Alibaba Group’s president J Michael Evans is very clear on the differences between the Chinese retailer and arguably its biggest competitor, Amazon, as outlined at NRF’s Big Show in New York.
The biggest differentiator is the way in which it operates as a marketplace, and not a retailer, he says. This is an important distinction because it means the group does not compete with brands, but rather helps them better connect directly to the consumer by handling logistics and sharing data. At present, there are over 10 million sellers on the platform, from brands and retailers to SMEs (smaller and medium-sized companies).
Secondly is Alibaba’s impressive scale: it has 600 million consumers and delivers 70 million packages a day, while its last Single’s Day sale sold over $31 billion in product. The company also has the world’s biggest IPO in history at $25 billion.
Clientele is also predominantly younger than its American counterpart, with 80% of its consumers being under the age of 35, while 40% are younger than 25. This has a strong influence in how Alibaba creates experiences that merge digital and physical, with mobile behavior always being front of mind.
The last difference, Evans emphasises is that the company is building bridges between its online business and the offline market, particularly in China through its New Retail concept. “The future of retail is all retail,” he says, and how to integrate it all properly. The concept is being implemented across eight different categories and sees the entire digitisation of the retail value chain, for the benefit of both the merchant and the consumer. The consumer, he says, is easier to please because they don’t care if they’re online or offline – they just want to shop. The merchant piece is more complicated however, because it involves many factors that need to be better linked together, such as inventory, payments and fulfilment. The concept can be best seen at play at Hema grocery stores in China, which include technologies such as facial recognition and dynamic pricing.
During the conversation, Evans also touched on advice for brands or retailers who want to enter China. “The market requires patience,” he explains, saying that its growing middle class, largely led by the young consumer, likes understanding what a brand is selling and whether it fits their lifestyle. Simply coming into the country and wanting to sell product quickly will not work, he says. “If you see China as long term, with the largest consumer group in the world, then this is a great market for you.”
How are you thinking about retail innovation? We’re all about finding you the perfect partners to do so. TheCurrent Global is a consultancy transforming how fashion, beauty