What Does a Supermarket Tell Us About Alibaba’s Massive 11.11 Day and the future of retail in China? China commerce explained.

The first thing you see are the lobsters. Large tanks of bubbling water, full of Boston lobsters, alive and fresh for less than 100 rmb. Crowds gather to gawk. Then, slowly, you notice the rest. Tanks of live crabs from Europe and the North Sea, live pomfret swimming slowly back and forth, smaller lobsters from Australia. What can this scene possibly tell us about Alibaba’s massive 11.11 sales day, which started in 2009 with 27 brands, and will include more than 140,000 brands offering more than 15 million products this year? How can a supermarket explain China commerce?

The key is in looking up. Above this supermarket scene, which takes place daily at numerous Hema supermarkets (owned by by Alibaba), wire baskets are whisked around the store on an overhead conveyor system, in the process of being filled with products ordered online and picked in-store by the workers.

This is New Retail, a model that Alibaba has been quietly incubating over the years, a true blend of the online and offline shopping experience, and a theme of this year’s Singles Day, which is expected to chalk up record sales this year. That makes it at least 18 times the size of Amazon Prime Day and 2.5 times bigger than Black Friday and Cyber Monday combined.

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[ABOVE: Singles Day has earned festival status in China]

How does it work? Hema has digitalized the entire store, allowing customers to either buy products directly, as they would in a normal grocery store, buy them online for delivery, or consume them in-store, a bit like a seafood and deli market. The technology lets consumers scan every product in store to find information about.

The payoff for Alibaba? Consumer data, including purchasing habits and history and store visits of every customer, which they can then use to provide a more personalized experience, and the potential to keep the entire shopping experience, from providing the goods to processing the payment to delivering a lobster, within Alibaba’s ecosystem (Tmall, Taobao, Alipay, Cainiao).

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[ABOVE: Technology plays a big role in an Alibaba-owned Hema supermarket]

What does this mean for other brands? A lot. New Retail is the future of hybrid shopping, as Alibaba sees it, in which retail can act as entertainment (or vice versa), exemplified in their star-studded and heavily-branded fashion show. Held on October 31 to kickoff the 11.11 shopping season, customers were able to watch via seven different channels, and immediately purchase the items they saw on the catwalk. International brands took things one step further, with Adidas actually 3D mapping images on to models, and Pandora projecting its designs via video and light onto the stage.

On the flip side of things, more than 1,000 brands have converted over 100,000 physical locations into “smart stores” and over 1 million merchants have used various online-offline integrations to enhance merchant operations and create engaging consumer experiences in the run-up to the sales day.

For our clients, the takeaway from this massive gear-up and foray into online-offline brand integration is that the Chinese consumer is already extremely savvy — so savvy that AC Nielsen reports they are sick of all shopping events except 11.11 — and that in order to compete in this market, they have to stay as fresh as the produce at the supermarket, constantly tweaking their marketing formula and sales channels, and integrating the latest technology in order to compete with the tens of thousands of domestic brands already out there. The Silk Initiative Market Monitor can help with this, protecting and growing your product in the Chinese marketplace. We know how to do this. Let us help.