Alibaba is one of the biggest retail companies in the world. It has a capitalization of more than $500 billion, almost matching that of Amazon. Since 2014, it has spent more than $10 billion in acquiring brick-and-mortar retail companies with a view to change the way sales is done in stores.
Acquisitions and New Retail
It invested in Intime Retail Group for $692 million in 2014, followed a year later with a $4.6 billion outlay on 2-0% of Sunning which has 1,600 outlets. It next bought into Sun Art Retail, for $2.9 billion equivalent to a 36% stake. Based in Hong Kong, it is the largest supermarket chain in China with 446 stores in 224 cities.
Amazon has also been acquiring companies during the same period, however, they have been converting these companies into online entities. Alibaba, on the other hand, is trying to inject new technology into the stores. This is in stark contrast to what Amazon and the rest of the west is doing. Amazon has been pushing for more online sales, whereas Alibaba has found innovative ways to increase sales of their brick-and-mortar stores.
Alibaba founder Jack Ma calls this concept “New Retail”, which is the fusion of both offline retail and ecommerce. One of the ideas being implemented under New Retail is that of home delivery or store pick up of items bought online. Home delivery is the cornerstone of online marketing, which Alibaba aims to streamline with improved use of customer data.
The integration of physical retail and ecommerce is also aimed at creating an improved customer shopping experience as well as boost business for their partners. One ecommerce platform that they are focusing on is supply chain management.
New Online and Offline Customer Experience
Alibaba’s offline store, Tmall, recently opened its first megastore in Beijing. The partnership with Intersport, which is one of the largest sports retailers in the world. The strategy would make use of data and AI support to sustain growth of sales in real stores. The store is banking on new shopping experiences which will connect online and offline stores and buyer activities.
The synergy of online and offline activities include attracting customers to their online stores, and then directing them to the stores. The strategy also includes e-commerce integrations of platform and logistics for faster delivery and in-store pickup. Alibaba is working heavily on developing algorithms to look at brand loyalty, purchasing history and both online and offline store tracking. Alibaba aims to use the data to better understand the shopper preferences. With the customer information, it is possible for the company adjust to buying trends as they happen, as well as design new marketing campaigns built on fast response supply chains.
In-store AI-Assisted Shopping
The newly opened stores feature innovations which help to generate more sales. One of their showcases is Hema Xiansheng, the Alibaba supermarket. Launched in 2015, it currently has a presence in 13 cities with 46 stores. It plans to add 2,000 more branches in the next five years. The Hema store one-ups Amazon as it offers customers the option to shop in-store or via its app. The app allows buyers to see information about the product. They can have the product delivered for free or be ready for pickup in 30 minutes. It also allows for payment via facial recognition.
At an Alibaba Intersport store customers can choose any item. They can also pull up an app to read additional information about it. For first time buyers of non-Chinese brands this can be very helpful. There is also an in-store AI assistant which can help in choosing which brand or model to buy. It also has a feature which uses VR to show how the person would look like when wearing a certain merchandise. This is particularly important to women shoppers since they can try out different dresses virtually.