spent $10 billion on traditional retailers since 2016, and has been conducting unholy retail experiments on their corpses ever since. The result of this work is Alibaba’s “new retail” technology, an off-the-shelf, “digitalisation-in-a-box” concept which small retailers can easily understand and implement. It offers a set of digitalisation tools (SEO, website design, mobile optimisation…), syncs online and offline operations, optimises in-store layout, improves inventory and supply chain management, provides customer insights, and grants access to electronic payments via Alipay.
It’s also cheap enough to be attractive to a large market: $6,000 to $7,500 for store renovations, about $620 a year to be a “super-member” of the program, and the obligation to purchase a small share of inventory from the Alibaba platform. What does Alibaba gain from this? New, loyal and recurrent Alipay and Alibaba customers and sweet, sweet data for its A.I businesses, as well as valuable insights for its retail subsidiaries. All this while making a very nice margin and competing with its main rival, Tencent.

  • Electronic price tags and prices varying in real time based on certain factors
  • Facial recognition technology used to track customers, and discounts offered on items they smile at or that they have searched for online
  • Home delivery details don’t need to be given as the system already has the purchaser’s home address on record
  • Customers can scan images using AR technology to visit product listing page and collect coupons
  • AR mobile gamification to earn coupons
  • Rewards for posting on social media about brands
  • Need I go on?
  • Seriously, Tesco and Carrefour, I hope you’re taking notes

JD.com 101

Alibaba’s not the only trailblazer, though it is by far the largest. JD.com is also revolutionising retail in its own way with its “Unbounded Retail” (无界零售 (?)) concept, which merges e-commerce with social networks. Though its game is strictly B2C, JD boasts an impressive 301.8 million active users, and is bankrolled by Google, Walmart and gaming-and-social-media giant Tencent (20%), all of which have mountains of data to use and test in a retal environment.

JD.com’s retail efforts

JD is also going very much offline in the near future: it plans to open 1,000 restaurants fully operated by robots by 2020, recently announced its ambition to create a store chain without cash registers in China (which would co-exist alongside the high-tech 7Fresh supermarket chain that JD.com launched late last year) and aims to open one million(not a typo) convenience franchisees within the next few years. It’s also broken a market Amazon never could: luxury with its Toplife line.

  • Be pragmatic: seperate PR from ROI, yet nurture continue to nurture both.
  • Collaborate: if you can’t beat them (hint: you can’t beat them), join them.
  • Create core competencies that yield a real competitive advantage in the long run.
  • Everyone needs to be digital: one token team just won’t do

Join a movement

This article was originally made for The Pourquoi Pas, an online magazine providing in-depth analyses of today’s technological challenges. Click here to access it.

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