What Alibaba, JD, China Post See in Turning Small Stores Into Franchise Touch Points

Speaking of Chinese online retail, here‘s China Money Network on Alibaba‘s plan to transform China’s mom-and-pop stores:

The retail giant has now unveiled an even more ambitious plan to transform 10,000 mom-and-pop convenience stores across China into a vast network of Tmall.com brick-and-mortar outlets, where consumers can shop, pick up packages, make orders online or even apply for and receive small loans. It’s the first step in Alibaba’s broader plan to turn as many as six million convenience stores into smart service centers equipped with Alibaba’s e-commerce infrastructure and capabilities in financial technology, logistics and travel services. […]

“These Tmall shops will be a supermarket, a post office, a travel agency, or even a community bank,” said Lin Xiaohai, vice president of Alibaba. “Behind every digitalized Tmall shop, there is synergy to be achieved (via Alibaba’s platform) on supply chain, branding, sales services, etc. (These stores) will not just be a retail end-point, rather a new starting point to observe user behavior.”

​Over time a deep integration of Alibaba services will change the nature of these stores completely:

A new IT system was installed to keep track of inventory and retail sales. Alibaba also introduced the shop owner to 1688.com, an Alibaba platform focusing on domestic B2B trades. Huang can enjoy free delivery with orders over RMB288 (US$44), thanks to Alibaba’s logistics platform Cainiao Network.

​As Lin Xiaohai from Alibaba said, “(These stores) will not just be a retail end-point, rather a new starting point to observe user behavior.”

​They will become franchise touch points for the whole Alibaba ecosystem.

TechNode:

The licensed physical stores will be much smarter and well-targeted. For example, customer preferences and purchasing history data from LST, Alibaba B2B platform that’s being used in over 500k stores, will be analyzed to provide curated plans on product offerings and marketing campaigns. All-around services will be offered such as merchandise channels and orderings, logistics, marketing, and more.

“There are over 6 million community grocery stores across China, mostly family operations. 70% of such stores are based in third- to sixth-tier cities. 80 percent of the shop owners are above 45-years-old, a group that’s not accustomed to smartphone and new technologies. The lack of technological support resulted in low efficiencies and thus meager profits despite hard work with an average daily operation time range from 12 to 15 hours,” said Lin Xiaohai, vice president of Alibaba.

​Alibaba is not the only one pursueing this strategy:

Alibaba’s arch-rival JD plans to open more than 1 million JD convenience stores across the country in the next five years, in addition to launching 10,000 JD home appliance stores offline.

​You may also recall that the China Post is already sucessfully building more or less the same thing with its Ule platform.

​More on this topic:

​* How China Post’s Ule Is Building the World’s Largest Retail Network
​* Taobao Villages: Alibaba Is Deeply Entrenched in More and More Rural Regions in China
​* Alibaba’s On-Demand Services Unit Koubei to Raise $1.2 Billion
​* Alibaba: “Our Ultimate Strategy Is to Build the Future Infrastructure for Global Commerce”

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