Is Alibaba taking a page out of Amazon.com’s playbook?
Alibaba Group announced this morning that it will acquire a 36.2 percent stake in Chinese supermarket operator Sun Art Retail Group for US$2.88 billion, an investment that “further underscores its commitment to ‘new retail,’” according to a company statement.
The investment gives Alibaba a strategic foothold in markets of two major Chinese retailers —Auchan Retail and Ruentex Group. The Chinese e-commerce giant said that the partnership will speed up its efforts to merge online and offline shopping into an “omnichannel” consumer experience, leveraging its own assets, ecosystem and technology.
“Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy,” said Daniel Zhang, chief executive officer of Alibaba Group. “By fully integrating online and physical channels together with our partners, we look forward to delivering an original and delightful shopping experience to Chinese consumers.”
Alibaba is already blurring the lines between online- and offline-retail with “Hema,” it’s internet- and technology-powered supermarket, where all transactions take place through a mobile app. If that’s starting to sound remarkably similar to Amazon’s tech-intensive terrestrial Amazon Go stores, which launched in beta earlier this year, that’s because it is. And if Alibaba’s announcement this morning sounds like a slightly less ambitious iteration of Amazon’s acquisition of Whole Foods for $13.7 billion earlier this year, that seems to be the case as well.
Integrating brick-and-mortar outlets into e-commerce strategies has been happening since companies started selling online, with most retailers from small- to medium-sized enterprises (SMEs) to the likes of Walmart leveraging their stores as shipping centers. Footwear retailer DSW was one such store that turned its retail outlets into highly functional e-commerce warehouses, allowing them to justify larger inventories – which means they always have your size in stock – while also reaching customers that aren’t within driving range of their stores.
But, while Amazon has been tight lipped about the extent to which it’s Amazon Go shopping centers will integrate into the Amazon e-commerce ecosystem, and what role they play in the context of Whole Foods, Alibaba is promoting its Hema outlets as fulfillment centers for online orders.
Either way, developments such as these are rendering the term “e-commerce” increasingly nebulous, also suggesting that there are limits to consumer’s appetites for in-home deliveries, or their willingness to give up perusing the aisles for something that strikes their fancy.
In the video below, Alibaba’s CEO Jack Ma tours a Hema supermarket demonstrating how online and offline shopping are merged into the “New Retail” experience: