Retail has been operating under an “adapt or die” mandate for the last several years thanks to the skyrocketing growth of e-commerce. That growth doesn’t seem to be slowing down any time soon, with some experts predicting that e-commerce penetration will grow from 9% today to 12.4% by 2020. As more and more shopping experiences shift to digital – most notably grocery shopping – pressure will continue to mount on brick-and-mortar stores.
Retailers that are hunting for new ways to adapt under this significant pressure are taking a look at Alibaba’s “New Retail” model. Rather than keeping e-commerce and brick-and-mortar in two separate silos, this model blends and blurs the lines between digital and in-store shopping, offering the best of both worlds to the modern consumer.
A Brief History Of Alibaba
Most US marketers have heard of Alibaba, better known as “The Amazon of China.” Founded in 1999, it is now China’s largest online retailer, controlling some 80 percent of the Chinese market. They offer a traditional B2C retail platform, a consumer-to-consumer platform (like eBay), and a third-party payment system called Alipay that has rapidly become the most widely used mobile payment system in China.
Alibaba’s new frontier has been to eliminate the boundary between offline and online shopping, personalizing experiences tailored to each customer. They have dubbed this model “New Retail,” and are actively attempting to change the way people shop from the mom-and-pop convenience store all the way through major purchases like automobiles.
Alibaba’s “New Retail” Models Up Close
“New Retail” according to Alibaba isn’t just about multichannel experiences. It’s about digitizing the in-store experience and personalizing the digital experience. Here are some of the ways they are executing “New Retail” today:
Hema supermarkets are the flagship example of New Retail. Alibaba uses data and technology to provide a seamless, personalized and efficient shopping experience. Consumers must download Hema’s app, because the experience is powered by mobile. Shoppers can scan barcodes and learn about the products they are viewing and receive recommendations on similar or complementary products, as well. Customers can also place grocery orders online and have their groceries delivered in 30 minutes (as long as they live within 3 kilometers of a Hema store).
Automobile Vending Machines
Shopping for cars can be extremely stressful. It takes hours and hours to drive around to car dealerships, browse, take test drives and then dodge texts, emails and phone calls from pushy salespeople. Alibaba has been working on a way to turn this model upside down with car “vending machines.”
Customers use Alibaba’s Tmall app to browse cars they are interested in. They choose the vehicle(s) they would like to test drive, place a deposit, upload a selfie and schedule a pickup time. Then, they visit an unstaffed digital “vending machine” where they scan their face and prove their identity, and the car is dispensed for a test drive.
The car can be driven for up to three days, allowing buyers to try it out for short and long commutes. They can then choose to buy the car directly through an Alibaba finance partner or return it.
Neighborhood Convenience Stores
Mom and pop convenience stores are a staple of urban life around the globe, and that retail model has not evolved much at all over the last 30 years. Now, Chinese store owners can work with Alibaba to bring that archaic model into the future. Through a special app, store owners are kept up-to-date with real-time analytics. They can see what’s selling and what isn’t and they can tailor orders and inventory based on that data. That ordering, of course, must go through Alibaba, but many stores appreciate the ability to use a single distributor for their entire store.
The Shopping Mall
In the US, suburban shopping malls across the country are on life support. In China, Alibaba has revitalized the mall experience by digitizing and modernizing the traditional model. Say, for example, you need a new pair of jeans. You go to your favorite store and try on a few pairs. However, the ones you like the most don’t come in your exact size. Now what? Alibaba allows shoppers in this situation to scan the item using their phone, enter their preferred size, and the item will be delivered to their doorstep in short order.
Alibaba has also installed smart mirrors in bathrooms that allow people to digitally try out new hairstyles and makeup looks, and if they like something specific, they can purchase products immediately out of a vending machine in the restroom.
To Save Tradition, Forget Tradition
According to Alibaba, the key to saving traditional retail is to forget about tradition altogether. US retailers can borrow from their innovative approaches to deliver exciting – yet practical and useful – innovations to the American consumer.