Alibaba redraws retail fault lines with bricks-andmortar push
HANGZHOU, CHINA: In a small village shop near the eastern Chinese city of Hangzhou, store owner Lu Qiwei uses his smartphone to place orders to refill stocks of instant noodles, rice and drinks.
Lu, 61, says he didn’t own a phone two years ago, but he’s now one of 600,000 people using a supply chain app made by e-commerce giant Alibaba Group Holding Ltd, aimed at drawing millions of Chinese momand-pop stores into its orbit.
The app is one part of a multibillion dollar drive by Alibaba to extend its dominance of online shopping into physical stores, and build a data fingerprint for every consumer in China, where 85 per cent of retail sales are still made offline.
“We’re working to make the net in the sky and the net on the ground,” CEO Daniel Zhang said last month after Alibaba took a US$2.9 billion stake in top grocery chain Sun Art Retail Group Ltd . “We will cover all consumers seamlessly.”
Alibaba’s strategy echoes Amazon Inc’s US$13.7 billion deal this year for organic offline grocer Whole Foods Market Inc – but with a twist.
China’s fragmented market means Alibaba is spreading itself wider and thinner, hooking an array of mall operators and stores to its mobile payment, logistics and inventory management tools.
Alibaba said it had no immediate comment on how the two companies’ strategies compare.
Over the past two years, Alibaba has acquired major stakes in big box retailer Suning Commerce Group Co Ltd, Lianhua Supermarket Holdings Co Ltd and Intime Retail Group Co Ltd.
It all adds up to a vital – but expensive – gamble as Alibaba looks to maintain rapid growth and meet huge investor expectations even as the broader online retail market slows. Alibaba shares have more than doubled this year. — Reuters