PURE-PLAY E-COMMERCE GIANTS TAKE ON BRICKS & MORTAR CHANNEL
WHAT’S GOING ON
Amazon disrupted the retail food chain when it moved into the bricks & mortar channel by purchasing Wholefoods in June this year resulting in an almost immediate slump in retail and manufacturer share prices.
This recent move is just one example of a growing trend among pure-play online retailers investing in bricks & mortar stores.
Alibaba, the world’s largest retailer and one of the largest e-commerce platforms has failed to attract the same level of attention despite an aggressive move into bricks & mortar that started well before Amazon’s purchase of Wholefoods.
Over the past two years, Alibaba has invested c. $8 billion in bricks & mortar retailing, acquiring stakes in local supermarket chains and Chinese luxury mall “Intime” and is building a five-floor shopping mall in the Chinese city of Hangzhou.
Alibaba is using these stores to test the use of technology as part of the company’s “new retail” vision.
The Hema Xiansheng supermarket which describes itself as an “e-commerce experience store” is an example. All products in the store are digitised allowing shoppers to scan barcodes with the app and pay using the Alipay e-wallet. Similar to the online experience “because you liked this, you might also like this..”, the app make personal recommendations for further purchases.
Online orders are fulfilled and delivered within ½ an hour through the store, which acts as a fulfilment centre for the surrounding area.
GROWTH MANTRA’S PREDICTION
Amazon and Alibaba’s move into physical stores is testament to the belief that bricks & mortar retail is far from dead.
Both companies have made moves to become hybrid-commerce companies – combining the best of e-commerce with the best of physical stores.
This new model is fast becoming the future face of retail and we already know neither of these global tech giants will remain in their respective geographical spheres.
Australian retailers are rightly worried about the entry of Amazon into the market but Alibaba may also be the sleeping giant to take them by surprise.
While many retailers around the world are investing in more experiential retail experiences, we believe Amazon and Alibaba’s play into bricks & mortar will see new retail innovations and developments that will really push the boundaries.
They are born innovators and disruptors both led by ambitious founders who have built companies from the ground up purely based off the unyielding philosophy of serving the customer.
Customers have been crying out for more engaging retail experiences for years. We believe we are now on the cusp of an exciting era in retailing and expect to see some radical innovations play out in the next decade forged by the tech giants which will force traditional players to re-think their business model.
While Australia is ahead of the pack in food experiences, our offline retail experiences are sadly lacking.