ALIBABA HAS AMBITIOUS, AMAZON-LIKE OFFLINE PLANS
Speaking of the death of retail and the end of physical shopping experiences, in late November Alibaba was investing announced that it invested nearly $3 billion for a 36% stake in China hypermart operator Sun Art Retail. It looked like the Chinese e-commerce titan was copying a page from Amazon’s strategy plan, after Jeff Bezos’ company stunned U.S. supermarket operators by acquiring high-end grocer Whole Foods for more than $13 billion.
However, the Chinese behemoth has been thinking about physical retail for years, as part of an effort to attract customers to its e-commerce platforms by helping to digitize old-fashioned merchants. Alibaba has pumped billions into investments including its own grocery chain, a shopping mall group, an electronics retailer, and now the Walmart-like Sun Art. It’s not simply a hunt for new revenues. “We don’t view this as purely physical retail, but rather as an opportunity to transform from physical to digital,” says Alibaba CEO Daniel Zhang in an interview with Fortune. “We still need physical stores, but we want to redefine the experience.”
The purest manifestation of Alibaba’s online/off-line ambitions is Hema, a digital-first supermarket chain it incubated in Shanghai and plans to rapidly expaned by opening 20 new stores. Consumers shop using a mobile app, either in person or remotely. Hema shall cater to the lifestyle of their customers. Shopping options include buying food to take home, purchasing in store and getting help cooking a meal, and buying online with 30-minute delivery. At Intime Retail, another shopping mall company in which Alibaba, they are experimenting with augmented-reality shopping features.
Zhang notes that e-commerce accounts for only 15% of consumption in China, making for fertile ground to collaborate with off-line merchants and helping them turn digital. However, whilst both online giants are growing, it makes one wonder, at what point will the world not be big enough for Alibaba and Amazon to coexist?