Via LinkedIn : Is Google really the target and competition for Alibaba?
As Alibaba receives a huge publicly raised war chest for its expansion, the intensity of the conversation around e-commerce is increasing. Boardrooms and shareholders question why Alibaba is the hottest ticket, and analysts provide greater granularity of insights into the category.
Having taken almost two decades to reach US$1 trillion in sales, educated predications are that it will double again in two years, hitting $2 trillion in 2015. Exponential growth like this is very exciting. But what does a China dominated category growth mean for everyone else and is e-commerce just a launching pad for Alibaba’s final goal?
Shopping in China is an acceptable pastime in itself, 78 per cent of Chinese believe that if you can shop, you are successful in life (McCann Truth about Shopping 2014). With only an emerging “offline” commerce sector, consumers in China have moved online to find the choice of products they yearn for, eagerly building their profiles. In the US, by contrast the study revealed e-commerce is merely making shopping more convenient, with a by-gone age of leisurely in-store retail experiences fondly remembered. No such cultural folklore exists in China, the inevitably younger skewed time-starved e-customers cannot refer to their older generations for an education in shopping. Thus curiosity drives engagement and participation helps define them. So it is clear we have very different customer psychologies in our e-commerce titan’s home-markets.
Alibaba is not only growing organically on its primary platforms. Alibaba has been acquiring companies on a quite incredible scale. Many of them, such as Taxi hailing apps and an App Analytics company, to western eyes may not seem core to the Alibaba offering. But it is clear that Jack Ma’s team want to have a keen understanding of their customers purchase habits across multiple touchpoints. The Chinese consumer’s expectation now is shopping enjoyment should be seamlessly synced with the invisible convenience technology provides – online reservation, delivery, and recorded personal information, treat me “like you know me!”.
Worries about the data that online stores hold about them in markets outside of China would suggest this kind of integrated platform creation would be looked on with privacy concerns. However, the Japanese e-commerce giant Rakuten appears to be following a similar strategy to Alibaba, in building a platform that can connect, entertain and provide retail opportunities. Chat app giant LINE is building entertainment as well as O2O commerce into its communication platform.
The mobile payment war now officially engaged in by Apple, will create another area for newly found cross category competitors to face off in the search for customers. Here Alibaba challenges traditional banks and payment facilitators like MasterCard and Visa, E-bay’s Paypal, some Telecom companies Google Wallet, with Alipay. Here, the battleground isn’t just in internet services. It is offline retail as well, where knowledge about the customer can deliver amazing competitive advantage.
The Truth about Shopping study told us that the majority of shoppers are happy for stores to use their data if they get value in return. While accepting technology driven shopping, it does worry western shoppers that they will miss out on discovering unexpected delights. They want the very human and personal touch amidst a wave of algorithm-based personalisation.
Data driven shopping is here and the customer is happy with the value it delivers (provided their data is secure).
As Alibaba’s platform of services expands globally it will continue to build a quality data set around shoppers. Therefore is Google really Alibaba’s target and real competition?