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Alibaba Group has released their Q2 results for the three months ending in September. Sales rose 61% to CNY55.1 bn (US$8.3 bn) for the same period last year.

Lead-up to Singles' day

Alibaba's Q2 results have somewhat been subdued in previous years. With strong focus on their 11.11 festival, one could perceive their second quarterly results more or less a formality. Certainly this year, however, it is clear that investment has played an important role in supporting Alibaba's overall growth. They invested, for example, CNY25.7 bn in the quarter versus CNY5.7 bn in the same quarter last year.

Alibaba's New Retail concept the heart

Alibaba is continuing to expand its physical store presence to support their overall ecosystem. Their marketplaces, investment in artificial intelligence and cloud-based businesses are just a few areas where the retailer is blending its operations as part of their New Retail strategy.

In Q2, Alibaba's ecommerce businesses such as Tmall and Taobao platforms showed strong performance, with revenue reaching CNY46.5 bn, a 63 percent rise versus the same quarter last year. Revenue from their cloud computing business was up 99 percent to CNY3 bn, but subdued from a 130 percent rise a year earlier.

What to expect in 2018

Strong results in Q2, along with their recent consolidation of Cainiao, has raised Alibaba's forecasted revenue growth up 4 percentage points to a growth range between 49% to 53% in 2018.

Daniel Zhang, CEO of Alibaba Group, said 'We had an outstanding quarter. Our consumer insights and technology innovation were the key drivers behind our customer value proposition across the Alibaba economy, [...] we are seeing the early results from our efforts to integrate online and offline with our New Retail strategy, and consumers have benefited from access to high quality products, improved customer experience and the tremendous convenience of shopping anytime, anywhere.'

Our View

We believe that Alibaba will continue to blend their businesses further, whilst expanding their physical presence with smaller format stores next year. See our report on Alibaba’s move to physical retail through Hema Fresh, as part of their New Retail strategy here.

Singles' Day is fast approaching, we review Alibaba's plans for 11.11 ahead of the events' six years anniversary.

The spectacle...

Alibaba's annual Global Shopping Festival, 11.11, will bring together shoppers, retailers, suppliers and financial institutions from around the world to experience Alibaba's vision on the future of retail. The retailer's latest strategy, New Retail, aims to blend online, offline and big data to reinvent retail.

To showcase this concept during the event, Alibaba will collaborate with 52 shopping malls to set up 60 New Retail concept pop-up stores across 12 cities in China. See our Hema Fresh report to see an example. The 24-hour online sale itself will be available across Alibaba's marketplaces, and feature over 140,000 brands and 15 million product listings globally.

Image source: alizila.com

Initiatives supporting main event

Alibaba are running several different initiatives prior to the 11.11 festival. Tmall, for example, are broadcasting an interactive fashion show, with models and celebrities showcasing a range of different items. During the fashion show, viewers will also be able to make real-time purchases from their mobile phones.

Performance driven by experience and insight

New Retail experiences such as facial-recognition payment, will be made available in converted 'smart stores' across nearly 100,000 stores in 31 provinces and 334 cities in China. Pop-up stores for cosmetics, for example, will offer experiences through augmented reality for make-up and lipstick trials.

Coverage to drive wider appeal

Alibaba will utilise media and entertainment to drive online engagement, with celebrities, well-known singers and movie stars to feature during the Singles' Day countdown. This will be broadcasted live on satellite TV channels Zhejiang TV, Shenzhen TV and Beijing TV. To drive further appeal, there will be an AR game on Mobile Taobao App called Catch the Cat and red envelopes will be shared amongst consumers through various games.

Connecting consumers across China

Alibaba is accelerating the shopper journey for consumers in China through connectivity. Consumers will be able to experience Alibaba's New Retail concept during 11.11 at community stores like Rural Taobao service centres and neighbourhood convenience stores. Longer term, Alibaba is planning to launch a new smaller format store in Shanghai, based on the Hema Fresh model. Smaller formats require less capital and can be expanded more rapidly and could prove to be a more cost effective solution.

Alibaba Group’s chief marketing officer, Chris Tung said, this year’s event “brings consumers around the world a step closer to realising the aspirational life where entertainment and retail become one. [...] regardless of their physical location, consumers will be able to participate in more experiences than ever before this year, all showing the reality of New Retail. We start today but this is a festival with nearly two weeks of celebration and so many different ways to participate.'

In previous years, Alibaba has used Singles' Day to test the capability of new innovations, and it seems that this year will prove to be no different. New Retail aims to offer consumers a better experience - perhaps they are close to achieving what retail might look like in the future.

E-commerce giant Alibaba is planning to open their first brick-and-mortar mall in Hangzhou, China.

'New Retail' strategy driving decisions...

Construction work to Alibaba's five-storey 'More Mall, which sits on a 40,000 sqm plot of land, is being finalised and launch is expected in April next year. The move to physical retail reflects Alibaba's 'new retail' strategy; blending online, offline and big data to reinvent retail.

The first Alibaba mall will feature the retailer's flagship grocery store Hema, as well as brands sold on Alibaba’s e-commerce platform Taobao. Other well-known retail brands will also feature to provide shoppers wider choice. To transform overall shopping experience, the mall will also utilise its new retail technologies including high-tech makeup-testing mirrors and next generation virtual fitting rooms. Alibaba will continue to entwine its online and offline logistics, concepts and operations - it is up to their competitors in how they respond.

 

Get in-depth online and omnichannel retail insight from the world's leading experts, including executives from Alibaba, at our Online & Digital Summit 2017.

Presentations

07/11/2017
How can brand owners tap into the fast growing online grocery markets in Asia? For the first time, we release the ranking of Asia's top grocery retailers. Check out who they are and how they plan to win the online battlefield.
30/10/2017
We review Alibaba’s move to physical retail through Hema Fresh, blending online, offline and big data to transform the grocery shopping experience.
24/10/2017
Now in its sixth year, the summit has become the leading online and digital event for the grocery industry. Here we provide the key learnings from each session.
View all presentations

Key presentations

Our new report highlights the five big trends that we think will help further shape the grocery retail landscape in Asia in 2017, plus provides insight on the latest retailer performance.

This in-depth guide to China explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Retail Analysis the most reliable and robust source available for data of this type. 

We've grouped all the latest Asian retail news, store visits, retailer profiles and downloadable presentations together in one place.