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  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
  • File format: Text
  • Number of pages: 2

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The article “How China is rebooting retail” focuses on how Chinese retail companies, particularly Alibaba, is reshaping the retail industry through “new retail”, a concept first devised by Alibaba founder Jack Ma. The main brand mentioned in the article, Alibaba - founded in 1999 - was a small business consisting of only 18 employees in 1999 (Leong, 2013) and grew to become one of the leading e-commerce brands, reporting a US$2.6 billion profit in the last quarter of 2017. Alibaba is well-known for Taobao, an online shopping service with around 580 million monthly users (DMR - Business Statistics and Fun Gadgets, 2018), to Alipay – an online payment platform. The article focuses on an advanced marketing mix coined “new retail”, as well as describing Alibaba's focus on a customer driven strategy through researching consumer behaviour in China. Furthermore, the article also briefly explains why certain brands, such as Toys “R” Us, have failed amidst the ever-changing face of retail.

The article explores the new multi-faceted marketing mix that Alibaba has implemented. Marketing mix refers to “a set of controllable tactical marketing tools that a firm blends to produce the response it wants to its target market” (Principles of Marketing, 2018). In this case, the “target market” of Alibaba is the typical Chinese consumer. The “place” of Alibaba's previous marketing mix was mostly online but with the “new retail” concept coming into play, Alibaba plans to assimilate online and offline experience. This can be evidenced by Alibaba's new technology-fuelled fresh food supermarket, Hema. Hema is an advanced supermarket system where consumers can search for product information by scanning the QR code that shows the origin, sourcing and nutritional information of each product that gives consumers a sense of trust as it guarantees quality of each product.

Alibaba is also focusing more on a customer driven strategy by understanding the busy lifestyle and culture of its Chinese consumers. By implementing technology, such as allowing consumers to order fresh food, even live seafood to be cooked and eaten in store or letting consumers place an order for home delivery for “30-minute delivery within a 3km radius” (The Conversation, 2018), this can be value-creating for consumers as it allows them to put in less effort into every day transactions and activities. Furthermore, Alibaba has created more value-creating techniques by understanding consumer behaviour. China is gradually becoming a “wallet-free society” and customers are able to pay at Hema supermarket or Tao Café (another Alibaba-affiliated supermarket) using Alipay, the digital pay system with over 520 million users (Advertising Age, 2018) where consumers pick up their items and scan their personalised QR code at the entrance and their payment is automatically charged to their bank account (The Conversation, 2018). This reduces costs for typical Chinese consumers as they spend less time and less effort on their everyday errands and go about with their busy lifestyles, as well as give Alibaba firm value.

Trust and reassurance is one of the main qualities that Alibaba attempts to build through “new retail”, and this is highly beneficial to Chinese consumers. China can be described as “the ultimate low-trust society” (Advertising Age, 2018). Strategies such as the QR code that provides comprehensive product information allow consumers to build faith in the brand's products and quality, as well as using the product trial concept at their Hema supermarkets, where consumers can “graze and pay as they go” (Advertising Age, 2018), allowing consumers to test out their products for quality and satisfaction. Additionally, Alibaba attempts to further draw in consumers by allowing them to eat live seafood at their Hema supermarkets, gives products a search attribute as they can physically and visually test out their products. Such strategies and techniques are beneficial to Alibaba as they could potentially draw interest from the “low-trust” (Advertising Age, 2018) Chinese consumers and attempt to change their scepticism and drive customer satisfaction by being the first supermarket to allow consumers to try out their products as well as receive additional meaningful information on products through a simple QR code scan.

The article also mentions how other international brands, such as Walmart, Toys “R” Us and many more are failing in the US and the UK. Particularly, the collapse of Toys “R” Us could also be compared to the booming Alibaba. Whilst Alibaba seeks to be innovative with “new retail”, Toys “R” Us has suffered with a severe case of marketing myopia. Marketing myopia is when a brand “makes a mistake of paying more attention to the specific products a company offers than the benefits and experiences produced by these products” (Principles of Marketing, 2018). In this case, Toys “R” Us did not attempt to keep up to date with the dynamic changes in the retail industry, such as the move from offline to online, and Toys “R” Us did not change their traditional store environment, where “More than 60 years later, Toys “R” Us stores don't feel much different” (The Globe and the Mail, 2018). The differences between Alibaba and Toys “R” Us show how important understanding consumer behaviour, having the right marketing mix and being innovative is in the retail industry.

In conclusion, the article and other resources demonstrate how Alibaba's innovative and smart marketing mix and decision to become more consumer-orientated has the potential to revolutionise the retail industry and boost Alibaba's command over the retail industry. Moreover, it also signals to other brands, such as Toys “R” Us, the importance of understanding consumer behaviour and the dynamics of the ever-changing retail industry.

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