German industrial manufacturer Bosch Group has forged a strategic partnership with China e-commerce giant Alibaba Group to strengthen collaboration in big-data-based digital marketing, the Internet of Things (IoT) and omnichannel retailing.
Bosch, which was founded in 1886 and set up its first sales office in China in 1909, rolled out direct-to-consumer online sales via Alibaba’s popular B2C website Tmall in 2010. The group operates four flagship stores on Tmall selling home appliances, power tools, automotive aftermarket products and services, and heating and cooling systems. Bosch Group owns the Siemens home appliance business, which also has a strategic partnership with Alibaba Group.
With such varied product lines, one challenge faced by Bosch is raising brand awareness in China to boost sales to consumers. Through the Alibaba partnership, Bosch is launching a cross-category flagship store, the first of its type on Tmall, to sell all Bosch-branded products and build a holistic brand profile.
“Unlike other global companies that specialize in certain areas, Bosch has a diverse portfolio of products,” said Jiang Jian, vice president of communication at Bosch China. “Even though we have gained great awareness and reputation in the B2B sector, we see that customers in the B2C sector may hold different interpretations of our brand.” For example, consumers who purchase Bosch spark plugs may not be aware Bosch also sells water heaters and air purifiers.
Through Tmall, Bosch is able to efficiently showcase all of its consumer products and engage a greater number of consumers. The company has integrated its Tmall-store membership programs for more efficient data-driven marketing through Alibaba’s online ecosystem, which includes online-shopping websites and apps, entertainment portals and social media outlets. Bosch on May 18 will hold a Super Brand Day, a 24-hour shopping event managed by Tmall to spotlight individual brands selling in the online marketplace.
Through the strategic partnership, Bosch says it will work with Alibaba’s IoT, cloud computing and artificial intelligence R&D teams to develop interconnected “smart” devices, using consumer data from Alibaba to help design products that best meet customer needs.
“E-commerce not only opens up (a) new channel for marketing and sales, but also brings a direct way to understand customer behavior and design a better customer journey,” said Peter Tyroller, member of the board of management of Robert Bosch GmbH responsible for Asia Pacific. “In the internet era, consumers are paying increasing attention to the overall consumption experience, rather than simply the product itself. This urges us to change our rather product-and-technology driven mindset, and become a more user-centric company.”
Tyroller added the company’s goal is to “find a channel to communicate directly with consumers, keep the brand closer to consumers, and design a unified brand experience journey for users of our different product categories … Alibaba has already managed to build up a very advanced, thought-through ecosystem, matching the local customer needs and market trends.”
Bosch is also delving into omnichannel retailing—the consolidation of online and offline sales channels, which Alibaba calls New Retail—with a brick-and-mortar “experience store” in Shanghai where consumers can check out products in person and complete purchases through Tmall. Online customers can even make “virtual visits” to the store and shop there online through 3D technology using their mobile phones. The company operates 200 automotive maintenance outlets in China that are connected with Tmall, allowing customers to buy car parts online and have their cars serviced at Bosch offline shops.
China is the second-largest market for Bosch outside Germany and the strongest growth driver. In 2015, China contributed 57.8 percent of the company’s Asia-Pacific sales and 15.8 percent of its global sales.
In 2016, Bosch’s Tmall GMV (sales) grew 60 percent to more than RMB 2 billion ($290 million). One model of electric drill sold more than 130,000 units last year, making it best-selling product in power tool category, according to Tmall.