Connect and share is a prominent trend of e-commerce today when corporations like Alibaba and Amazon focus on exploiting multi-channel sales models, allowing seamless connection to the door-to-door shopping experience. traditional goods and online sales channels.
E-commerce is eating the market share of the traditional retail industry, but in fact, most customers still prefer to shop at street stores rather than online stores. Therefore, the e-commerce giant Amazon is aggressively investing in traditional sales channels.
Amazon Go, a unique multi-channel model
Last January, Amazon officially opened Amazon Go store without checkout in Seattle, Washington state (USA). Buyers simply need to open the Amazon Go app software to scan the store’s gate as they enter and then select the products to buy on the shelf and then take them out, not waiting in line for payment. . All thanks to an automated process, in which the cameras and sensors of the Amazon Go store are tasked with “listing” the products that customers take off the shelf for the system to charge and deduct. guest Amazon account. Of course, Amazon will e-mail customers an electronic invoice.
This can be seen as a unique multi-channel sales model, allowing customers to experience in-store shopping as well as online experiences with multi-channel tools such as the Amazon Go app, Amazon online account. customer service.
It was Amazon that launched the online shopping revolution, but today it is moving into direct retail that started with the acquisition of fresh food chain Whole Foods for $ 13.7 billion. America and then the introduction of the over-the-counter Amazon Go. All of these moves are aimed at perfecting an omni-channel sales model.
One of the most noticeable features of this model is that Amazon is connecting customers who order online with pickup points inside more than 400 Whole Foods stores in the United States. In addition, Amazon has also set up small stores inside Whole Foods stores to display products sold on Amazon.com, allowing consumers to physically experience those products. Amazon understands that a consumer’s primary need to touch and feel an item before buying. Therefore, the company sees an omnichannel sales strategy as an effective solution to increase revenue.
Alibaba’s “New Retail” strategy
Although the online retail segment still accounts for the majority of Alibaba’s revenue, in recent years, the number one e-commerce group in China has been focusing on the strategy of “New Retail” in the morning. boss Jack Ma’s idea to exploit direct retail pie, accounting for 85% of total annual retail sales in China.
The “New Retail” strategy is a multi-channel retail model that seamlessly connects the online and direct-channel buying experience. This strategy is to build a retail ecosystem that combines online and offline sales channels, in which, customer-centric.
To implement this strategy, Alibaba bought a 35% stake in department store InTime for nearly $ 700 million in 2014. A year later, the group spent $ 4.6 billion to acquire holds a 20% stake in retail group Suning, headquartered in Nanjing and manages more than 1,600 stores across China. In early 2017, Alibaba spent an additional $ 2.6 billion to acquire the entire remaining stake in InTime. In June 2017, the e-commerce giant bought 18% of the shares of the supermarket chain Lianhua. And by the end of 2017, Alibaba announced it had spent $ 2.9 billion to buy 36.16% of the shares of Sun Art Retail, the retail group that manages China’s second largest supermarket chain. According to Alibaba CEO Daniel Zhang in a statement, traditional stores play an indispensable role in the shopping journey of consumers in this country. Therefore, these stores must be made efficient through technology and personalized services in the digital economy. “By integrating our store and online retail channels, we want to provide a unique and enjoyable shopping experience for Chinese consumers,” he said.
The aforementioned deals not only help Alibaba expand its portfolio of goods sold on the Tmall and Taobao e-commerce platforms, but also improve the efficiency of mobile payment services Alipay and logistics company Cainiao, where Alibaba holds a controlling stake. In addition, Alibaba can exploit huge amounts of data from its online commerce platform and Alipay payment service to improve customer experience in direct retail. In addition, Alibaba also implements a “New Retail” strategy with the opening of the Hema food supermarket chain in 2015. Customers come to Hema supermarkets to choose to buy food by phone by scanning the codes. bar on the product and pay by Alipay e-wallet. They can also download the Hema app to order online from the nearest Hema supermarket. Analyst Jialong Shi from the e-commerce consulting firm Instinet said: “Several initiatives of the” New Retail “strategy have shown promising signs of early success. But these initiatives may take a few more years to mature before we can see a profit from them.
By the end of 2017, Alibaba is managing 22 Hema supermarkets and plans to open 2,000 new Hema supermarkets in the next five years.
Cooperation with independent stores
Partnering with third-party stores is the latest way for Alibaba to expand its presence in traditional retail. The conglomerate is convincing independent store owners (often run by households) in China to use a retail management platform called Ling Shou Tong, which was launched by Alibaba in August. 2017. On the Singles Shopping Festival (11-11-2017), about 600,000 stores, or 10% of all independent stores in China, use the platform. Stores can use the Ling Shou Tong platform for free to access data analytics and logistics services from Alibaba. When stores order from Alibaba through Ling Shou Tong, they will be provided with data analysis services including advice on what products to buy and how to display them to maximize sales and profit. as well as being shipped directly to them by Alibaba. Ling Shou Tong platform primarily sells essentials, packaged foods, beverages, and snacks.
In addition, through cloud computing and other technologies, stores can also use inventory management software from the Ling Shou Tong platform for free. In return, the stores must agree to provide customer data to Alibaba as well as allow Alibaba to use the stores as a fulfillment hub for Alibaba. This can be seen as a move of cooperation and sharing to utilize the strength of each side.
At a small shop in a village near Hangzhou, 61-year-old Lu Qiwei regularly uses his smartphone to order stock items such as instant noodles, rice, and soft drinks. through the Ling Shou Tong application. Thanks to the application, he said, he has greatly reduced buying costs by not having to buy through intermediaries. In addition, he also easily pays for purchases to Alibaba using the Alipay e-wallet.
Alibaba is deploying a powerful army of 2,000 people to persuade independent stores to use the Ling Shou Tong platform. These people are trained by Alibaba and have to deposit 3,000 yuan ($ 450) and a fee of 3,000 yuan per year to be Alibaba sales staff and earn commissions on products sold. adopted the Ling Shou Tong platform. With its strategy of shaking hands with small stores, Alibaba is actually leading the direction of Chinese e-commerce instead of copying water models, says John Choi, an analyst at Daiwa Securities. out.
Le Linh / Quartz / Bloomberg / Reuters
* Source: Saigon Economic Times