Alibaba Group, the Chinese e-commerce, retail, Internet, and data conglomerate, had a message for delegates at the ICSC annual conference in Barcelona on Thursday: ‘Visualise your physical store as an e-commerce website’.
Two Alibaba case studies presented at the conference on the second day of the annual event highlighted how stores can be ‘digitalised’, backing up founder Jack Ma’s view that offline shopping can work hand-in-hand with online activity.
Speaking on behalf of the Chinese giant, Chris Potts, retail business development lead for the UK and Nordics at Alibaba Cloud, showed Alibaba’s Hema grocery stores, which place an emphasis on fresh food. The physical Hema grocery stores act both as a live market and an e-fulfilment centre for those that do not wish to visit the store.
Grocery goods are shown to online shoppers only if they are available at a given store. In-store conveyor belts carrying shopping bags get filled up by store pickers to fulfil online orders before those bags are dispatched or readied for pick-up.
For those that do wish to make in-store decisions, scanning codes on smart phones provide customers with detailed information about any given product, right down to the life history of a salmon a customer might be contemplating purchasing. This level of detail helps the customer ‘trust’ the store and the product enough to consider paying a little bit more. One of Alibaba’s apps learns from a customer’s previous purchase history to recommend products while the customer moves around the store.
In another example, Starbucks, the global coffee shop giant, has teamed up with Alibaba for a unique interactive physical coffee shop, Starbucks Reserve Roastery, in Shanghai. Using augmented reality technology, visitors to this store can point their phones at various parts of the roastery and learn on their screens about the actual process of how the Starbucks takes coffee beans and turns them into a drink the visitor might want. Web pages contain detailed information including store maps. In this way, customers at a physical store are gaining a ‘multi-sensory experience’, said Potts.
Potts explained the popularity of Alibaba’s online marketplace, Taobao, which on average attracts customers seven times a day onto the platform in a country containing 802 mln people connected to the Internet – 56% of the total population. That connectivity is almost all via smart phones.
‘But we don’t think the offline physical store is going anywhere soon,’ said Potts. ‘China is the biggest ecommerce market in the world, but still 77% of transactions happen offline. We find consumers prefer offline purchases to online shopping for certain categories, e.g. grocery shopping, cars, or luxury goods.’
According to Alibaba’s research, in 2015 at some point a customer first went online before buying something in-store in 16% of cases. That percentage subsequently rose to 43% in 2016. ‘We see the combination of online/offline already happening. With the online and offline experience, we are trying to make it possible for a consumer to shop the way they want.’