What Does Alibaba's "New Retail" Concept Mean for Amazon?
By Jasmine Glasheen
Alibaba stole the show at NRF this year. The “New Retail” concept coined by Alibaba’s founder, Jack Ma, promises to finally blur the lines between physical and digital. While it feels like almost every retailer has promised to create a truly omni-channel shopping experience at some point, Alibaba’s “New Retail” concept may make the company the first retailer with an actionable blueprint to combine physical and digital touchpoints in a way that actually empowers small business owners.
Before we delve into how Alibaba plans to do this – and why the company is about to give Amazon a run for their money – let’s take a look at what Alibaba’s hot catchphrase “New Retail” actually means.
Narrowing in on how “New Retail” will influence SMB
According to a recent YouTube video by the Alibaba Group, New Retail refers to “complete digitization of all commerce.” The video then goes on to say that the New Retail game plan, “could be the key to saving traditional retail.” At first glance this might sound like an empty promise coming from an e-commerce behemoth destined for glory–– potentially at the expense of SMB retailers (like their American counterpart). The reality is, however, that Alibaba is already using digitization to bring new life to flailing brick-and-mortar concepts overseas and it’s just a matter of time before the company brings New Retail to the U.S. market.
Keep in mind that 60% of retailers say that the main point of omnichannel is to provide better customer service, yet the in-store customer experience in the U.S. is constantly falling short. However, Alibaba’s New Retail might be the tech American retailers need to put their in-store customer service on par with their online operations.
Freshippo is coming for Whole Foods’ Market Share
While there are some rudimentary similarities between Alibaba’s grocery store/restaurant hybrid Freshippo and Amazon Go (such as scannable barcodes) Freshippo’s mobile-powered retail concept is tech-enabled convenience at a level that Jeff Bezos could only dream about. Each product in Freshippo has a barcode that customers can scan to pull up product info, pay for products, and track purchases on their phones. Considering that mobile payment volume is expected to reach 503 billion by 2020, Alibaba’s Freshippo concept holds major promise for widespread adoption in the U.S.
Consumers can also purchase meals to eat at the grocery store, or order them for home delivery, and their orders can then be delivered in a timeframe as short as 30 minutes. Alibaba is able to beat Amazon’s delivery window by using Freshippo stores as distribution centers, so there’s no middle-man when it comes to sourcing all of the fresh ingredients customers need.
Retail management platform modernizes c-stores
Here’s where the real innovation comes in: Alibaba is partnering with existing convenience stores to help them digitize their offerings. Traditional mom-and-pop stores are entering the 21st century with Alibaba’s Ling Shou Tong platform. Like Freshippo, Ling Shou Tong builds on the power of mobile commerce with a downloadable app that merchants can use to access consumer analytics from their stores, as well as to order the products most likely to sell. Best of all, each of the products on the Ling Shou Tong app come from one source, so retailers don’t have to try to juggle relationships with multiple vendors.
The Ling Shou Tong platform enables Alibaba to make a profit while also empowering retailers through tech. This method of building business by helping retailers update their stores is far less controversial than putting SMB retailers out of business (a’ la Amazon), and it’s only a matter of time until Alibaba brings Ling Shou Tong to the American market.
Resurrecting the shopping mall with virtual shelves
Alibaba’s New Retail concept doesn’t only speak to SMB retailers…it also has the potential to bring new life to deserted shopping malls by bringing e-commerce shopping into physical stores. Consumers can scroll through digital screens of products and order items in-store
to have them delivered directly to their home. Magic mirrors in ladies restrooms will allow mall customers to experiment with new makeup colors while waiting for a bathroom stall or while washing their hands, and customers can grab the products they fell in love with from vending machines on their way out.
If Alibaba’s New Retail concept teaches us one thing, it should be that the store of the future is rooted in technology and, believe it or not, Amazon’s tech still isn’t up to par. Mobile commerce is will used in a way that strengthens SMB retailers and we won’t have a lot of patience for e-commerce behemoths that are still disenfranchising independents.