BEIJING -- Both Alibaba and Tencent are doubling down on the retail sector, albeit through different approaches.
As the government has reiterated the importance of using internet technologies to better empower the real economy, the pair are hoping to leverage their strength in big data and cloud computing to reinvent old-school retailing.
Alibaba stepped up its efforts by acquiring major supermarket chains, from Sun Art Retail Group Ltd to Intime Retail Group Co, to fill the blank in the physical retail puzzle.
It then upgraded systems for half a million mom-and-pop stores across the nation's far-flung counties and villages, with the hope of connecting friendly neighbors to the internet and providing them tools to better manage inventory using data analytics.
It also piloted a prototyped, data-backed, new retail showroom through the Hema Fresh Market, the first of an envisioned nationwide chain that's a grocery store, restaurant and digital payment showcase rolled into one.
Customers can choose to dine in on a number of seafood dishes freshly prepared and cooked on site, or order and pay through an app and wait for the parcel to be delivered to the doorstep in 30 minutes within a radius of three kilometers.
While multiple Tencent senior executives have openly vowed to stay away from the retail business, that "oath" now seems up for debate, given its financial and technological backing of a prominent list of retailers that have increasingly blurred the lines between online and offline.
Tencent's moves include, but aren't confined to, taking major stakes in JD, Alibaba's major competitor in e-commerce, the backing of luxury e-retailer Vipshop, physical convenience chain Yonghui Super Stores and Hema's archrival Super Species.
Just this January, Tencent led an investment in Wanda Commercial, China's prominent property developer, and announced plans to invest in Carrefour SA's China units.
More importantly, Tencent is opening up its social marketing capabilities to tens of thousands of retailers who can thus pinpoint and analyze the behaviors of its near 1 billion WeChat users.
For instance, if a customer buys something at a physical store using WeChat Pay, he or she is entitled to win virtual red packets containing cash for the next possible item to be purchased online with its partnering stores.
It also rolled out virtual gift cards by teaming up with brands like Starbucks and McDonald's, and streamlined the membership registration process through a simple click.
The company is also empowering merchants to personalize their virtual storefronts for individual visitors, offering real-time, tailored product recommendations banking on algorithms that analyze a person's interests, location and purchasing power.
"WeChat is a super-strong asset from which to build, as it becomes the center of a customer's digital life," said Richard McKenzie, a partner of Oliver Wyman, who believes it is difficult for Alibaba to replicate.
"Having said that, Alibaba has a great share in e-commerce and cash flow, meaning they can invest significantly and they will fight very hard," McKenzie said. (Source: China Daily)
A single purchase
