Alibaba's no silver bullet for Australian retailers

Despite its clear benefits, Alibaba also poses a number of risks to our e-retailers looking to grow share of mind and wallet in China.

Chinese e-commerce giant Alibaba has landed on the New York Stock Exchange and its stellar debut is the latest step in a fifteen year journey that has seen the Hangzhou-based company blossom into the world’s largest online retailer – bigger than Amazon.

On the face of it, Alibaba is a silver bullet for Australian retailers. With analysts predicting that as many as 500 million Chinese could enter the global middle class over the next decade, the e-commerce platform is a reliable way of establishing a beach-head in the region and selling products and services to this rapidly expanding consumer market. According to accountancy firm KPMG, more Chinese consumers engage in online shopping that anywhere in the world.

However, e-commerce in China has some unique characteristics and requirements compared to other markets. For example, the Chinese consumer typically prefers to pay upon receipt of their goods rather than in advance, adding a layer of complexity to billing and transactions. Simplified Chinese and its vast character set are also challenging to integrate into a web platform. This is why many retailers look to Alibaba as a default - a ready-made, turn-key solution that sidesteps the quirks of the Chinese marketplace.

Despite its clear benefits, Alibaba also poses a number of risks to e-retailers looking to grow share of mind and wallet in China, particularly those with an established footprint and an international brand presence. For example, if you open a web store on Tmall, Alibaba’s popular B2C platform, the ability to manipulate the look and feel of the user experience is limited.

E-retailers that rely on a strong, vibrant brand identity to drive sales – fashion, luxury, food and drink – often complain that Alibaba restricts their ability to create an online experience that surprises and delights consumers in the same way a dedicated website can.

Mobile complications

The growth of mobile shopping – via smartphone, tablet, phablet – exacerbates this issue further. China is the world’s largest smartphone market, and its consumers spent in excess of US $27 billion shopping on mobile devices in 2013. If an Australian retailer relies on Tmall, it allows Alibaba to disintermediate its relationship with its mobile customer base. It loses control of vital customer data, its carefully-crafted brand experience and the opportunity to directly manage and influence the consumer’s path-to-purchase.

The rise of multi-channel shopping has driven the explosive growth of omni-channel commerce solutions. These are platforms that join up the consumer journey seamlessly across channels like mobile, in-store, website, social media, contact centre, ensuring a customer’s experience of a retailer – price, look-and-feel, content – is consistent, contextual and relevant. It is by following an ‘owned’ omni-channel strategy alongside a robust Alibaba presence that leading brands have thrived in China so far.

Product and inventory management are also an important component of a robust omni-channel commerce strategy. For Australian retailers wanting to operate multiple sites in different languages and different markets, the ability to update product information once, and for it to update immediate on any channel, anywhere is enormously powerful. Some platforms – like hybris – offer integration with Alibaba so status and stock data is automatically synchronised with, and updated on, the Tmall storefront in real-time.

Alibaba is vital to any Australian retailer’s strategy in China, as it engages the Chinese consumer and drives growth, but it’s important that brand integrity isn’t tarnished by operating on a platform you can’t fully control. An omni-channel commerce strategy will help to manage a series of ‘owned’ channels in the region – web, mobile, contact centre, social media, allowing the retailer to build a meaningful audience relationship and brand identity.

Stefan Schmidt is the vice president product strategy, hybris

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