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Alibaba implements unique online and offline retail integration in opposition to Amazon’s model of retail takeovers

China’s Alibaba and the U.S.’s Amazon are without a doubt the two biggest players in the online retail sphere, however it is becoming very apparent that each have much different ideas on how to expand their individual business models.

For Amazon, their focus has been on the acquisition of brick and mortar retail in order to integrate them in a way that will most likely lead to the destruction of competition in that given sector.  And perhaps there is no better example of this than in their purchase of Whole Foods earlier this year, where Amazon’s goal is to completely automate the grocery store chain, and then use this model to be able to cut prices to the point that it will drive out the competition because the profit margins in this industry have always been razor thin.

Image result for amazon is killing retail

Low-income consumers could be affected by this sale in the long term as Amazon edges out the competition. Smaller grocers may go out of business or be forced to close locations that serve food deserts, limiting access to fresh food in rural or some urban areas.

Traditional grocery stores, which once saw Whole Foods as competition, lose big here. As the markets demonstrated, investors have little confidence that grocers like Kroger, big-box retailers like Costco, and even discount options like Target will be able to compete with Amazon as it slowly moves to take over the grocery space in the same way it edged out bookstores in the early 2000s and helped kill traditional retail in more recent years. – Eater

Ironically as we move over to China, we see almost the exact opposite of Amazon’s model of takeover and consolidation in what Alibaba is trying to accomplish through their online retail behemoth.  And this is because the business model of Jack Ma’s retail portal is one where they are dedicated towards supporting both online and offline retail rather than forcing brick and mortar businesses into cow-towing to Alibaba’s demands.

When online giant Amazon bought grocery chain Whole Foods Market for US$13.7 billion in August, the move was described as a harbinger of disruption for America’s traditional retailing landscape.Top of Form

Bottom of FormBut the future of global retailing may have been on view on November 11 in China, where businesses led by Alibaba Group Holding stage-managed what has become the world’s biggest online shopping event: Singles’ Day, and which this year some analysts saw as a litmus test of the way forward: the integration of online and offline stores.

Sharing centre-stage at this year’s Singles’ Day were hundreds of thousands of actual high-street stores, linked to the internet and powered by computer algorithms, big data and cloud computing, offering shoppers a seamless shopping experience that is further blurring the lines between online and offline retail.

Connecting actual shops to the internet is Alibaba’s latest strategy, and that of its e-commerce counterparts, to transform China’s 4 trillion yuan (US$603.2 billion), old-school retail market. The country is already the world’s largest online shopping market.

The idea is to form partnerships between shops and actual bricks-and-mortar premises to hook consumers into massive e-commerce ecosystems, giving them expanded data and insight into products before they buy – a comprehensive consumer experience to further boost online orders, said Andria Cheng, an analyst with eMarketer Retail. – South China Morning Post

Alibaba’s model appears to be completely in line with what Beijing is trying to accomplish through their Silk Road project… build and own the infrastructure while at the same time supporting proprietary businesses to profit and grow in their own right through using their platforms.

As companies in the U.S. embark on a path of acquisition which in the end limits competition and choice for the consumer, Alibaba is seeking to simply become the online umbrella in which businesses large and small alike can compete on the same level playing field.  And in the end it is disconcerting to see the ‘Communist’ country looking much more free enterprise than the so-called ‘Capitalist’ country that used to be America, and why China will most likely dominate the 21st century the same way the U.S. did in the 20th.

Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.com, Roguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.


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