The i-store, revolutionizing retail business
Alibaba Group Vice President Xiao Lihua revealed a new type of retail business at the opening of 2018 International E-business Expo held recently in Hangzhou.
The i-store service taps into a large database connected to all of Alibaba’s apps to get an accurate profile of customers using their products according to their activities, ranging from online shopping, dining, takeaway ordering, movie watching and traveling.
Once Alibaba has gathered this information from their online shoppers, a text message is sent out alerting a potential customer to a new brand or offering an exclusive discount on certain items. In this way, offline stores are able to attract online customers and make their sales promotions more effective.
The system also reshapes the brand’s supply chain. In the past, all the products purchased online were delivered from warehouses that are usually located in suburban areas. With the combination of online and offline stock systems, all the physical stores can function as “warehouses” for online business, and the delivery time could be shortened.
Xiao said that the coming “Double 11” (November 11) shopping day will be the first time that Alibaba opens and integrates resources in all of its sectors to help traditional retailers boost sales on their omnichannel that day.
Jack Ma, Alibaba’s founder, said two years ago at the Computing Conference that in 10 or 20 years there would be no mention of “e-commerce.” Ma coined the term “new retail” to refer to “the integration of online, offline, logistics and data” that he thinks will be the next generation of retail business.
Alibaba’s move on enhancing its integration with physical stores has been fast and aggressive.
In January 2017, Alibaba announced a 17.7 billion yuan (US$1.69 billion) bid to privatize Intime Retail Group, one of China’s leading department store operators. In August 2017, the first physical Tmall store was launched in Hangzhou. The project hopes to digitalize the supply chain of family-owned grocery stores through Alibaba’s stock and purchase order management system LST (Ling Shou Tong).
Now the e-commerce giant is eying both the more profitable consumer brand retailers and the lower-end wholesale markets. Tian Yuan, co-founder of LST, revealed at the expo that they have already helped upgrade over 100 wholesale markets nationwide.
Retail brands are also reaching out for collaboration. In August, Starbucks announced a strategic partnership with the Alibaba Group for building Starbuck’s “new retail” smart stores. Other brands showcased on Tmall’s new retail website, which is still in a trial operation stage, range from clothing, cosmetics, to food and automobiles.
In the meantime, China’s e-commerce sites have been converging with social media. Individual sellers are embedding marketing information on social networking sites, such as WeChat, Weibo, Douyin and Toutiao. E-commerce platforms are also creating more editorial content and using the influences of personal users to bring more sales.
“A very important reason is that attracting online customers has become much more costly. The competitiveness of traditional e-commerce sites is declining and there are already big players in the field such as Tmall.com and JD.com. So late comers must lead a new way,” said Ni Shu, China’s e-commerce observer.
Beibei.com is an online maternity and baby care retail site, launched in 2014. Its CEO Zhang Lianglun worked in the business-to-business sector of the Alibaba Group for two years before he established his own company. In August last year, they introduced their social e-commerce app Beidian.
Instead of copying the traditional model of a centralized department store, Beidian allows individual sellers to open their own stores on the platform while the company offers a selection of products and a streamlined and efficient supply chain.
The business of Beidian has been growing rapidly, with an average user increase at 30 percent each month.
“We see a lot of opportunities for e-commerce in social media and social infrastructure,” Zhang told Shanghai Daily. “Marketplaces like us should develop our own ecology instead of doing all things yourselves. On Beibei.com, we leveraged the strengths of our consumers, suppliers and third-party service providers. In Beidian, we even crowd-sourced marketing to our store owners.
“What we need to do is involve as many specialized partners as we can, and let your ecology grow.”
Lianlian, a third-party service provider in cross-border e-commerce, also shares such idea of platformization.
The non-banking payment company has just announced a 1 billion yuan financing round earlier this year. Its CEO Pan Guodong disclosed at the expo that they have served over 300,000 cross-border e-commerce companies and the total accounts receivable collected on their platform exceeds 20 billion yuan in the first half of 2018.
Apart from offering a stable and legally compliant payment service, Lianlian is also expecting to be a connector for its customers and other third-party service providers.
In the past a great part of profit in cross-border e-commerce has been taken by cost on purchasing, logistics, marketing and agency commissions.
“Lianlian gained a lot of experience in risk control and big data management in our payment business. So we hope to use these expertise to help our customers find the right service providers more efficiently,” Pan said.
The service platform, which is going live this month, will contain service providers from product selection, store opening, logistics, marketing, finance and insurance. The company reveals that it will invest 3 billion yuan in developing a cross-border e-commerce ecology in the next three years.
Hangzhou already has a booming e-commerce business. From January to June this year, the added value of e-commerce in Hangzhou hit 66.7 billion yuan, a rise of 20.1 percent from a year earlier, and accounted for 10.5 percent of the city’s gross domestic product.
The Internet retail sales is 221.5 billion yuan, accounting for 33.2 percent of the total amount in Zhejiang Province. After three years of operation, China (Hangzhou) Cross-border E-commerce Comprehensive Pilot Area has introduced more than 1,400 enterprises with an accumulated registered capital of 22.9 billion yuan.
This year’s e-business expo included one opening summit, eight sub-forums and several other theme events. The 30,000-square-meter exhibition area has attracted more than 700 retailers and e-retailers in the world including Alibaba, NetEase Yanxuan, Amazon and Shopee.