Online retail has really become a new launching pad for many retailers that are having to make their business go to the next level. It’s a way to get your company from making small amounts of revenue due to low market coverage, to exploding within your industry, all because you have online exposure. It also allows companies to perform a variety of logistical approaches, especially when it’s necessary to work with other retailers and consolidate product orders. This is exactly what is happening for China-based retailer Alibaba, which has created a different approach to generate the kind of sales its’ looking for.
Internet Retailer recently reported how Alibaba is using e-commerce to deliver to shoppers all the goods they need from a number of sellers, all at one time. Alibaba Group Holdings hosts 70,000 online storefronts within their Tmall Supermarket or chaoshi.tmall.com. The online retail site generated $49 billion in sales in 2013. The Tmall has grown exponentially since its’ 2012 rollout. 2013 was a breakout year, growing at 400% and Alibaba expects 2014 to be the same.
The sales have definitely come a long way. A Tmall spokesman stated in the article, “the reason is that consumers like to purchase from different grocery stores. We can’t aggregate the orders at that time so that the shipping costs turn out to be too expensive for consumers who place multiple orders”. This was before 2012, when the company had not tried their new approach. Chinese shoppers have really bought into the Tmall Supermarket and the site retailers have as well.
These storefronts are operated by a variety of retailers, Chinese and foreign. What was discovered was that shoppers would buy their general products from different sellers, however, they did not do the same with their grocery purchases. For example, they would buy their milk from one online storefront, but their rice from another. Alibaba realized that it needed a different online approach to make it work. The retailer decided to create a Tmall Supermarket warehouse, in which all of the storefront sellers would ship their groceries to their location. From there, Alibaba would have the shoppers’ entire order consolidated and delivered to them at one time.
The warehousing is the key ingredient that makes the Tmall successful. Alibaba has outsourced to logistics management company Guangdong ALOG to handle this aspect of chaoshi.tmall.com. ALOG manages warehouses with 200,000 square meters of space across China. From the warehouses, the Tmall sells roughly 20,000 products, including cosmetics, home furnishings, household cleaning goods, food, beverages, and more. This is a great lesson for any company that may just need a shift in their online retail approach.
With every online retail business, whether in the US or elsewhere, has to be an effective delivery system. Tmall performs its’ own same-day delivery, charging around $2 per order and free delivery for orders over $15. A same-day courier like A-1 Express is a viable option for online retailers that can’t perform their own deliveries. The Boston courier can also help with fast returns and correct delivery errors.
Reference: 4.4.14, Fortune Magazine, Dan Mitchell, Next up for disruption: The grocery business