After its omnichannel-focused Singles’ Day promotions, Alibaba is upping its bet on merging online and offline retail. The top Chinese e-commerce giant’s new stake in China’s biggest hypermarket brand not only adds to its growing portfolio of brick-and-mortar investments, but also poses competition to the established partnership between rival JD.com and Walmart.
Alibaba’s $2.9 billion purchase of a 36% stake in the Sun Art Retail Group is the latest in a string of investments in brick-and-mortar retailers that have spanned grocery stores, department stores, and even an Alibaba-owned mall being built in Hangzhou. These are all part of the e-tailer’s “new retail” omnichannel concept introduced in 2016 that encompasses logistics, big data, and AI.
Following a 2% decline in hypermarket sales of FMCG goods in China while e-commerce sales grew by 54% last year, L2’s Digital IQ Index: CPG China looks at the impact on brands of e-tailers’ omnichannel investments. For example, JD.com’s partnership with Walmart allows two-hour delivery from Walmart and Sam’s Club stores through the e-tailer’s crowdsourcing delivery platform New Dada. JD.com has now teamed up with 146 Walmart stores across China, and stocks Sam’s Club goods in its warehouses. The e-tailer has also launched omnichannel promotions with Walmart such as in-store QR code coupons for online orders ahead of JD.com’s 8.8 omnichannel shopping festival.
Both Alibaba and JD.com also began making investments in omnichannel grocery that started way before Amazon’s Whole Foods acquisition. JD.com has partnered with supermarket chain Yonghui since 2015, while Alibaba used its recent Singles’ Day shopping festival to promote its connected grocery store Hema Supermarket. Alibaba has branched out into several sectors with its omnichannel investments, which also include digitization of mom-and-pop convenience stores, department store chain Intime, retail conglomerate Bailian, and electronics retailer Suning.
Brick-and-mortar retailers are hoping these partnerships will help them digitize their operations, while Alibaba and JD.com can use these partnerships to combine online purchase behavior data with offline spending. They can also tap into users’ mobile payment data via Alipay for Alibaba and WeChat for JD.com after the latter two just announced a data partnership called the “JD-Tencent Retail Marketing Solution.” While offline stores are likely hoping to gain back some of the sales growth that’s being lost to e-commerce in China, Alibaba and JD.com are both amassing troves of valuable data in the process.