After generating $760 billion in gross merchandise volume on its shopping sites last year, observers may assume that Alibaba Group is still, 19 years after its founding, an e-commerce company.
But that assumption would be wrong, Alibaba CEO Daniel Zhang says.
Speaking at the Consumer Goods Forum Global Summit in Singapore on Thursday, Zhang pointed to what Alibaba calls an ecosystem of marketplaces and services developed to connect brands with the customers they’re trying to reach in China.
“The key thing is that we use a platform model,” Zhang told BBC anchor Sharanjit Leyl, who interviewed him at the event. “Alibaba wants to enable our brand partners, SMEs and retailers to better operate their businesses.”
“[That is] why we can reach such a high scale,” Zhang said, “because of the model, it’s because of the power of the ecosystem.”
That ecosystem now includes online marketplaces Taobao and Tmall, payments platform Alipay, logistics network Cainiao, cloud-services provider Alibaba Cloud, media properties such as video hub Youku and microblogging site Weibo and more.
What ties them all together is Alibaba’s role as a bridge between merchant and consumer, rather than acting as a merchant itself, the Alibaba CEO said. It’s a business model far different from many in the e-commerce sector, most notably Amazon, which purchases goods from brands and retailers and then resells them to customers on its platform.
Alibaba is an “enabler,” Zhang said. “We don’t want to be in a war between brands and customers. We want to be the platform that enables them to connect.”
Alibaba is also helping brick-and-mortar retailers move their operations into the 21st century. Called New Retail, the initiative involves the seamless integration of online and offline commerce to better serve consumers. Because, Zhang said, “People are always online, anytime anywhere. These are not two separate worlds.”
Intime, Bailian, RT-Mart and Switzerland’s Intersport have all benefitted from these innovations.
“We strongly believe that brick-and-mortar stores can create huge value, but their model needs to be upgraded, and their operations need to be digitalized,” Zhang said.
Zhang also discussed the power of consumer analytics, whether generated by online or offline shopping, the US-China trade relationship and more. Watch the video for the full interview: