Credit by Franklin Chu
E-commerce is getting physical. As the respective e-commerce leaders in the US and China, Amazon and Alibaba are now strategically investing more in offline retail expansion.
Consumer demand for omnichannel options has prompted these retailers to grow beyond their e-commerce excellence by opening physical stores.
We compare and contrast the companies' offline strategies, and discuss how US retailers can adopt their best practices for effective omnichannel retailing.
Amazon’s walk-out technology versus Alibaba’s mobile payments technology
Both Amazon and Alibaba have branched into offline retail with their Amazon Go convenience stores and Hema smart grocery stores. There are 14 Amazon Go stores in the US, whereas there are approximately 120 Hema stores from Alibaba located throughout China.
Both retailers leverage online customer data and technology to customize product selections for certain demographics in certain regions. This approach ensures that average sales per customer and sales per square foot are higher than those of traditional retail stores. However, the two retailers offer very different shopping experiences.
Amazon Go convenience stores streamline customers’ transactions by requiring them to download the Amazon Go mobile app beforehand and swipe the QR code on it when they enter the store. Then, as customers pick up items from the shelf, sensors detect which item has been removed and use heat mapping technology to detect when that customer has left the store. As the customer leaves the store, the items are automatically checked out and his or her pre-registered credit card is charged.
Alibaba’s Hema smart grocery stores operate on a slightly different model, catering to Chinese preferences for mobile payments technology. Customers pay at self-checkout counters where they can use a traditional point-of-sale system to check out the items one by one. They can use the Hema app, Alipay mobile payment apps, or even cash to pay for their orders. What’s more is, Hema now lets customers use facial recognition technology to pay for their goods, as long as their face is pre-registered on their Alipay apps.
So the shopping experience is slightly different, largely because the way American and Chinese consumers pay for their goods is different. For Amazon Go, the experience appears to be a bit more seamless and encourages the customer to buy more items as he or she is unaware of how large the shopping bill is growing as they shop.
But getting started for the first time can be complicated because the customer has to first download the Amazon Go app and link it to his Amazon account before he or she even walks into the store. This process may make it difficult to solicit less tech-savvy customers.
Alibaba is ahead in omnichannel retailing
But Alibaba wins when it comes to omnichannel integration.
It starts with Hema’s food courts, which serve fresh imported food such as lobsters, sushi and more. The goal is to draw more foot traffic that can then be converted into paying customers who order groceries through delivery services – Hema customers can use the app to deliver groceries to their door if they live within a 3 km (1.9 miles) radius.