A comprehensive analysis of the “new retail” in alibaba’s ecology

After decades of rapid development, China is in the midst of a commercial revolution. In some areas of the Internet, China has taken the global frontier.

The Internet consumer industry is a typical representative of Chinese enterprises to play an innovative spirit and change people’s way of life and create huge market opportunities through the combination of technology and commerce.

Alibaba group chief executive zhang yong (flower “free and unfettered”) in this deep feeling good: “in the field of retail, especially in the field of consumer Internet, I think, this is the first time that China has in recent centuries, (in business) stand at the top of the world. We can change society and benefit society through the combination of technology and business. I think this is a great opportunity for us today, a great opportunity for a great age.”

As a pioneer of China’s retail e-commerce, alibaba has been on the road for 18 years. In the midst of the boom in e-commerce, with its market capitalisation hitting record highs, alibaba has, like the great companies in history, constantly reinventing itself.

At the end of 2016, the term “new retail” created by alibaba gradually became “Internet red”. Ma’s view is that the era of pure e-commerce will soon be over. In the next 10 years, 20 years, there will be no e-commerce, only ‘new retail’.

Inevitably, this remark caused great controversy and discussion. But as a “new retail first benchmark,” said the box Ma Xian acclaimed, as there is no convenience store blossom, as more and more enterprises to upgrade to the new retail form, the wind changed.

We found that retail is not a new concept of bo person eyeball, but growth in electronic commerce, the consumer demand to upgrade, the new technology widely applied situation, an update of the birth of commercial form, one of the most forward-looking business philosophy, a possible change again as at the beginning of e-commerce retail industry new ecosystem.

Management guru Peter drucker once told businesses that they needed to open their business skylights every six to 12 months to see the world outside.

But what we’re going to open up is the skylight of the new retail business. In the new retail formats to start spreading, we interviewed part has been used the concept of new retail businesses, also had an interview with alibaba’s chief executive, zhang yong, listen to how he personally decrypt the connotation of new retail. We look forward to the record of those who are on the top of the tide, reflecting the great business innovation of this era.

The birth of the new retail

As the head of China’s e-commerce company, zhang yong is coming to the 10th anniversary of alibaba. On August 29, 10 years ago, he completed his final earnings release and joined alibaba the next day as chief financial officer of taobao.

In 10 years, Mr. Zhang’s position rose to alibaba’s chief executive. This decade is also the decade of alibaba’s roaring growth. Over the past decade, alibaba’s business has blossomed, and e-commerce, payment, logistics and other aspects have changed people’s lives in every way, and alibaba’s market value has repeatedly climbed to a new high.

Even though alibaba is “huge” in terms of market capitalization, influence and business scope, alibaba has always been the core driver of innovation.

“If, 10 years from now, ali’s main business is just today, we’re not going to be a big deal. You need to have new business and even more important business, which is more important for our whole development.” Zhang yong said.

New retail is what Mr Zhang refers to as “more important business”. The emergence of this “Internet red” word comes from a rich imagination.

“Last October, I was talking to ma’s (ma), chatting and chatting with him,” zhang yong told caijing magazine. “Mr. Ma jumped out of the word ‘new retail’.”

In zhang yong’s eyes, ma has a lot of imagination about the future, good at summarizing, good at summing up the future trend and the development of the business, and the emergence of new retail is the same.

In fact, Mr Ma’s judgment about the end of the era of pure ecommerce is deliberate. E-commerce currently accounts for 15% of total retail sales of social consumer goods, for the enterprise, business opportunities in the future is not simply turn electricity proportion to 20% or 30%, but should use long-term eyes to see, standing on the perspective of consumers, the remaining more than 80% of the business, all digital.

Indeed, e-commerce is a “small business” compared to the whole business. Moreover, after a period of rapid development, this once new business mode, began to enter a soft period. The national bureau of statistics data show that in 2014, 2015, 2014, the online retail sales of 2.8 trillion yuan, 3.88 trillion yuan and 5.16 trillion yuan respectively, year-on-year growth of 49.7%, 33.3% and 26.2%, respectively, slowing growth trend is obvious.

And because of that, alibaba has come up with a new retail. In alibaba’s view, China’s total retail sales of social consumer goods for more than 30, one trillion yuan, instead of staring at the line, see if need to embrace the Internet, be badly in need of digital line, help them develop and do more business.

If ma yun is the author of the new retail concept of alibaba, the thoughtful zhang yong is the interpreter and practitioner of the new retail. In fact, zhang yong, who “first did it” as a code of conduct, had led alibaba in some of its new ventures before the new retail term appeared.

“All of our methodologies are explored from practice. Not a methodology is written down and then executed. It’s not there. There’s no such thing as a fairy to write about.” Zhang yong said.

As early as 2015, zhang yong and fellow shanghainese hou yi, in the scene of countless cups of coffee, spitting and splashing, the new business model of offline integration on the line of collision. Then, with alibaba’s incubation and support, a new species in the retail industry was finally born, and it became a benchmark for alibaba’s new retail sales, which is a box of fresh produce.

The first post

In early 2015, hou yi, a logistics industry veteran, returned to his hometown in Shanghai. One day, he met with zhang yong in a coffee shop, and they met each other very much.

Zhang told hou that he wanted to explore a new retail model for online and offline integration. As a senior version, has 20 years experience in logistics programmer, slightly Hou Yi thinking, that can break from fresh categories, and to do from offline, and then through online and offline data will get through.

Hou yi’s selection of fresh products was hailed as the last bone in the field of e-commerce. Major e-commerce companies have been pushing into the field, but eventually, the cost of logistics has failed. Hou’s idea is a different one, and if the pattern runs through, it means a lot. Zhang yong after hearing, decided to support him on the spot.

“We talked about a lot of rigid standards when we were prototyping that day, and we have to implement these things.” According to zhang yong, these rigid standards mainly involve four aspects: the first is that online transactions should be greater than offline. The second is that the daily order quantity of the online store is more than 5000. Third, the App does not need other traffic support, can survive independently; Fourth, in the context of the cost control of the cold chain logistics, the realization of the controllable range of 30 minutes service.

After the agreement, hou yi went back to recruit and recruit a team, and in March 2015, the box was officially established. The team started with seven people and then increased to 18. This is not only in line with alibaba’s early “18 rohan” stories, but also, the box ma survived the alibaba flower culture, and zhang yong used to call hou yi’s name “Lao CAI”.

For the next six months, zhang yong and hou yi met frequently and met each other once or twice a month to discuss the progress of the project and adjust the development strategy.

In zhang yong and Hou Yi many collisions, box Ma Xian gave birth to the development of the standard is becoming more and more clear, such as to achieve the unity of the five aspects: unified member, unified stock, unified price, unified sales, unified settlement. Then, follow these criteria to set up specific operating procedures.

Achieving five unity requires strong technical support. Fortunately Hou Yi itself is a software engineer, and has many years of logistics experience, plus do support system with the alibaba team, box Ma Xian foundation – online integration system, finally after nine months to come.

“The whole process, it’s amazing. It will take at least two years to build the system. Hou Yi said.

While the system runs through, the first store of the box is also entering the landing stage. On January 15, 2016, the first store opened in jinqiao square, Shanghai.

The average enterprise will give high priority to the first store, but the box is very low key. On opening day, there was neither ribbon cutting nor any publicity. The reason for this is that, although the box is very early, it will not be recognized by the market, or a question mark. The more low-key it is, the less likely it is to be noticed, and if there is a problem, it can be adjusted in an undisturbed context.

“At first it is best not to have too much attention, because on one hand, the box horse system comes online at the top three days before the opening, and further tests are needed. On the other hand, the store requires customers to download a box of horse App and must pay alipay, which is not known to users. Hou Yi said.

The result proved that users liked the new format. The consumer enters the box to live raw, download an App first, then can buy seafood, vegetables and other fresh fresh food on its own, can pay through the App after the election, also can pay through the self-service cash register to pay the bill; If you don’t want to take the ingredients home, you can process them in the store and have a wide and clean area to eat. The whole process has less involvement and more automation. If your home is within 3 km of the neighborhood, you can deliver the goods to your door with your order of 30 minutes.

The backstage of the box is the storage, which can be replenished at any time according to the front desk sales, or directly from the warehouse. According to the shopping behavior of the member, the box horse can accurately analyze the daily shopping habit of members, adjust the category to make accurate marketing, and then provide more optimized services.

Although the box Ma Xian not supermarkets, convenience stores, not restaurants, nor the vegetable market, but it has all functions, including the above forms, is supermarkets and restaurants and convenience stores plus market and logistics the compound function of body.

The popularity of consumers has made the first store in the box more and more popular. By April 2016, its weekend sales had reached about 10 times its opening. The report by huatai securities research shows that the sales volume in the first year of the store is about 250 million yuan, and the ping effect is about 56,000 yuan, well above the average level of the company.

Even more dramatic, consumers are even considering buying “box rooms” to enjoy the service of the box.

Box Ma Xian gave birth to the first store opened after 5 months, inspects once Zhang Yongceng low-key, found the box horse after buying rate, conversion rate is much higher than traditional electric company, very happy, this shows that the box Ma Xian raw mode only.

Since then, box horses have accelerated the pace of replication, with 13 stores in Beijing, Shanghai and ningbo as of July.

As the first of China’s new retail sales, the box horse has gradually become a full Internet celebrity. For the past 1 years, not only carrefour, wal-mart, rt-mart and other colleagues to go to study, even starbucks chairman Howard schultz also appeared in box Ma Xian Shanghai jinqiao store investigation. In the retail industry big and small meeting, the box ma xian sheng also became the object that everybody discuss.

Some of the swiftest peers began to follow up with similar formats. If Meituan follow up the layout of fresh fish, su ning launched “Su Xian life”, bailian launching RISO are fed, yong hui vigorously develop super species, rt-mart launch fresh “” flying cow optimal, even B2C electrical contractor was living follow line layout, to explore the integration development.

Zhang yong said that box Ma Xian gave birth to the purpose of the launch, is the hope that through data driven, complete online and the perfect combination of modern logistics technology, bringing fresh items 3 km 30 minutes express supreme service experience of the home.

Three kilometers and 30 minutes, behind the two figures, is a rigorous calculation. ’30 minutes is the limit of random time in a person’s life,’ says hou. After consumer shopping, most expect to get the goods in 30 minutes. Consumers in the App order within 3 km of distance stores, box Ma Xian will use big data, mobile Internet, smart iot, automation technology, such as implementing “people, goods,” the optimal matching between the three, greatly improving the efficiency of logistics.

Setting limits of 3 km, apart from time considerations, there are also factors in cost control. As we all know, it is difficult to build a cold chain logistics distribution system in the case of fresh e-commerce. If not, the loss of goods will be high, but the cost of distribution will rise. In the range of 3 km, it can replace cold chain logistics distribution with normal temperature distribution, which greatly reduces logistics cost.

Despite the popularity of the box, alibaba has not publicly acknowledged its relationship with it. Until July 14 this year, jack ma and zhang yong showed up at the Shanghai jinqiao store, tasting a lobster, king crab and other seafood. Before leaving, they packed the crayfish and the boxes of the homemade ingredient vinegar.

Three days later, alibaba announced formally, box Ma Xian life is the exploration for two years in the field of new retail projects, it is not only the alibaba, one of the main land to explore new retail or China first of the new retail formats to achieve scale profit.

Due to its unique model, the data performance of the box is quite beautiful, thanks to the innovative, data-driven, online and offline operation thought, and the ultimate experience of the user. By July of this year, the box horse fresh had been purchased 4.5 times per month; The ping effect is 3~5 times of traditional supermarket, 50 thousand yuan per square meter; The conversion rate of online goods is 10~15 times that of traditional e-commerce and 35 percent. More than six months of store, all have realized single store profit.

To some extent, this new retail sample is significant. This means new retail is not a slogan, it is really really could lead to disruptive changes after landing, not only convenient for the life of consumers, the brand new shopping experience, and reconstructed the supermarket formats, greatly enhance the enterprise’s profit ability.

Zhang yong believes that in addition to the supermarket, coffee shops, convenience stores, mother-and-baby shops and other retail formats have the opportunity to refactor. Only refactoring can create new things. Alibaba’s vision is to make innovations and work with partners to help others upgrade.

“Ali does a box of fresh produce, not to occupy China’s fresh sales, but to arouse the retail industry to wake up.” Mr. Ma said.

According to the understanding, the current box ma xian sheng has already passed through the way of the joint camp, open its new retail ability to the outside world, the ningbo shop is responsible for daily operation by sanjiang shopping. By the end of this year, more than 20 per cent of stores are expected to achieve joint venture cooperation.

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