ALIBABA, JD.COM LEAD IN ONLINE, OFFLINE OFFERINGS
Chinese giants already making headway while Amazon plans first grocery push
AS Amazon.com Inc looks to swallow the United States grocery chain Whole Foods Market Inc, China’s tech giants are already digesting hefty bricks-and-mortar deals, taking the lead in the battle to transform supermarket shopping with big data and better supply chains.
China’s Alibaba Group Holding and JD.com Inc have invested heavily in offline retail — bricksand-mortar stores — in recent years to complement their online offerings.
With their ready-made payment and social media platforms to lure shoppers, Alibaba and JD.com have helped China become the world’s largest online grocery market, far ahead of the US.
This early lead, cemented by densely populated urban areas and cheap labour, could be key as retailers and tech firms race to boost margins on low-cost consumer goods by reinventing supply chains with big data analytics.
“China is already the largest online grocery market in terms of value in the world so it’s really advanced in terms of scale,” said Nick Miles, London-based head of Asia Pacific for food and grocery industry research body IGD.
Sales made online are set to more than double to around 6.6 per cent of China’s broader grocery market by 2020, compared with around 1.4 per cent for the US sales by then.
Both US and Chinese e-commerce firms are grappling with the challenge of increasing their margins on fast-moving consumer goods, which include lowmargin, high-demand goods with a short shelf-life — a staple of grocery stores.
Alibaba, which has a burgeoning cloud business that competes directly with Amazon, plans to use its trove of consumer data to provide a suite of connected services back to brands whose goods they sell.
Services would include inventory management, smart manufacturing and logistics, aiming to slash waste and margins across the entire supply chain, according to the company’s so-called “New Retail” strategy.
Likewise, JD.com uses data from a partnership with China’s hugely popular messaging app WeChat, which has over 930 million users, to build data profiles for a range of brands including baby products, cosmetics and soft drinks. Bloomberg