Feature: Taking British business to Alibaba's 488mn Chinese consumers
Host of the world’s largest 24-hour online shopping event, Alibaba’s influence on the global retail stage is unrelenting. On 11 November 2017 alone some $25bn of sales passed through its portal.
Driven by an ever-expanding middle class Chinese population with growing disposable incomes, the ecommerce giant is proving to be a valuable platform for companies all over the world looking to establish a customer base in China.
The UK and Scandinavia are among such targets, and David Lloyd, Managing Director for the UK, Ireland and Nordics, is the man responsible for opening doors for native businesses…
What attracted you to join Alibaba Group back in 2016?
For someone who is fascinated by how the internet brings people together, and is passionate about retail and working internationally, the opportunity to work at Alibaba was a natural next step for me.
We’re going through a very exciting time, which sees the radical and rapid transformation of the retail industry worldwide, but in China, what we in the West still consider futuristic, is already a reality. This is driven, among other factors, by the surge of a new consumer: younger, internationally-oriented, tech-savvy and seeking great quality, original foreign products.
This changing landscape has made it necessary for brands to rethink their strategies to engage with their consumers, with data technology representing a crucial part of the equation. Alibaba Group has been a pioneer in this field, and since 2015 we have been responding to the changing retail world by blending the online and offline spheres to create seamless brand and customer experience. We are trialling new technologies and helping brands trade globally – all with the sole mission of making it easy to do business anywhere. It’s an honour to be part of such an exciting moment in the company’s history.
Now, as Managing Director for the UK, what is your overriding objective?
Our mission globally is to make it easy to do business anywhere, and it’s no different in the UK. My focus is to help British businesses find success in China, supporting them to reach the 488mn annual active consumers on our platforms, a number which keeps on growing. This can range from businesses who already have a presence in China and need help expanding their offering, to those who have never even considered selling to the Chinese consumer and helping them embrace cross-border trade for the very first time.
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We have an increasing number of diverse British brands joining Tmall and Tmall Global, our B2C ecommerce marketplaces for international brands looking to sell to China. Some of those already on our platforms include Dyson, Whittard of Chelsea and Burberry.
2017’s Singles Day event generated $25bn in sales. What do you think is the key to its success?
Singles’ Day is the world’s largest 24-hour online shopping event and last year’s was our most successful yet – with 39% year-over-year increase in the value of goods sold - but it isn’t just about massive sales. Since
Alibaba first adopted 11.11 in 2009, it has evolved from being a single shopping day to a global retail and entertainment festival, during which we can glimpse what the future of retail will look like.
The event this year was built on two fundamental pillars: New Retail and “retail-tainment”. This was a natural direction for us, driven by the understanding that, for Chinese consumers, shopping is an immersive experience, one that does much more than merely ask consumers to passively add items to their ‘virtual cart’. In China, shopping is a social activity, which is even more enjoyable if carried out with family and friends and enriched by entertainment and gaming elements.
Moreover, this year we further enhanced the pool of brands and products shoppers could access: over 15mn product listings made available by 140,000 participating brands, including 60,000 international (compared to the “only” 100,000 brands participating in 2016).
Alibaba coined the term New Retail last year – in simple terms, what does this mean?
New Retail is completely redefining commerce in China and it is a game-changer for Alibaba and retail in the country. We are anticipating a reimagined retail industry driven by the integration of offline, online, logistics and data across a single value chain, coupled with social media, interactive content and entertainment on one platform.
New Retail, therefore, sees ecommerce and physical retail work together, rather than in opposition, with the ultimate aim of creating deeper brand engagement and better shopping experiences for consumers. In China, ecommerce currently accounts for approximately 18% of total retail.
Through “New Retail” we want to bring our data and technological capability to work with and digitally transform the 82% of offline retail. This isn’t to get into the bricks-and-mortar retail business, but rather to help bricks-and-mortar operators restructure and enhance their operations, including customer experience, inventory management, logistics and retail spaces, to enable them to succeed in the digital era.
How was technology used to enhance the consumer experience at this year’s 11.11 festival?
11.11 demonstrates the technological innovation and global scale of the entire Alibaba ecosystem.
One of the ways in which we bring New Retail to life is through new innovative technologies, some of which were showcased at this year’s 11.11 Global Shopping Festival. These range from augmented and virtual reality applications, facial recognition and scan-and-deliver convenience. For example, we launched an augmented reality-powered ‘magic mirror’ experience, where consumers were able to test different types of make-up on screen. From the same touchscreen, consumers could immediately order products from the likes of Maybelline and L’Oréal and have them delivered.
More than 1,000 brands converted over 100,000 physical locations into “smart stores” – digitised stores that have seamless payments and logistics options.
Over a million merchants utilised various online-offline integrations under Alibaba’s new retail format to enhance merchant operations and create exciting engaging consumer experiences.
About 50 shopping malls will have New Retail-powered “Pop-up Stores”, where consumers can browse and use virtual fitting rooms and “magic mirrors” to “try-on” outfits and cosmetics.
We also held our annual ‘See Now Buy Now’ fashion show, a live fashion event preceding 11.11, where retailers showcased their products in an engaging, entertainment-focused format. For example, Adidas used 3D mapping to project images onto the models’ clothing as they walked down the runway. Across seven different media platforms, customers were able to livestream the event and pick and buy products in real-time via their mobiles.
This all shows how ecommerce and media platforms can be used to create one seamless experience for viewers, bringing technology, entertainment and shopping together in one place.
Are there other technologies you are developing to further improve the shopping experience?
We see a great potential in how data technology applications can help make the shopping experience, even the grocery purchases, highly personalised, entertaining and convenient. We know this represents a challenge for brands, which have to look into new ways and formats to enhance the experience of their consumers – but together with hundreds of them, we are already experimenting all this in this big retail laboratory that is China today.
Let’s take Hema supermarkets, for example. This a prime example of this evolution that’s taking place and a great example of how we are building New Retail. With over 20 entirely digitised stores across China, Hema provides consumers with a three-in-one retail experience that encompasses all modes and desires of urban shoppers.
In an innovation that is unique to Hema, deliveries are fulfilled not from a separate warehouse, but from within the store itself. As a result, goods reach customers in a three-kilometer radius as quickly as 30 minutes after ordering. They can also scan products in-store to either add it to their virtual shopping basket or find detailed information on a product and its origins, or simply have fresh food prepared and enjoyed at the store’s on-premise dining area.
The shopping experience of the future will be defined by ease, speed and brand engagement – all things we are committed to delivering at their highest capacity.
How big a presence does Alibaba have in the UK, and what are your aims for growth in the coming year or so?
Alibaba established its London office in 2009, the first step in its globalisation programme towards Europe. Since then, our office has grown massively and it is now the hub for several business units of the Group, from the team responsible for the development of Tmall and Tmall Global, to Cloud, B2B, Fliggy and Alipay.
Growth only makes sense for us if it is achieved in a sustainable way and, most importantly, if it is built upon the satisfaction of our customers, who are central in our business approach. We put customers first, always, because we believe that our and their success are aligned and inseparable.
In the future, we’ll continue to work with a wide range of British brands, companies and stakeholders, developing the best solutions for them to thrive in the digital economy and make the most of the many opportunities offered by globalisation and global trade.
What is the size of the opportunity for British businesses looking to tap into the Chinese consumer market?
China is one of the largest and fastest growing ecommerce markets in the world. The country now has an estimated 731m internet users, and mobile devices are increasingly used as the shopping tool of choice.
The ecommerce market in China, coupled with the country’s growing middle class and desire for international goods, represents a huge opportunity for British businesses. We are not talking just about big numbers, but it’s also incredible to see how brands are finding new, innovative ways to engage with their consumers – revolutionising the traditional way of doing ecommerce as we know it.
Marketplaces like Alibaba’s Tmall and Tmall Global play a crucial role in a shopping environment like the Chinese one, where users spend on average more time on ecommerce platforms than in the West, and they are not only looking to buy but rather to live an immersive, omnichannel experience. This is all very different from the UK, where consumers either search for a product online or go straight to a brand’s website and demand rapidity and convenience, rather than a moment invested with social meaning.
As a British brand willing to tap into the China market, it is important to choose a trusted partner to work with. Being present on one of Alibaba’s marketplaces brings with it a brand awareness and access to the Chinese consumer that would be difficult to achieve otherwise.
We have already over 200 UK brands with stores on our platforms, and we expect to welcome more in the next few months, to represent the “made in Britain” excellence, quality and reliability.
What do you expect the ecommerce and retail scene to look like over the next five to 10 years?
The channel you shop in is becoming increasingly less relevant: in China, the lines between on and offline are now more or less invisible, and I expect to see this trend continue in the UK. Data-driven technology will play a key role in designing a consistent and entertaining shopping experience for customers at every touchpoint, as ecommerce players strengthen their investment in offline experiences, and as traditional players embrace new technology.
The better that businesses use data, the more successful they will be. The real challenge for retailers will be to find the right blend of personalised, engaging service, relevant branding, and products to catch the attention of tomorrow’s consumers.