Ford Motors and e-commerce giant Alibaba has opened the first car vending machine in Guangzhou City, China. This bold move has transformed the traditional car-buying model and made it part of the online shopping industry – an arena where Alibaba has long held dominion over.
This new development will undoubtedly trigger a ripple effect in the automotive industry. Once seen as the last bastion of brick-and-mortar sales, car buyers can now begin the process on their smartphones, via Alibaba’s e-commerce app. The actual visit to the vending machine will be to pick up and test drive the car of their choice. This cuts down the car buying process to literally minutes.
Try Before You Buy
According to Ford, buyers get a three-day trial before deciding whether they would like to buy the car or not. This offers potential buyers a generous “try before you buy experience”, especially for young professionals who are buying cars for the first time.
So how does it work? Users of Alibaba’s Tmall online platform can use the Taobao app to browse dozens of car models. They only need to snap a selfie to confirm a booking for a test drive. Under the car-vending scheme, users need a score of 700 or higher on Sesame Credit, Alibaba’s social credit scoring system, before they can schedule a test-drive.
From there, they will pick up their car of choice from the vending machine and take it for a spin. Alibaba says their car vending machine is an innovative sales model that had made buying cars as easy as buying a can of soda. It eliminates negotiations with sales people since inquiries are made on a smartphone. The car brand Alibaba is pushing is Ford. After the test drive, the end goal is to have the buyer purchase a car at the nearest Ford dealership.
The vending machine technology will eventually be rolled out to the rest of the car industry. Alibaba is also working with Ford Motor to find ways both companies will be able to upgrade customer experiences in the industry.
Alibaba’s Foray in the Car Industry
Alibaba has been aiming its sights on transportation earlier with its investment in the electric car start-up Xiaopeng Motors. This is in line with its new retail policy that will involve merging the online and offline company businesses.
Xiaopeng, founded three years ago, is chaired by He Xiaopeng, former Alibaba executive and founder of the UCWeb. The startup has additional investments from the luminaries of the tech domain and venture capital.
Xiaopeng aims to build internet-connected cars, which led the company to recruit core employees from the major automakers like Ford Motor Co., Guangzhou Automobile Group Co Ltd, and BYD Co Ltd, as well as from tech companies Samsung and Huawei. Internet connection is not necessary for a V2V vehicle, but will allow the car to be able to access and communicate with other vehicles with internet-of-things (IoT) functionality in mind.
Xiaopeng will produce its first batch of the prototype electric SUVs that will be featuring intelligent driving, mobile-phone-enabled remote control functions, and self parking. Xiaopeng motors collaborated with Chinese automaker FAW Group subsidiary Haima Automobile to begin producing its first model this year, with the finalized version of the electric SUV expected to hit the market before the end of 2018.
Xiaopeng Motor’s clean energy vehicle startup fits well with Alibaba’s strategic focus in the automobile sector. Alibaba’s open-platform approach will continue as the company works with a range of automotive manufacturing partners to benefit the Chinese consumers.
Alibaba’s venture in the automobile industry came after the BAT companies – the acronym of China’s major players Baidu, Alibaba, and Tencent – made their own investment in electric vehicle development.
Tencent acquired 5 percent, worth $1.78 billion stakes in Tesla in early 2017. Baidu and Tencent both invested in the vehicle start-up Nio. Baidu has also invested in another electric vehicle start-up WM Motor Technology.
Alibaba has also invested in other vehicle-based tech ventures including Grab in Southeast Asia.