US Insights

Alibaba Is More Than a Gateway to China

Harriet Leach

Senior Analyst

Retail 04.08.2019 / 09:00

AlibabaOffice

Alibaba is approaching adolescence on the global stage.

Being a competitive brand in a data-centric, omnichannel world, is getting more challenging. Or perhaps, with achieving channel-less, connected commerce only possible through collaboration and partnerships, it is getting more exciting.

As uncovered in our Initiative for Real Growth survey, successful businesses recognise that opportunities for winning market share from competitors is limited. Instead, companies should be focused on looking strategically at new opportunities and partnerships for long-term growth. Making new, strategic friendships will be key to success.

Alibaba is a pioneer in this space with its “New Retail” philosophy. A household name in China, it is approaching adolescence on the global stage, helping brands unlock the potential of Chinese consumers, and making it easier to do business everywhere. There are four key reasons why Alibaba should be firmly on your new best friends list.

New Retail: Seamlessly integrating online and offline by utilising data synergies to create operational efficiency, and bringing connected commerce to life by maximising frictionless brand experiences.

Globalization: Creating infrastructure of commerce through technology to enable businesses to operate more effectively and efficiently, granting access to lucrative markets through new platforms like Tmall Global.

Retail as a Service: Creating a comprehensive commercial operating system: A100, serving brands across every part of the value chain, from branding and product development to finance, logistics and supply chain.

Uni-Marketing: Creating the ultimate shopper centric platform, combining huge data assets to launch a powerful suite of marketing services to deliver a radical new level of targeting and reach of consumers for brands.

International brands for Chinese consumers

Chinese consumers are increasingly looking for high-quality products from reputable international brands. In 2018, China’s total imports reached $2.14 trillion, up 15.8% year-on-year from the previous year, according to the Chinese Ministry of Commerce.

Tmall Global, set up in 2014 to bring international brands to Chinese consumers aims to win through cross-border commerce. The focus: seamless, engaging shopping experiences and international category expansion to attract young affluent digital spenders who shop mobile first. By creating a dedicated space for brands to own their content and sales strategies, Tmall has created a space whereby brands can add value and own the relationship with the consumer, rather than just focus solely on GMV. By doing so, Alibaba has increased customer retention within its ecosystem and fuelled brand loyalty on a colossal scale.

This year, the marketplace has introduced a new set of services for international brands to better manage their entry into China, strengthening brands’ propositions with their data tools, enabling cross-border commerce opportunities and increasing active buyers. Alibaba plans to bring USD200 billion worth of international goods into China over the next five years; a true commitment to cross-border international commerce.

Accelerating digital transformation

A further acceleration of digital transformation available to brands is Alibaba’s Business Operating System, A100. Allowing brands to fully leverage the necessary services to drive growth and operational efficiencies. Having established New Retail - the idea of seamlessly integrating online and offline, A100 is a comprehensive commercial operating system, serving brands across every aspect of the value chain from branding and product development to finance, logistics and supply chain. This new service will deepen the friendship with Alibaba.

Bringing New Retail to the World

Alibaba is not only seeking to bring the outside world into China, but Chinese brands to the rest of the world. Alongside its army of innovative data-first, global facing marketplaces, Alibaba is also partnering with existing retailers across the globe, bringing New Retail and final-mile solutions to European markets.

In Spain, Alibaba Express has partnered with postal service Correos to boost cross-border exports of Spanish SMEs and Chinese imports, with a focus on European and Latin American markets.

An agreement was also created with Spanish retail giant El Corte Inglés to collaborate across multiple areas, including Cloud computing, online and offline retail, logistics, and digital payments, to utilise its distribution centres as collection points for purchases made on AliExpress. In turn, AliExpress will explore the potential of creating unique and engaging shopping experiences by installing physical points at El Corte Inglés shopping centres.

In Russia, Alibaba, through AliExpress and Tmall Russia, now controls 69% of the eCommerce market (Source: Ecommerce News Europe). In Singapore, Alibaba holds a controlling stake in Lazada, and last year invested USD1.1 billion in Tokopedia, a leading eCommerce platform in Indonesia.

Strategic and sustainable brand-building.

Alibaba’s Uni Marketing is somewhat of a gamechanger when it comes to marketing tools. Leveraging the entire Alibaba ecosystem to inform brands about their consumers, allowing them to target more effectively. Utilising this revolutionary data-driven marketing approach enables more strategic and sustainable brand-building.

Key takeaways

Look beyond your bottom line: Globalisation is well underway for Alibaba. Its ecosystem provides huge potential for future-focused brands, seeking new partnerships, to grow their consumer base and extend into markets including China, Russia, Southeast Asia and Latin America.

Be customer-obsessed: Who is your customer and what is their experience of your brand? Evolving brand experiences increase customer satisfaction and increase overall penetration and retention. Alibaba’s new digital tools will effectively become the loyalty scheme of the future – do you know how to use them?

Eliminate shopper friction: Understanding your shopper’s path to purchase and respondingto consumers’ needs by developing a diverse partner ecosystem will create growth on an inordinate scale, as can be seen by Alibaba Group through their investments and future-facing trajectory.

Optimisation and Innovation: The new world order demands new tools, processes and team structures. Alibaba’s relentless focus in these spaces makes them a valuable strategic partner, granting access to new territories and consumers. Every brand should be asking themselves: does Alibaba want to be friends with me, too?

Join us, and Alibaba, in Amsterdam on 15th and 16th May to discover more

To find out more about Alibaba’s vast ecosystem and how to win in a hugely competitive digital arena, come to our eCommerce & Digital Strategy conference in Amsterdam in May. Our experts will guide you through executional nuances and the fundamental criteria of building a successful strategy with Alibaba to sell your products on a truly global scale.

Source: Kantar

Editor's Notes

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