Cloud Services Reshape New Retail, Alibaba White Paper Says
Cui Hanwen
DATE:  Aug 07 2017
/ SOURCE:  Yicai
Cloud Services Reshape New Retail, Alibaba White Paper Says Cloud Services Reshape New Retail, Alibaba White Paper Says

(Yicai Global) Aug. 7 -- Ali Research Institute and Alibaba Commerce Technologies & Services Group, the two units of Alibaba Group Holding Ltd. [NYSE:BABA], jointly issued the 'Cloud Services Reshape New Retail - Alibaba Commercial Services Ecology White Paper 2017.'

The report published on July 29 said that 'new retail' is coming. Retail enterprises are experiencing change and facing both opportunities and challenges. At the same time, cloud services ecology is bringing "new opportunities" for China's retail industry to achieve a leap-forward development.

The nearly 100-page report makes a comprehensive and detailed introduction of the latest progress of Alibaba's cloud retail service ecosystem. It also provides a detailed outline of the current forefront and most advanced service platform, service tools, and service market through dozens of new cases.

In the face of the upcoming "reconstruction," the report also illustrates, from the perspectives of both theory and practice, how to use the cloud retail service ecosystem to carry out whole channel and whole industry reconstruction.

China's Wholesale and Retail Enterprises Are Facing Challenges Brought About by Comprehensive Changes

Ali Research Institute believes that compared to the mature and efficient large circulation pattern that the US retail industry has formed since 1840, the overall efficiency of China's wholesale and retail industry is low and traditional Chinese retail industry still lags behind in many respects. In the future, China's wholesale and retail enterprises need to further enhance the efficiency to meet rapidly-rising consumer demand and cope with stiffer international competition.

China's retail industry is facing challenges posed by a deeper change: online retailers' e-commerce traffic dividend era has passed. After nearly a decade of rapid growth of the number of China's internet users, the surplus gradually disappeared, and the scale of internet user growth has remained stable. Accordingly, the operating mode of e-commerce that relied on traffic surplus needs to change for both e-commerce platforms and online merchants.

Against such a backdrop, whether physical retailers should close stores to reduce loss or make transformation and upgrading of stores will become the key decision for business owners. In the first three quarters of 2016, the retail sales of 100 large retail enterprises in China fell by 2 percent. Many department stores from both home and abroad such as billionaire Wang Jianlin's Wanda department store, Malaysian shopping retail chain Parkson, and Thailand's largest department store chain family business, Central, began to shrink their physical stores, while China's department store giant Wangfujing issued farewell to department store business format to focus on shopping centers and outlets. Guangzhou Friendship store which retailed high-end imported goods has transformed into "department store + financial" dual business format while LV, Prada, Burberry and other luxury brands also adjusted or closed some of their physical stores.

In the past, retail enterprises would pass part of the increasing operating costs to consumers through price increase. But in the internet age, commodity prices are more transparent, making passing the burden to consumers difficult. Therefore, some offline stores had difficulty to increase prices and some physical stores running on backward management methods had to close for upgrading in order to optimize the business process.

Cloud Services Offer A Leap-Forward Development Opportunity for Retail Industry

However, new opportunities have emerged: the rapid development of the internet and increasingly mature cloud service environment makes China to have the opportunity to take the lead in achieving leaps and bounds in "cloud retail."

At present, the 'internet +' retail infrastructure construction has begun to take shape. Digital business platform infrastructure including cloud computing, internet finance, and intelligent logistics has been initially formed.

For example, Taobao, China's largest online shopping platform has been active in 100 kinds of trading fields, more than 60 kinds of transaction types, and more than 3,000 kinds of marketing formats, and also has the world's largest hybrid cloud deployment architecture.

Cloud services make social division of labor and professional scale to take place not only in various regions and different fields in a country, but also in the world. Driven by internet, more sophisticated division of labor of retail practitioners is in line with both the interests of retail practitioners and social progress.

To meet the "future," it requires enterprises to further strengthen insights into people, goods, and sites. Data construction and development ability makes data play a greater role in global marketing and global reach. The focus of the enterprises should also start to move from the market side to the supply side and from B2C to C2B.

'Reconstruction' Requires Deeper Thinking And Integration of New Ecology

Retail companies should decouple a series of existing relationships. This is not limited to the "retail and circulation" decoupling (separation of business flow and logistics). The entire business organizations will also take some very dramatic changes.

The reconstruction of the new retail business system will be a major proposition for the new era. Retail enterprises' thinking on reconstruction should not only stay in the simple business skills level, but should have a deeper level of thinking.

The report suggests that companies should observe the current reconstruction from the following four perspectives:

1 -- C end: to reconstruct perception of consumers

2 -- B-C: to reconstruct customer relationships

3 -- B2B: to reconstruct business partnerships

4 -- B end: to reconstruct internal relationship

This year, Alibaba will further improve its service system: on one hand, it will further standardize and unify the data interface to provide more comprehensive, more intelligent and better quality basic data services. It, on the other, will closely follow market development trends and gradually integrate more businesses into a package of services.

For example, a number of important components in services including Taobao online open platform, Qianniu, an online store management tool developed by Alibaba, and fuwu.1688.com, a service platform for online merchants are also further expanded and upgraded.

The report finally published the 2016/2017 annual "excellent vendor list," and "provincial and municipal commercial service ecological development list," so all those involved can have a more comprehensive understanding of the latest progress of Alibaba commercial services ecology.

The author is a member of Ali Research Institute

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Keywords:   Alibaba,New Retail,E-COMMERCE,Cloud Service,Industry Reconstruction,Data,Market,Upgrading,Transformation,Business,Enterprise,Consumer,Internet+,Ecosystem