Internet-enabled innovation is set to play a major role in fueling China’s economic growth, after the draft outline of the 13th Five-Year Plan (2016-20) indicated that the central government is placing strong emphasis on the development of the Web-based economy.
Although the rapid development of China’s e-commerce sector is a perfect example of how the application of Internet technologies can expand domestic consumption, some ambitious players believe that there is still huge potential after the so-called Internet Plus strategy successfully revolutionized the retail industry.
Alibaba Group Holdings, China’s largest e-commerce player, recently announced that it wants to offer a wider range of services to “empower” traditional retailers and improve their business prospects in the digital era.
A new vision
“Retailers need to ditch the idea that e-commerce is merely another sales channel for their products,” Zhang Yong, CEO of Alibaba Group, said on March 1, at the company’s headquarters in Hangzhou, capital of Zhejiang province. He added that Alibaba can offer many advantages because of its strong technical capacity and vast pool of consumer data.
“We want to help retailers break the information wall for products, services and memberships between the online and offline channels,” he said.
Many retailers have separate systems to sell products online and offline, which requires two different methods of branding, pricing, inventory and membership management. Zhang said it is important for customers to get the same products, services and shopping experience, no matter which channel they use to make purchases.
For example, if shoppers buy a pair of trousers from, say, Uniqlo online, they can choose to pick them up at their related nearest outlet, and even have the length changed in-store, if required. Moreover, if the customer has a membership card for the chain in question, which guarantees a discounted price, they can still claim the discount when they purchase the goods online.
Alibaba’s initiative to help brands build a “seamless omni-channel shopping experience” comes amid the rising trend of online-to-offline business in China, in which e-commerce platforms bury the hatchet with brick-and-mortar businesses after years of fierce competition.
Last year, the revenue of Suning Holdings, one of China’s largest electronics retailers, was largely driven by online growth after the company embraced the Internet.
Suning, which last year partnered with Alibaba to offer in-store post-purchase services for goods bought on Tmall, China’s largest open business-to-consumer platform, saw 2015 revenue reach almost 136 billion yuan ($20 billion), a rise of more than 24 percent from a year before.
Sun Weimin, Suning’s vice-chairman, said the collaboration with Alibaba has resulted in a complicated process because the service is a link between an online trade platform and a vast retail system. Purchasing and sourcing based on the big data generated from each other’s platforms have persuaded more suppliers to develop more consumer-based products, Sun said.
Not to be left out in this online-to-offline competition, Alibaba’s rival JD.com recently announced a plan to build brick-and-mortar electronics stores in the country’s rural areas.
Last year, China overtook the United States to become the world’s largest e-commerce market. The market is projected to continue its solid growth to reach more than $1 trillion in 2020, according to statistics from Forrester Research, a multinational consultancy.
Nicholas Kontopoulos, global head of Fast Growth Markets and Marketing Innovation at the information provider SAP Hybris, said that to survive and thrive in today’s “digi-tail” era, retailers will have to take advantage of technology to create something with which consumers can connect.
“Consumer expectations have been, and will continue to be, the catalyst for omni-channel strategy development. A recent SAP survey found that 86 percent of respondents agreed that with the omni-channel, consumer expectations of the organizations have risen,” he said.
“By collecting and harnessing omni-channel data, retailers and businesses now have the opportunity to not only meet expectations, but to preempt and surpass them.”