“The songs are still in my head” — Chris Tung, Alibaba’s Chief Marketing Officer, reflects on the previous night’s gala before jumping right into the nitty-gritty of 11.11.
On the front end, it’s just shopping: smooth, carefully engineered experiences both online and offline for customers all around China and the world. All fun and games: catching cats, scanning QR codes, interacting with pop-up stores. On the back end, though, there is a massive infrastructure: an interwoven network of storage facilities, retailers, data scientists and gigantic servers. The result: 168 billion RMB in revenue during a single 24-hour period.
“The show is just one part of it” Tung admits. “What is driving everything is the data technology.”
But the fuss this year was not only about spending and revenues. As was explained by many Alibaba execs during the day, Singles’ Day 2017 also served as the biggest test run yet for the company’s new vision of shopping, New Retail: a vast system that works from and builds on the insane amount of data and preferences that Alibaba collects from its customers, a mapping of each and every Tmall user’s likes, dislikes, and shopping behaviors.
What is it?
After moving shopping to the internet, Alibaba now wants to bring it back to the streets, at least in part. Tung describes New Retail as an intersection of online and offline shopping: the stores are physical, but include many digital, web-based features, such as AR and real-time data collection reflecting consumers’ needs and preferences in order to make the retail experience more comfortable, more personal.
“The store knows you better than your boyfriend does,” says Tung, much to the bewilderment of some European journalists present. Even though he reassures everyone that Alibaba would never release pieces of personal information to its retailers, their worry is understandable — to customize the shopping experience and constantly receive highly personalized offers, and to let retailers anticipate our needs, we must let Alibaba peek into our lives deeper than any other online company.
“The store knows you better than your boyfriend does” — Chris Tung, Chief Marketing Officer, Alibaba
The question arises: could this be the biggest obstacle to Alibaba’s expansion to the West, where consumers are more concerned about their privacy than in the already tightly-monitored Chinese context? Can we trust Alibaba to make shopping easier without posing any risk to us?
How does it work?
Questions of privacy aside, the gears of New Retail are already shifting, often with impressive results. Later in the day, we see how exactly it works through a video call with a model store in Hangzhou. The Tmall-branded outlet is decorated lavishly for Singles’ Day, with flags wishing a happy 11.11 and Tmall’s signature black cats everywhere. Long Yi, the store’s manager, explains the changes that have occurred since they switched to Alibaba’s New Retail model a few months ago:
Now I am buying all my replenishments online, and based on the consumer data on the area Alibaba provides, I can give an offering fitted to the needs of my consumers. The set of goods in our shop is a lot different from our competitors’.
And New Retail is working out well for them. Li Yong explains that their store’s revenue has jumped 30% since they switched to New Retail. It looks like both the merchant and the consumers are happier this way — the prospect of this most convenient way of shopping certainly holds an appeal.
Who’s doing it?
The massive promotion of New Retail couldn’t work without some crucial partners. Alibaba’s two main allies in the campaign are Hema, a newly formed food retailer, and Intime Retail, a chain that Alibaba privatized in January and has been rebuilding for the purposes of their next shopping revolution.
“There’s much chemistry going on between us and Alibaba,” explains Chen Xiaodong, CEO of Intime Retail. He is putting it mildly: ever since their privatization, Intime’s complete business model has been reformed, and they now serve as a flagship model for the New Retail system. Real-time consumer data is constantly supplied to them by Alibaba, while they provide statistics to them and set up AR interfaces for their customers.
Hema’s case is simpler. The food provider was formed with precise ideas about New Retail in mind, and uses the interconnectedness of online and offline in order to constantly provide customers with best-quality food products.
“Everything here is freshly grown and only here for that 24-hour-long period when the food is reaching its best quality,” says a clerk from Hema’s flagship store in Shanghai Expo’s Media Center. Their goods are constantly selling out, and are constantly replaced throughout the day. As 11.11 draws to a close, everyone present has witnessed Hema’s most elastic capabilities.
Midnight is nigh, and Singles’ Day is about to officially end. Daniel Zhang, CEO of Alibaba, stands amongst entrepreneurs from all five continents, all of whom have been making big bucks in the past 24 hours. The countdown starts, the clock hits midnight, and the counter on the IMAX screen freezes at 168 billion RMB (~ $25 billion). The record is not a surprise: last year’s numbers were exceeded at about 2pm. Other world records include most transactions per second (256 thousand) and most online searches supported per second (42 million). CTO Zhang Tinfang calls the day the “greatest man-and-machine collaboration ever, in history,” while Shen Guojun, CEO of Cainiao, Alibaba’s logistics network, not-so-modestly calls the day a “miracle.”
And New Retail has also passed the test: more than 15 million people have made contact with the new model. Daniel Zhang is extremely pleased.
“It’s like giving offline retailers wings,” he says. “And we are changing the face of traditional e-commerce with it. It is innovative, it is creating a better experience for users and merchants. And it is just getting started. Now we are at Year Zero of the new commerce.”
Some uncertainties come to mind, however. How much privacy is the West ready to sacrifice, and how much will global customers trust Alibaba with their data?
And there are indeed places to go: 40% of the retailers taking part in this year’s 11.11 were international — a great pool to globally promote New Retail. Some uncertainties come to mind, however. How much privacy is the West ready to sacrifice, and how much will global customers trust Alibaba with their data? Based on their Singles’ Day performance this year, this Chinese tech giant might just be on the way to earning global trust.
“We are going to go forward, but it’s going to be different,” says Zhang, referring to the many technological advances he has in mind to upgrade New Retail, to make it even more consumer-friendly and customized, an even bigger part of the life of every shopper with a Tmall account.
Should we wish him luck?