The i-store, rev­o­lu­tion­iz­ing re­tail busi­ness

Shanghai Daily - - HANGZHOU SPECIAL - Shi Jia

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 ecom­merce 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 crowd­sourced 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 cross­bor­der 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 ecom­merce busi­ness. From Jan­uary to June this year, the added value of ecom­merce 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 ere­tail­ers in the world in­clud­ing Alibaba, NetEase Yanx­uan, Ama­zon and Shopee.

The 2018 In­ter­na­tional E-busi­ness Expo, cov­er­ing 30,000 square me­ters of ex­hi­bi­tion area, has at­tracted more than 700 re­tail­ers and e-re­tail­ers in the world in­clud­ing Alibaba, NetEase Yanx­uan, Ama­zon and Shopee. — Pho­tos by Shi Jia

This year’s e-busi­ness expo, held in Hangzhou, in­cludes one open­ing sum­mit, eight sub-fo­rums and sev­eral other theme events.

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