By Stefan Schmidt, hybris
In one of the most hotly anticipated IPOs of the last few years, this month Chinese e-Commerce giant Alibaba listed on the New York Stock Exchange. It is the next step in a 15-year journey that has seen the Hangzhou-based company blossom into the world’s largest online retailer — bigger than Amazon.
For Western retailers, on the face of it at least, Alibaba is a god-send. 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 safe, secure and 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.
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However, e-Commerce in China has some key characteristics and requirements 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 is 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.
However, 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 a company elects to open a web store on Tmall, Alibaba’s popular B2C platform, its 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.
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 a 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 omnichannel commerce solutions. These are platforms that join up the consumer journey seamlessly across channels like mobile, in-store, web site, 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’ omnichannel strategy alongside a robust Alibaba presence that leading brands have thrived in China so far.
Product and inventory management is also an important component of a robust omnichannel commerce strategy. For retailers with 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 offer integration with Alibaba so status and stock data is automatically synchronized with, and updated on, the Tmall storefront in real-time.
Alibaba is vital to any Western retailer’s strategy in China. It is an important way of engaging the Chinese consumer and driving growth. However, retailers should be careful not to put all of their eggs in Alibaba’s basket. An omni-channel commerce strategy, that helps to manage a series of ‘owned’ channels in the region — web, mobile, contact centre, social media, even Tmall itself — is a much better alternative, allowing a retailer to build a meaningful audience relationship and brand identity.
In his role as VP of Product Strategy, Stefan Schmidt has designed and developed a number of products at hybris, including order management, mobile and customer service offerings. In addition, he has ‘hands-on’ experience from managing many global e-commerce projects for leading industry brands. He also has a strong relationship with the global analyst community, and has taken a lead in briefing analysts at every level about hybris’ product strategy – a program that has resulted in hybris obtaining top rankings from both leading analyst firms in the area of multichannel and e-commerce.
Stefan boasts more than a decade in e-Commerce and multichannel retailing and draws a wealth of expertise from his tenure at hybris software and previously at Wysiwyg, and is a graduate from Hochschule für Technik und Wirtschaft in Germany.
