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Understanding Alibaba's move to jumpstart next phase of e-commerce growth

The battlefield of Chinese e-commerce giants has shifted offline, reports TechInAsia

Penny Lau | Tech In Asia 

Understanding Alibaba's move to jumpstart next phase of e-commerce growth

The battlefield of Chinese giants has shifted offline. The latest move is by Alibaba, which joins its competitors in venturing into the supplier market space for China’s mom-and-pop stores. The idea is to reach the 600 million Chinese consumers still unexposed to online retail.
 
TMall, one of Alibaba’s online shopping businesses, will now also operate as a supply chain platform for small shops conveniently located within 500 meters of consumers’ living compounds and buildings. It aims to reach out to 10,000 such stores in its first year, according to an article on its website last week. 
 
Fighting for a place in the offline world
 
According to a report by Zhiyan Consulting Group, Chinese online retail sales per year is expected to slow to 13% in 2020 from 26% in 2016.
 
“The offline market is still the main theme in domestic consumption. Although online retail has been developing for about 20 years in China, its share of total consumer retail was less than 15% last year, according to our data,” says Cao Lei, director of the China Research Center.
 
Why mom-and-pop stores?
 
In the past, had focused their competition on more durable consumer products such as clothing, books, and electronics. But there is a large potential market in the fresh food and grocery segment that could be worth hundreds of billions of dollars, according to Cao
What’s in it for small stores?
 
Understanding Alibaba's move to jumpstart next phase of e-commerce growth
Local shops are where people pick up last-minute items or stock up on small volumes of groceries. Typically owned by small business owners unfamiliar with the online retail space, many of their customers, too, are elderly people and children who have not yet been reached by online retailers. 

This is an excerpt from the article published on Tech In Asia. You can read the full article here.

First Published: Fri, September 08 2017. 13:51 IST
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