Despite constantly being referred to as an ecommerce giant, Alibaba has been a data technology company at the heart of its operation.
At the Taobao Maker Festival in Hangzhou, Chris Tung, chief marketing officer of Alibaba Group was quick to reassure reporters that the company had no interest in the F&B business when it set up Tao Café. The cashier-less shop uses facial recognition technology and allows customers to buy goods with their smartphones via QR codes without lineups at the till.
In fact, the pop-up store is a pilot on how offline retail could be integrated with online to digitise the consumer journey from personalised retail to a cashless payment system.
“We believe that retail experience will always be both offline and online, these two are not mutually exclusive. Offline retail can be made better with data capability of online, and Alibaba has strong data assets to help our retail partners to achieve that,” said Tung.
While Amazon caused some stir when it bought Whole Foods recently, Alibaba has been one step ahead. Over the past year, Alibaba acquired Chinese department store chain Intimate Retail and formed a strategic partnership with supermarket chain Bailian Group. The company’s founder Jack Ma is reportedly keen on new retail which really is an extension of O2O (online-to-offline).
“We are a data technology provider studying all the different segments, but it is up to our partners which (data) they should take from us,” said Tung. “If you are a retail brand with operations in different cities, you need to work with a partner with a big data pool because China is too vast. If your partner only has 100 million users for example, you are going to miss out a lot in terms of location coverage,” said Tung. He shared that retailers and merchants partnering with Alibaba can access the user profile of consumers through a data bank.
“For a supermarket, if you know that 80 percent of the consumers in the neighbourhood are watching Korean drama, it would make more sense to have more stocks with Korean brands. This would make the consumers happy,” said Tung.
Notwithstanding its unrivalled data powerhouse status with over 500 million active users on Taobao, Alibaba has its own challenge for the online marketplace. The elephant in the room has been its reputation as a market for counterfeit goods but Tung disagreed that Taobao is soley for consumers to buy cheap goods.
“On average our active users are spending more than 20 minutes on the site every day. You don’t just buy things for more than 20 minutes…they are there not just for shopping. The site has the largest media consumption in the world because people are there for content, exchange of ideas and sharing of passion,” said Tung.
The trend could perhaps be shifting with more “Taobao makers”, start-ups and entrepreneurs selling their own products on the site. The Hangzhou festival showcased 108 select merchants and brands selling on its C2C online marketplace out of about 10 million merchants selling on Taobao.
Shoe designer Nuo Chen who sells his Nuogic line on Taobao said the marketplace provides a less costly avenue for a new brand like him compared to a brick-and-mortar store. “When I sent my order to my supplier, they were actually very happy because they could take pride in making products for a genuine brand instead of the copycats previously,” said Chen.