Alibaba: Why You Need To Rethink Your Omnichannel Approach
By Girish Pai, AVP, Group Manager, Retail, CPG and Logistics for Infosys
Ali Baba is a literary character from the Arabian Nights stories known for his ability to get virtually anything he wants by shouting “Open Sesame!”
The China-based Internet retailer of the same name is ready to display some magic of its own this summer when it stages an initial public offering that could very well go down as the largest in history. The billions of dollars the company is expected to raise from its Western IPO will allow Alibaba to get a strong foothold in the lucrative North American market … without having to shout anything.
Alibaba accounts for 80% of that country’s online revenues. As part of its ambitious plan, Alibaba has bought a stake in the luxury e-commerce site 1stDibs, the mobile messaging app Tango, and the mobile peer-to-peer ride sharing app Lyft. More recently Alibaba announced it was paying nearly $200 million for a 50% stake in China’s top soccer team, Guangzhou Evergrande.
To an outsider who’s unfamiliar with the incredibly competitive e-commerce sector, it might appear that Alibaba purchases companies and other business entities with reckless abandon. Far from it. Every move that Alibaba makes is part of a well conceived strategy. The investment in Guangzhou Evergrande is likely all about advertising and media rights. Lyft is probably an attempt to own a growing delivery network in urban areas. In other words, Alibaba keeps things smart and savvy, yet elegantly simple, while it expands its business empire. And its ability to figure out how to enter new markets and create new revenue streams while maintaining phenomenal profit levels is unparalleled.
It also helps that Alibaba processes billions of dollars in mobile payments and runs its own Cloud platform. The infrastructure and strategy are there – now they’re counting on Americans to buy products online and go to a physical store to pick them up. What the world is waiting to see is if Alibaba can change the way North Americans approach Web commerce. Buying things online and traveling to a store (or even a kiosk) to pick them up is not a huge part of the way North American consumers purchase things online. That method accounted for just 1.2% of all Internet retail transactions last year.
Needless to say, Alibaba sees some room to grow in that space. They’ve already demonstrated this by investing in Intime Retail, a Chinese Department store operator, to focus on developing online-to-offline business in shopping malls, department stores, and supermarkets in China. It is not unreasonable to expect Alibaba to perfect the “reverse-showrooming” model in China before eventually introducing it to North America. Supposing that this innovative Chinese powerhouse, buoyed by billions of dollars from an IPO, is able to increase its share of online-to-offline business in the West, retailers here should be ready for some startling market transformations.
That’s why it’s a good time to rethink just how your store’s omnichannel strategy works. Is it ready for an Alibaba-style shift to online-to-offline sales? If configured properly, the shift shouldn’t even matter. That’s because the right solutions give a retailer an accurate view of inventory across stores and the Web — no matter the location of the purchase and pick-up.
To get a sense of how retailers can up the game this summer, check out the ingenious pick-up strategy at the New England grocery chain Stop & Shop. Of course, Stop & Shop already owns Peapod, a very successful online grocery service. But what the store is piloting is something a bit different. Stop & Shop has figured that a certain percent of its customers care a lot about convenience and often don’t have the time to stop at the store.
Stop & Shop is placing pick-up stations — basically refrigerated boxes, manned by an hourly employee — in the corners of parking lots, at large shopping malls, and other locations that tend to have less traffic congestion than at your local supermarket. More importantly, it’s on your drive home from work. You chose a slot within a short window somewhere in late afternoon to pick up your groceries. A van from the nearest store drops off all the orders in that refrigerated box. You drive up and tell the attendant your phone number and he gives you your groceries. You haven’t left your car and grocery shopping is done!
This sort of retailing e-commerce system works because it takes a comprehensive approach to inventory visibility. It doesn’t matter where the customer buys the goods but just that the store can instantly fill the order and all she needs to do is show up to take them away. What we don’t see behind the scenes is the robust yet flexible back-end business processes, order and inventory information, in-store coordination, and customer communications coming together in a seamless way to bring her order to the pick-up station.
These are elegantly simply approaches to e-commerce, and Stop & Shop, Alibaba, and others are going to use them to revolutionize omnichannel retailing. Retailers that have an accurate view of their inventories across stores and distribution centers will be able to make a seamless transition to the new online-to-offline method.
As Amazon experiments with unmanned drones that drop off packages in your front yard just hours after you’ve bought stuff, I believe that retailers who invest in robust back-office capabilities to offer simple yet innovative options to customers will win. Don’t hold your breath waiting for an unmanned delivery drone anytime soon. Or magic carpets from the Arabian Nights, for that matter.
Girish Pai, AVP, group manager, retail, CPG and logistics for Infosys can be reached at [email protected].
Under Armour to open its biggest store to date, in Chicago
Baltimore — Under Armour is bringing its “Brand House” specialty retail format to Chicago, with plans to open in the Windy City in March 2015.
Located at 600 North Michigan Avenue, the 30,000-sq.-ft. store will be Under Armour’s largest retail space to date and offer a fully immersive brand experience. Innovative digital displays that act as points of information and inspiration will help tell the brand’s story.
The store will feature men’s, women’s and youth apparel, footwear and equipment, and also include localized Chicago products that celebrate the iconic legacy of the city in both sport and style. It also will highlight Under Armour’s partnership with Chicago-area sports franchises and universities.
Other Under Armour “Brand House’ locations include New York City’s SoHo neighborhood, Baltimore, and Tysons Corner in McLean, Virginia.
"We are excited to open our first Brand House in Chicago, on Michigan Avenue, one of the world’s most iconic and dynamic retail destinations," said Susie McCabe, senior VP of global retail. "The Under Armour Chicago Brand House will be our largest to date and will provide us with a new opportunity to expand upon our mission to make all athletes better, while delivering an elevated and personalized shopping experience."
DSW’s Affiliated Business Group to open Yellow Box concept store
DSW’s Affiliated Business Group (ABG) division and Yellow Box Corporation have partnered to open a Yellow Box concept store at The Falls Shopping Center in Miami, Florida, Friday, June 20.
Yellow Box plans to host a grand opening event with Lucky Magazine on the afternoon of Saturday, June 28. The company also plans to open two additional stores in Southern California at the Topanga and Sherman Oaks shopping centers in August.
Yellow Box is a leading women’s footwear wholesaler notable for jeweled sandals and fashion footwear for women.
"We are very excited to debut our first Yellow Box Footwear store in the United States,” said Affiliated Business Group’s SVP and GM Christopher Lanning. “Yellow Box is a proven women’s footwear brand with a strong positioning in the market place. Customers will have a great opportunity to experience Yellow Box’s unique brand of fun and fashion in an incredible retail setting."
ABG partners with multi-category retailers and wholesale companies in the development of strategies, leased businesses, new concepts and business models designed to optimize sales and profits through branded shoe assortments and retail experiences.