Thank Alibaba for Revamping Your Omnichannel Strategy
Prepare for a tidal wave of online-to-offline sales thanks to the rapidly growing influence of Alibaba, the China-based internet retailer. Although the online-to-offline shopping segment today accounts for just 1.2 percent of e-commerce transactions in North America, retailers should anticipate this segment to heat up as the Chinese e-commerce giant goes public with a fresh infusion of cash.
For those who haven't heard of the company, Alibaba is the largest web retailer in Asia, accounting for a whopping 80 percent of all e-commerce in China alone. Sometime this summer it will stage an initial public offering in the United States that's rumored to be the largest of its kind in history — even eclipsing Facebook's mega-IPO of 2012. Last year, Alibaba's annual revenues were one-tenth of Amazon.com's, but its net profit was 10 times that of the American web retailer. That makes Alibaba 100 times more profitable than Amazon. The company's ability to figure out how to enter new markets and create new revenue streams — all while maintaining phenomenal profit levels — is unparalleled in the world of e-commerce.
This summer would be a good time for retailers in North America to re-evaluate their upstream and back-end capabilities to support more flexible fulfillment options for their customers. If Alibaba decides to enter the North American market with a splash this summer, here are the top four reasons why retailers should think about revamping their omnichannel strategies:
1. Alibaba will be flush with cash. The company is raising a huge amount of money ($15 billion) through its impending IPO and will be focusing on making its online-to-offline strategy a winning force in the North American market.
2. Online-to-offline is Alibaba's next big thing. It recently acquired a 26 percent stake in Intime Retail, a Chinese department store. The two entities will form a joint venture focused on developing online-to-offline businesses in shopping malls, department stores and supermarkets in China. It's not unreasonable to expect Alibaba to perfect the "reverse showrooming" model in China before introducing it to a North American audience.