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From the outlet logic and market segments, the ecological strategies and the whole line of the two giants of Ali and Tencent are counted.
In 2017, the term "new retail" was introduced as the defining concept of the year. During this period, digital channels became more integrated with physical retail, and offline commerce began to recover. The internet giants, such as Alibaba and Tencent, started to push into the retail space with a focus on innovation, including unmanned stores and smart shelves that captured significant investor attention.
From a market perspective, we analyze the strategies of Alibaba and Tencent, focusing on their outlet logic and how they are expanding into different market segments. This includes their efforts to build comprehensive ecosystems that span various aspects of retail, from e-commerce to logistics and beyond.
Here are some key insights:
**Three Key Logics Behind New Retail**
At the Yunqi Conference in October 2016, Jack Ma emphasized that the era of pure e-commerce was coming to an end. He introduced the concept of "new retail," which integrates online and offline experiences through modern logistics and data-driven approaches. This model aims to enhance customer experience by leveraging real-time data, efficient resource allocation, and personalized services.
New retail is not just about technology; it's about redefining the retail landscape by creating a seamless consumer journey. It involves AI, robotics, and augmented reality to improve operations and customer satisfaction. According to Euromonitor International, new consumerism has reshaped market participants, value chains, and priorities.
The concept of new retail quickly became a buzzword. By 2017, over 300 investment cases were recorded in the retail industry, with nearly 10 billion yuan invested. Analysts predict that China’s new retail transaction volume will grow from 38.94 billion yuan in 2017 to 1.8 trillion yuan by 2022, reflecting a compound annual growth rate of 115.27%.
**Three Pillars of the New Retail Logic**
1. **E-commerce Traffic Dividends Are Peaking**: As online traffic costs rise, many traditional retailers are facing challenges. However, offline retail is seeing renewed interest, with a focus on digital transformation and integration with online platforms to optimize costs and improve customer experience.
2. **Technological Innovations Are Expanding Offline Scenarios**: Mobile payments, big data, and virtual reality are changing how consumers interact with physical stores. These technologies are enabling more immersive shopping experiences and driving efficiency in areas like inventory management and logistics.
3. **Rising Consumer Income and Changing Preferences**: With higher disposable incomes and evolving consumption habits, especially among the 80s and 90s generations, demand for quality products and personalized services is growing. This shift is opening up new opportunities in sectors like luxury goods and health and wellness.
**The Eight Driving Forces of New Retail (from Alibaba Research Institute)**
Alibaba and Tencent have taken different approaches to building their new retail ecosystems. Alibaba focuses on centralizing its platform to empower a wide range of businesses, while Tencent prefers a decentralized strategy, supporting third-party partners rather than directly competing.
Alibaba’s core business is e-commerce, which accounts for 85% of its revenue. Over the years, the company has expanded into areas like cloud computing, digital media, and financial services. Its new retail initiatives include strategic investments in offline retailers, the development of unmanned convenience stores, and the use of AI to enhance customer engagement.
Tencent, on the other hand, has a more diversified revenue stream, with online games and social networks being its main sources of income. Its approach to new retail is more collaborative, partnering with companies like JD.com and Yonghui to drive innovation in the sector.
As the competition intensifies, both Alibaba and Tencent are investing heavily in new retail, aiming to capture market share and reshape the future of commerce. While Alibaba leads in platform integration and technological innovation, Tencent leverages its strong social network and user base to support emerging retail models.
In summary, the new retail wave is being driven by internet giants who are transforming traditional retail through technology, data, and strategic partnerships. This shift is expected to continue shaping the retail landscape in the years to come.