Alibaba, Bailian Announce ‘New Retail’ Deal

Chinese e-commerce giant Alibaba Group made another move in its push to merge online and offline shopping on Monday when it announced a new strategic partnership with Bailian Group, one of China’s largest retail conglomerates.

At a press conference in Shanghai, the two companies said they would leverage their troves of consumer data in order to integrate offline stores, merchandise, logistics and payment tools to deliver a better overall shopping experience. They would also “explore new forms of retail opportunities across each other’s ecosystem,” according to a statement.

Alibaba has been taking steps to combine its Tmall and Taobao e-commerce platforms with bricks-and-mortar stores, most notably last month in its offer to privatize Chinese shopping mall operator Intime Retail. A surge in mobile internet usage—Alibaba has 500 million monthly active mobile users—and the growth of big data capabilities is driving this new “omnichannel” shopping experience as a way to better meet consumer demand, the company has said. Now, Alibaba wants to bring Bailian and its 4,700 stores across 200 Chinese cities and autonomous regions into the fold as well.

“Our partnership with Bailian is an important milestone in the evolution of Chinese retail, where the distinction between physical and virtual commerce is becoming obsolete,” Alibaba CEO Daniel Zhang said in a statement.

As part of the deal, Alibaba and Bailian will co-design bricks-and-mortar stores that merge offline and online shopping and services to improve the buying experience for consumers. They will also combine their membership bases to deliver enhanced customer service through technologies such as geo-location, facial recognition and big-data driven sales and customer management systems.

In addition, there are plans to make Alipay, the online payments app owned by Alibaba affiliate company Ant Financial, available at all Bailian stores, while Bailian’s Safepass and Bailian OK Card payments services will be integrated with Alipay. The companies will also partner on logistics to boost efficiencies in deliveries, as well as research and develop new retail-related technologies in AI, big data and the Internet of Things.

The omnichannel model falls under a larger sea change in commerce that Alibaba calls “New Retail,” which Zhang said would disrupt not just the relationship between merchants and consumers but the traditional models of manufacturing and supply chain management as well. Changes in technology and shopping behavior will demand that businesses “embrace big data and new innovations to better identify, reach, analyze and serve their customers,” he said, “and their digital transformation will be empowered by Alibaba’s ecosystem.”

This merger of the online and offline retailer worlds, and Alibaba’s role in it, was on full display last year in the run-up to the 11.11 Global Shopping Festival. About a million storefronts on Tmall leveraged some kind of omnichannel initiative to reach consumers for the annual one-day event, including an augmented reality game that drove shoppers into bricks-and-mortar stores. Seventy million consumers played the game.

Meanwhile, foreign brands also used live-streaming to introduce themselves to Chinese consumers while receiving feedback in real time. Alibaba also helped 80,000 physical shops establish digital connections to better serve customers through membership programs, to deliver more services and to more efficiently allocate inventory.

In the statement, Bailian Chairman and President Ye Yongming called on traditional retailers to recognize the changes sweeping through their industry, including adopting the new technologies driving those changes.

They “need to be able to leverage technologies such as the Internet of Things, [artificial intelligence] and big data to provide consumers with new and immersive shopping experience across channels and product categories anytime and anywhere,” Ye said.