I chanced upon this when I attended the grand opening event of the Alibaba TaoBao university in S’pore earlier this year. Managed to convinced my wife to join me for this study trip to Hangzhou, the HQ of Alibaba. We finally went last week after postponing our earlier July date.
https://www.sirsdigitalcommerce.com/alibaba-ceo-programme1.html
This course was heavily subsidized by the Skillsfuture initiative, up to a tune of 90%. Accommodations and food were provided, except for the flights. It was intended to be a deep immersion introduction to the new e-Retail concept in China over 5 days. These monthly trips started in Apr this year and our class was the largest so far at 48 pax. Most participants were like us, leveraging on the subsidy and wanting to see if a new career path in e-commerce is possible.
The first day was spent travelling to the Alibaba HQ campus for an on-site experience of their work environment. We were introduced to their core beliefs and corporate structure, plus their recent initiatives. I was highly impressed with the latest concept store called Hema. It is a supermarket cum restaurant structure that changes the whole shopping experience. Its stock of live seafood was pretty impressive. The store has mapped out its client target market to within 3 km of the location and they can ensure that any online order they received will be delivered within 30 minutes!! (12 mins for packing and 18 mins for delivery by scooter).
https://www.supermarketnews.com/retail-financial/offline-retail-store-hema-seeing-success
This was followed by 3 days of classroom lessons that provided us with a history of China’s e-commerce landscape and the current situation. Alibaba started in 1999 and it was only around 2006-08 that things started to take off in a big way. In a country where privacy is non-existent where it is always the country/state before the individual, this big social experiment has also evolved in ways we can never imagine.
All actions can be tracked and hence any discrepancies can be detected eventually. The resulting social behavioural changes are amazing. Everyone wants to do the right thing now as it really does not pay to be dishonest. As an example, I paid the coach driver at the end of our tour and then discovered that the classmate who had booked it for me had already paid upfront to the transport company when he confirmed the trip for me the night before. When he called them up the next day, they immediately credit back the double payment to him, no questions asked. The company cannot afford to have a discrepancy in their books which could potentially cause more problems for them with the tax authorities as all transactions have a digital record.
We also learned about the opportunities available in the e-commerce space in China. Two points stand out: that most buyers are born after the 1980/90s, and that items related to health/beauty have a very strong selling point. Speed and convenience of service are now a given. An alive and still swimming fish can be delivered to your doorstep easily. Same day to plus 1 day delivery time is the norm and they have even succeeded in providing 30 minutes turnaround time in the new Hema concept supermarkets.
B2B is passé, C2C is extremely advanced already and now S2B2C is the next big thing where every order is customizable to the end user requirements. Big Data is now ever so important for the analysis of trends and for strategy implementation.
Many case studies were provided during the 2nd day of classroom lessons. While the China e-commerce market population is so big with new opportunities, strategy planning is even more important now in this online cutthroat world. Every little step can mean success or failure. Everyone wants to be number 1 and number 2 will be fighting so hard to win the crown while the rest of the competition is eliminated.
The trainer shared a story that captivated all of us. In our overseas view, it would have been a boring but crazy tale of a simple product. It was about a big online fight between 2 sellers and how he was advising one side on how to stay on top of the game and to retain their number 1 position. And the product that they were selling? A portable water heater that cost less than USD 5 bucks… A pricing war erupted and target marketing to buyers resulted (mainly undergraduates). They developed a side war by launching a new product (mini cook pot for 1) to cross-sell and regain market share. Sales were about 80,000 units and pricing was a mere RMB 19.90 level. Both went for an all-out war to try to kill each other. Eventually, they reached a truce and move pricing levels to a more survivable RMB 39 level.
We did e-Retailing product line strategy (product lifecycle), product competitive analysis (SWOT, data mining) exercises and more comparisons between online e-commerce and traditional commerce. The trainer provided more e-Retailing examples of how successful brands generate product experience which in turn enhances customer experience.
In between the training sessions, we got to know the other classmates better. We were from all walks of life. There were traditional manufacturers (sausages) trying to go digital. Others were in diverse industries seeking to understand e-commerce better and to assess its impact on their industries (banking). Some are looking to penetrate the China market while others want to replicate this in their world.
It seems that China is way, way ahead of the rest of the world in e-commerce. It has only been about 10 years for them but because they do not have privacy concerns, they are able to think out of the box on how technology can improve the overall quality of life. AI (Artificial Intelligence) is one of their focused pillar of growth for the future and with Big Data, the sky is the limit. Holding cash in your wallet is non-existent and everyone uses their eWallets in their mobile phones for all transactions.
I am excited by all these as I see opportunities. Many old world industries will be swept away by the onslaught of new technology, but many more new jobs will be created. The fear of being left behind is very real if we do not constantly aim to improve ourselves and learn new things, to adapt. Change is constant but its velocity is increasing.
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