China: Alibaba subverts its theory that physical stores make no sense

Updated: Mar 5

Step-by-step Alibaba, what is going to be the largest retailer of all time, is creating a physical brick-and-mortar footprint. The retail of the future has to have a robust online, and off-line presence, for shoppers. The stronger the physical off-line presence, the more your online business will grow, and vice versa. It does not make sense to talk about channels anymore, a holistic ecosystems around shoppers have to be build.

Here an overview of Alibaba's off-line presence: 1. China is a country of tea. There are hundreds of thousands of tea houses. Almost all traditional. Alibaba knows it. On March 25, Tmall's first new West Lake retail tea shop opened in Hangzhou. Traditional teas combined with black technology to make tea houses "smart."

The Tmall teahouse is equipped with automated tea machines, interactive shelves, and a new generation of a smart vending machine. The smart vending machine needs the Alipay scan code to buy products, and automatically charge your Alipay account. Additionally, the teahouse uses AI to interact with consumers in the form of games, allowing them to experience the brand. 2. The Alibaba's Tmall stores are flooding China. Besides, others store chains not owned by Alibaba, but integrated into its digital ecosystem through its LST platform, are a fundamental part of Alibaba's physical store footprint. Here we are talking about 1.5 million neighborhood stores in 2021.

Shao Xiong, omnichannel director of Tmall FMCG, mentioned that next year, Tmall will open 1,000 stores on campus, enter 1,000 universities across the country in three years, serve 20 million university students and create a new retail university ecosystem. According to statistics from the Ministry of Education, there are currently 2,631 colleges and universities nationwide with 26,958 million university students. 3. Intime department store, known as the first testing ground department store for new retailers, has been intelligently digitized and transformed with Alibaba technology in recent years.

"Intime department store is no longer a traditional department store now." Alibaba's Jiang Xinjie recently said. In China the number of smart stores such as Intime department stores have transformed and/or cooperate with Alibaba have reached 114,500. 4. Alibaba's brick & mortar IKEA style furnishing store concept Taobao, is now also present, outside mainland China, in Singapore and Malaysia.