Starbucks is sweating. A $9K chicken. IPAs and data.
Land wars
Hi there,
Are tech companies the new retailers? Amazon in the US and Alibaba in China already dominate online commerce.
Now we’re seeing a (literal) land grab as they race to control offline retail.
Amazon’s $13.7B acquisition of Whole Foods last year is just one brick in the physical empire these tech giants are building. Amazon has also opened over a dozen bookstores, set up shop-in-shops in Kohl’s, and unveiled cashier-free convenience store Amazon Go.
Alibaba has surpassed Amazon in physical presence by far. It invested $2.9B in Sun Art Retail Group, $290M into Sanjiang Shopping Club, and $100M+ into Lianhua Supermarket. It also launched its own chain of tech-enabled grocery stores, Hema Fresh, among other initiatives, which we covered in our new report last week.
Going deeper
Alibaba’s directly-financed stores are the tip of the iceberg.
The tech giant already provided cloud-based inventory management software to 600,000 mom-and-pop shops around China — often offering the platform for free in exchange for stores’ shopper data.
These shops also serve double-duty as rural distribution centers for online orders. The strategy helped the company rake in a record-breaking $25.3B in sales in a single day last year (Single’s Day), according to Alibaba president Mike Evans.
Alibaba also aims to convert 100,000 existing retail stores into “smart stores” enhanced by Alibaba’s tech. L’Oreal already signed on.
Nordstrom…storefront by Amazon?
Amazon could follow in Alibaba’s footsteps and offer a plug-and-play solution for brick-and-mortar stores.
Amazon always likes the platform play. With Fulfillment by Amazon today, brands can outsource their whole storage, shipping, and customer service operations to Amazon — all the brands have to bring are the products.
Once Amazon improves its store tech internally and at Whole Foods, it could license its platform to existing retailers. It’s already piloted the idea with Calvin Klein and Tuft & Needle. We could call it BAMaaS (brick-and-mortar-as-a-service) or RIOTaaS (retail-IoT-as-a-service) or some other fun acronym, but the strategy could help small brands open tech-enabled stores as easily as they can open offices in a WeWork today.
We dove into all these ideas and more this week with our Amazon vs. Alibaba offline report. Check it out.
