As I
write this article, my inspiration comes from Alibaba who is redefining Retail
by leveraging technology. Before I embark on this topic, a few questions to Middle
Eastern hypermarket giants like Carrefour, Lulu hypermarkets, Geant, Hyper
Panda, Danube hypermarkets, Manuel, Spar, Nesto hypermarkets
a) How they intend to
differentiate their offerings to consumers who are very well connected through
the internet, who prefers researching their
purchases prior to buying & convenience of shopping?
b) Have hypermarkets ever thought
of business model wherein they grow their scale of operations 10X with minimal
investments?
c) How to tap unexplored
territories to grow their sales & market share?
I am
sure CEOs, CFOs and CIOs of these companies must have an answer to my above questions but I would like
to share my learnings of studying Alibaba’s vision i.e. “Using disruptive marketing as Growth Engine”.
Every
strategist would agree with me that if you cannot defeat your competitor then
change the rules of the game and that’s what Alibaba did with the launch of
their project i.e. Ling Shou Tong which means
Connect Retail.
The basic premise
of this project is to tap unexplored markets by utilizing existing Alibaba’s
strengths of the supply chain, a wide array of products & vast suppliers
base, efficient delivery & order processing, order fulfillment &
logistics support.
Alibaba,
in order to bring efficiencies into their existing businesses and using their
existing strengths, has ventured into
territory which has been untapped so far by the launch
of Project
Connect Retail.
They
have adopted 100,000 small grocery stores and connected them with their
integrated POS system by means of the app,
wherein these small grocery owners could benefit from buying directly from
Alibaba suppliers which provides Low Prices Everyday brand promise.
This
project has created Retail ecosystem wherein these small groceries procure
directly from Alibaba thereby eliminating distributors and improving their
buying margins and passing the cost benefits to end customers. Customers stand
to gain from price benefits and good quality products backed by Alibaba’s commitment.
In return, Alibaba gains wider
geographical spread using their core strengths i.e. procurement, wider
varieties, a large base of suppliers- all
neatly knitted into logistics operations.
That’s what I call disruptive
marketing or creating a different play-field thus leaving behind all your
competitors.
Connect Retail app also provides Business
Intelligence to these small groceries i.e. as to which item is selling better
in their shops and how much they need to stock and how they need to merchandise
or display.
This
app also provides information on best-selling products in entire Alibaba’s
network and provides access to these
products to small groceries in China.
Imagine
the scale of operations and growth Alibaba would be achieving thus optimizing
its existing investments in warehousing and creation of a large array of products through widespread vendors and bringing both suppliers
and end consumers together.
In UAE alone, there is said to
be over 20,000 small groceries, which may be getting serviced through various
distributors currently. Now if any Hypermarkets try to tap into these segments
by providing access to their better procurement, better offers and better
supply chains, this initiative would re-define these hypermarket’s market share
and would leave their competitor far behind.
Basically,
it is out of box thinking approach
which is currently lacking in Middle Eastern hypermarkets as they are still
thinking traditionally i.e. brick& mortar way by expanding through their
existing formats or within their malls.
I
would encourage these hypermarket retailers to study Alibaba’s Ling Shou Tong model and learn more to redefine their leadership stance in the region.
I would be more than glad to discuss my learnings which I have acquired by closely
following Alibaba’s retail 3.0 with any of the big or small hypermarket players
in the Middle East market, thus helping
my Retail sector to grow beyond boundaries.
Remember “For those who dare to dream,
there is the whole new world to win”.
Wishing all my readers Merry Christmas and a very Happy New Year 2018.
Love
Ritesh Mohan
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