With over 1 trillion USD spent onlinewhich is about half of the global commerce sales, China is at the forefront of commerce and with about 60% market share, Who can be in better position than Alibaba to forge a strategy for the future of retail, which is aptly christened as NEW RETAIL by Jack Ma.
Now we shall discuss New Retail is two parts.In this episode, we shall discuss the O2O (online to offline) and in the next episode, we shall discuss how Data is central to the New Retail Strategy.
So, Future of retail is not a question of online or offline, it will be a matter of integrating consumer touch points for seamless experience in the most efficient way.And that is what ALIBABA is attempting in its new endeavour of the New Retail.Through New Retail, Alibaba is trying to revolutionise 4 areas of retail as of now:
Mom and Pop Storesand
Before we begin let’s understand that Alibaba group has 3 major pillars from a retail perspective-Taobao- a mass retail marketplace (more like a micro business to consumers or c2c), Alibaba- connecting Chinese exporters with the world (b2b)and TMall -acurated trusted brands marketplace (more b2c)
So, let’s come back and talk about the 1 area of retail to be transformed and that is the supermarket-
The supermarket transformation is christened as HEMA stores.Shopping at Hema is a smartphone-powered experience—you can do it from home or in the store. When you’re in the store, you’re able to scan a barcode with your phone to get product information. Payment is also cashless, done through the Alipay platform embedded in the Hema app.
The fast 30 minute delivery for those who live within three kilometres of the market,is Hema’s key USP. Each store serves as its own warehouse and logistics centre that collects, fulfils, and delivers customer orders as fast as they come in, online or offline.
2.The Car Retail:
china is the world’s largest Car market, and the retail part of it can really become more convenient and effective. Alibaba is creating auto vending machines across the country.It’s a model that lets customers browse makes and models inside their app, choose a car they want to test drive, pick it up from an unmanned vending machine, and drive it for up to three days. After experiencing the car in a no-pressure situation, they can make an appointment to visit a dealer when they’re ready to buy.
3.Mom and Pop Convenience Stores- The local kirana shops, as we call them in India are generally plagued with inventory related insights.There is absolutely no insight into demand prediction, loyalty, up-marketing and inventory management, and RoI. Alibaba launched a program that is called Ling Shou Tong or LST,which digitises the inventory management of each store and integrates these businesses into a central warehousing and logistics system. It also provided them with an analytics platform that anticipates customer preferences and lets proprietors know what they need to order, how much, and when. Ling Shou Tong also modernized the insides and signage of the stores. Early results point to more efficient operations.
4.The Malls-These are the giants that attract a huge volume of footfalls and window-shoppers, but in recent times are witnessing lower volume of shoppers.Alibaba has invested in Malls and the stores in these malls are equipped with “Virtual Shelves,”
As per Google 43% of consumers exit a store without buying in frustration because they did not find what they needed, or lack of information about what they needed.
So with virtual shelves, if you don’t find your size or colour in stock, you can still select the product you want on a screen, punch in your size, colour, and other specs, scan with your app, and have exactly what you want to be delivered directly to your home.
Even the changing room or washrooms of malls can be a New Retail experience. Step into the ladies’ room, and while you’re waiting, check out the “Magic Mirror” on the wall to experiment, virtually, with new makeup colours. And if you Like what you see? You can buy it from the nearest vending machine
So in the next episode let’s look at the DATA part of the New Retail strategy of Alibaba. Thank you and see you soon.
ebay is gradually but steadily& seriously working towards becoming the dominant ecommerce player if the world. After having been beaten by Taobao in China and observing the surge of Amazon as a cloud-marketplace, it’s not unnatural for ebay to initiate what it calls X.Commerce.
ebay realises that to win this battle, it has to play the end-to-end game; meaning ebay wants to control, payments, logistics & supply chain, multichannel customer experience & transaction,
enabling hosted shopfronts, and providing scale & targetd reach to SMBs, large enterprises or C2C merchants
I tried creating an infographic to show the ebay strategy based on my understanding and you can understand how the recent buy-outs by ebay are starting to make sense.
Let’s look at the buy outs first:
1. Where.com – Over 1.2 lac retailers onboard. Location based ad-network + local deals. (USD135M)
2. Milo.com-local ecommerce player (USD 75M)
3. Magento.com- Open sourced ecom platform-alongwith mcommerce and hosted shopfront options. Over 90,000 retailers onboard. (ebay bought 49% stake last year @ USD22.5M, the rest 51% was bought this year)
4. GSI- Complete logistics, order management and CRM platform. ((USD 1.96B)
5. PayPal: mobile and web payments (USD1.5B)
6. FigCard- Point of purchase payments (figures not available)
7. Red Laser- barcode reading app (bought in 2010)
At the centre of the ebay nervous system is the Open Sourced Web & Mobile Platform- Magento-this platform can enable anyone to start a shop, and enables customers to transact
from a web or mobile platform. This platform also enables developers to develop applications and solutions which can be bought by both buyers and sellers
On this platform ebay plugged in PayPal for payment integration, and GSI for logistics, supply chain, and customer care.
This kind of closes the loop for everyone.
The services range from free to a few thousand dollars a year for merchants.
But the story is not over yet, ebay understands the merit of local shopping, local search, and offline payments. If these could be
brought in the ebay ecosystem then ebay will indeed control the real end-to-end of shopping.
And that’s how Milo, Figo and Red Laser make sense.
Milo is a local ecommerce platform- that allows users to search and buy products within a specific geography. This will also be integrated with the Open Source Platform.
Red Laser- allows users with smartphone to do comparison shopping offline, and then buy online near their location (courstey Milo), through barcode readers. (ebay had sold USD 600M of products through mobile phones in 2009, and tosay 10% of all ebay sales are on Mobile phones in UK)