The Future of Commerce In A Connected World
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Keynote presentation made at Shoptalk 2017 by Lee McCabe, Vice President - North America. Date: March 2017
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The Future of Commerce In A Connected World
- 1. The Future of Commerce in a Connected World Lee McCabe, VP/GM North America
- 2. Agriculture Heavy industry, export oriented Consumer & service driven market Cross border
- 3. • Too short-term profit focused • Local team not empowered • Inflexible and slow • Insufficient attention to local market needs Challenges of Multinational Giants Copyright © 2017 Alibaba Group. All rights reserved. 3Image Source: http://sampi.co/
- 4. ~12% of revenue and ~26% of profits come from Greater China. International Brands in China Copyright © 2017 Alibaba Group. All rights reserved. Nearly 1 million Buicks sold in China in 2015 (~80% of international sales) Starbucks China grew from 1,000 in 2013 to 2,000 in 2015; plans to open 500 new stores per year over the next five years Apple’s fastest-growing market, surpassed EU to become Apple’s 2nd-largest market in 2015 4Source: Frank Lavin (Export Now), Bog Show 2017 Presentation
- 5. China’s Consumption Growth Compared to Other Leading Economies Copyright © 2017 Alibaba Group. All rights reserved. 5 6.5 2.8 2.3 2.1 1.7 USA CHINA JAPAN GERMANY UK FRANCE 4 8 12 16 US$trillion 15 Source: Economist Intelligence Unit, BCG Research 21% 55% 17% 28% 17% 31% Consumption added 2015 - 2020 Private Consumption 2015
- 6. China’s Consumption Growth Compared to Other Leading Economies Copyright © 2017 Alibaba Group. All rights reserved. 6 6.5 2.3 CHINA GERMANY 2 4 5 7 US$trillion Source: Economist Intelligence Unit, BCG Research 55% 28% Consumption added 2015 - 2020 Private Consumption 2015 2.3 4.2
- 7. China Dominates eCommerce Copyright © 2017 Alibaba Group. All rights reserved. 7 By 2019 Chinese on-line shoppers will account for 29% of the world and account for 55% of sales 2019 RANK 2019 2015 CHINA INDIA US INDONESIA JAPAN 29.0% 11.6% 9.4% 3.9% 3.0% 28.6% 5.6% 11.7% 5.3% 1.5% CHINA US UK JAPAN GERMANY 55.1% 40.2% 15.0% 24.0% 4.0% 5.9% 3.7% 5.4% 2.4% 3.7% 1 2 3 5 4 Source: Emarketer 2016
- 8. 1 Ecommerce in China – A Perfect Storm
- 9. Weak retail environment Marketplace dominated web Third party payments Cheap logistics cost
- 10. 2 China Leads the World in Mobile Commerce
- 11. Internet Users in China More than twice the population of US Almost the population of Europe Total number of internet Users Still only half of China’s population of over 1.3 billion
- 12. MISSION: to make it easy to do business anywhere Copyright © 2017 Alibaba Group. All rights reserved. 12
- 13. Copyright © 2017 Alibaba Group. All rights reserved. 13
- 14. Our Platforms – Our Ecosystem – Our Business Copyright © 2017 Alibaba Group. All rights reserved. 14 Core Commerce Mobile Media & Entertainment Local Services Payment & Financial Services Logistics Marketing services Data Management Platform Cloud Computing OTT Tickets
- 15. 493 MILLION Monthly active users Millions of packages shipped a day 400 MILLION Monthly active users Billion of transactions per year 42 MILLION Packages delivered everyday Processes 70% of all China package delivery 580 MILLION users 400 million daily mobile video views Copyright © 2017 Alibaba Group. All rights reserved. 15 Commerce Payments Logistics Media 300 MILLION Monthly active users 132 million DAU Social
- 16. It took Walmart 54 years to reach the sales of 3 trillion while only 13 years for Alibaba Copyright © 2017 Alibaba Group. All rights reserved. 16 How long it takes to reach 3 trillion 13years 54years 6000 5000 4000 3000 2000 1000 0 Walmart International Walmart US Alibaba Sales
- 17. 3 Cross Border – Think Global, Act Global
- 18. Virtually every type of cross- border transaction now has a digital component
- 19. Copyright © 2017 Alibaba Group. All rights reserved. 19 Source: Facebook; AliResearch; US Department of Commerce; OECD; World Bank; McKinsey Global Institute analysis Social networking users with at least one foreign connection International travelers Cross-border e-commerce shoppers Cross-border online workers Cross-border online students Note: Numbers adjusted to account for overlap between platforms and for individuals making multiple international trips in the same year. 914 million 429 million 361 million 44 million 13 million Individuals are participating in globalization more than ever
- 20. nearly 92% of total Chinese outbound travel spending is received by major global cities
- 21. Tmall Global Copyright © 2017 Alibaba Group. All rights reserved. 21 Most Popular Product Categories Mobile Tmall Top Ten Countries Tmall Global Shoppers Ordered from in 2016 All Others Home Décor & Accessories Beverage & Food Clothes & Shoes Cosmetics & Personal Care Mother & Baby Products Health Supplements 1 U.S. 2 JAPAN 3 GERMANY 5 AUSTRALIA 6 HOLLAND 7 FRANCE 8 U.K. 9 ITALY 10 NEW ZEALAND 4 SOUTH KOREA
- 22. Growth of the Chinese eCommerce Consumer Copyright © 2017 Alibaba Group. All rights reserved. 22 CHINA USA 2010 2010 140million Online Shoppers 140million Online Shoppers 891million Online Shoppers 2020 270million Online Shoppers 2020
- 23. Convergence | Contact | Context
- 24. Convergence
- 25. Alibaba’s 493 million annual active buyers and Suning’s 250 million members
- 28. Contact
- 29. Singles Day - 11th November Copyright © 2017 Alibaba Group. All rights reserved. 29 • 98,000 Merchants participated (40,000 in 2015) • 232 countries participated • 37% of all sales were from international brands • 82% sold on mobile • A total of 657m orders were generated 2009 $8M $17.8 billion 20162010 $140M 2011 $750M 2012 $3B 2013 $5B 2014 $9.2B 2015 $14.4B
- 33. Entertainment = Velocity Copyright © 2017 Alibaba Group. All rights reserved. 33 600 tons of Costco nuts in 24 hrs 168 tons of Northwest cherries 100, 000 iPhone 7s in 24hrs 100 Maseratis in 18 seconds
- 34. Context
- 35. More Signals Copyright © 2017 Alibaba Group. All rights reserved. 35 By 2020, more people will have mobile phones than electricity at home People with Mobile Phones: 5.4 billion 69% of Global Population People with Electricity: 5.3 billion 68% of Global Population People with Bank Accounts: 4.5 billion 58% of Global Population People with running water: 3.5 billion 45% of Global Population People with Cars: 2.8 billion 36% of Global Population People with Landlines: 2.2 billion 28% of Global Population Source: Cisco
- 36. More Products & Content Copyright © 2017 Alibaba Group. All rights reserved. 36 US EXPERIENCE CHINESE EXPERIENCE https://www.haribo.com/enUS/home.html www.haribo.world.tmall.com
- 37. Intent & Identity – Fully Integrated Media and Retail Ecosystem Copyright © 2017 Alibaba Group. All rights reserved. 37 ENTERTAINMENT Alibaba Pictures + Alibaba Music Alibaba Sports + Tmall TV (OTT) Weibo Chinese Twitter Biggest Micro-Blogging Site UCWeb 2nd Most Popular Mobile Browse Mobile Search Newsfeed Youku Todou Chinese YOUTUBE Single Marketing & Data Management Platform One Super ID More Personalised User Experiences DATA DATA
- 38. Bill, wants Nike trainers Li, just got married Jesse, loves keeping fit Peng, loves Star Wars Qian, likes European travel Hao, avid golfer Jane, wants to buy baby formula Big Data, not Big Bets
- 39. Convergence | Contact | Context
- 40. Thank You
Editor's Notes
- China now boasts the world’s largest eCommerce market, the rise of which could power domestic consumption, creating a new engine of economic growth, just as stalwart industries such real estate and infrastructure have begun to struggle.
- A generation ago, most households in China relied on ration coupons to buy everything from rice and woks to shoes and bicycles. Agriculture was by far the dominant industry. By the mid-1980s, industrial reforms had achieved substantial success in some areas. A wide range of modern industries had been established; The country was one of the world's leading producers of coal, textiles, and bicycles. There were major plants in almost every key industry. The last ten years has seen long-awaited shift from a heavy-industry, export-oriented, semi-command economy into a consumer- and service-driven market, where private companies large and small have direct access to domestic consumers Globally, cross-border e-commerce habits vary. But when it comes to China, the demand for foreign products is surging, thanks to the combination of overseas travel, increased internet usage, exposure to foreign brands and convenience of online retail. China is projected to become the largest cross-border B2C market by 2020. China changed form being the world’s factory to the world’s consumer.
- Companies flocked to China attempting to capitalize on a huge potential market of increasingly affluent, middle class consumers. Despite this many fail and it is interesting to explore why. This is key, China evidently developed historically and culturally in a very different way than western societies. The Chinese consumer is different with a complex set of needs and expectations. Firms need to take time to understand the consumer and what they want. Multinational brands often engage in advertising campaigns and marketing strategies that have been successful in the West but find themselves unable to adapt them to the Chinese market. The market dynamics are different and a more localized, Chinese specific strategy is required.
- Call out Nike – over a quarter of profits come from China 80% of international Buick sales are in China Starbucks is expanding aggressively and China is now Apple’s second largest market
- China has a weak retail infrastructure. Shopping malls in China are much less prevalent than in developed countries. China – 2.4 malls per million people US – 12 malls per million people Well established internet infrastructure cultivated 700m internet users. The explosive growth of Chinese middle class drove private consumption. Share of wallet shifted toward discretionary spend. Ecommerce sales have been the mainstream of retail in China instead of a supplemenary channel in US – Baba largest retailer in China- Amazon #11 in US. We established an escrow service to improve trust – that blossomed to Alipay.
- China, like many other developing markets, did not follow the pattern of the West in going from physical shops to PC to laptop to smartphone. Many consumers just went straight to the smartphone and have never engaged directly with a website. Chinese consumers are on smartphones at least two hours a day. Internet users in China reached 668 million in June 2015 and 549 million of those users, almost 90%, accessed the internet on a mobile device. In other words, the number of internet users in China is more than twice the population of the US and almost the population of Europe, and most of those individuals are walking around with a smartphone. But, this has barely started: the total number of internet users represents less than half of China’s population of over 1.3 billion.
- Jack Ma and a group of friends founded Alibaba 16 years ago in his apartment in Hangzhou, China. They set out to help entrepreneurs, with the belief that the internet could level the playing field and unleash the potential in the country. Today Alibaba is the largest online and mobile commerce company in the world. In the Western world, we think of e-commerce as convenient and a nice supplement to the shopping we mostly do in stores. But in China, the retail infrastructure of national retail chains, big box stores and shopping malls never developed. So e-commerce is the primary way many people shop. Founded in 1999 by 18 entrepreneurs led by Jack Ma, a former English teacher from Hangzhou, China. The founders set out to help entrepreneurs, with the belief that the internet could level the playing field and unleash the potential in the country. Alibaba aims to build the future infrastructure of commerce and be a company that lasts 102 years.
- Mention Supermarket
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- The world is more connected than ever, but the nature of its connections has changed in a fundamental way. The amount of cross-border bandwidth that is used has grown 45 times larger since 2005. It is projected to increase by an additional nine times over the next five years as flows of information, searches, communication, video, transactions, and intracompany traffic continue to surge. In addition to transmitting valuable streams of information and ideas in their own right, data flows enable the movement of goods, services, finance, and people. Virtually every type of cross-border transaction now has a digital component. Trade was once largely confined to advanced economies and their large multinational companies. Today, a more digital form of globalization has opened the door to developing countries, to small companies and start-ups, and to billions of individuals. Tens of millions of small and midsize enterprises worldwide have turned themselves into exporters by joining e-commerce marketplaces such as Alibaba, Amazon, eBay, Flipkart, and Rakuten. Approximately 12 percent of the global goods trade is conducted via international e-commerce. Even the smallest enterprises can be born global: 86 percent of tech-based start-ups surveyed by MGI report some type of cross-border activity. Today, even the smallest firms can compete with the largest multinationals.
- Outbound China Tourism China is becoming the largest source market for international travel, overtaking the US in 2014. The income growth and expansion of China’s middle class makes long-haul travel more achievable. The rapid expansion of airlines such as Hainan Airlines on the international stage makes the Chinese traveller a more accessible consumer. Already, Chinese travellers are ranked among the top spenders on a per-trip basis. Their preferences are rapidly shifting towards long-haul travel, higher-cost accommodation and up-scale shopping. Cities are the primary attraction for Chinese outbound travellers: nearly 92% of total Chinese outbound travel spending is received by major global cities.
- 179% YoY growth in the quarter ended Dec. 31, 2015 Demand for foreign brands underscored by high growth in product categories baby food and baby care, health and nutritional supplements and personal care products Tmall Global offers more than 9000 international brands from 53 countries and regions
- Three things that we are working on…..
- Stock photo ID: 184858523 https://www.shutterstock.com/image-photo/chengduchina-may-252012-suning-electric-store-184858523?src=o6WVp9xB4RxQmthleEMojw-1-1 Alibaba and Suning said they will also support electronics brands by allowing them to leverage consumer data on Alibaba’s 423 million annual active buyers and Suning’s 250 million members. Big data technology can enable more targeted sales and marketing campaigns and even provide insights that allow electronics manufacturers to make products that better meet consumer needs, the companies said. Using consumer data, German electronics company Siemens launched a refrigerator customized for Tmall users in March and Chinese appliance maker Midea in May began selling a rice cooker that was designed partly based on Tmall data.
- The contact has to be more than the transaction. We are investing on an entertaining experience.
- To shop in Alibaba’s virtual reality universe, you stare at the thing you want. For instance, a Betsey Johnson handbag at Macy’s, or a bottle of Head and Shoulders at Target. Both are marked with a blue dot not unlike a sniper’s laser beam. Gaze at the dot long enough, and the shampoo will leap off the shelf and hover in mid-air, spinning like a snack on a lazy Susan. Bob your head a few times, and you’ve just paid for the item, as if the transaction happened entirely in your brain. Alibaba, the Chinese e-commerce giant that earlier this year outpaced Walmart as the world’s largest retailer, debuted this meta mall, called Buy+, last week ahead of China’s Singles’ Day shopping festival on Friday. On Day One, an hour after it launched, 30,000 people had tried the platform, according to the company, which for the occasion produced 150,000 cardboard headsets, sold on Taobao, its consumer-to-consumer marketplace for about 15 cents apiece. As of Thursday, 8 million people had tried it.
- Alibaba's Singles Day 2016 global shopping event is on November 11. Consumers will be able to play an augmented reality game similar to Pokemon Go, in which players chase Tmall’s cat mascot around both online and offline environments to earn prizes from participating merchants including Shanghai Disneyland, Starbucks and McDonald’s. Alibaba is taking the Pokemon Go game idea and fully applies it to shopping. Pokemon Go has not launched in China yet. The Tmall augmented reality game gives Chinese consumers a taste of Pokemon Go, just with cats. The game is one part of Alibaba’s larger online-to-offline strategy to streamline sales between its platforms and the bricks-and-mortar stores of the merchants selling on its e-commerce platforms.
- For eight hours, the Tmall Global Fashion Show saw about 200 models showing off apparel, footwear and accessories from 80 different brands, 50 of which including Adidas, Gap, Paul Smith, Italian fashion house Trussardi and French cosmetics maker Guerlain were international, while Asian pop stars Chris Lee, Christine Fan and Khalil Fong performed hits for the crowd at the Shanghai Oriental Sports Center. But the event was more than just a showcase for the season’s latest fashion. Viewers, who could watch a live stream of the event through Tmall’s mobile app, were also able to pre-order the items they saw on the catwalk ahead of Alibaba’s massive 11.11 sale. To that end, the Chinese e-commerce giant made its “See Now, Buy Now” initiative a core part of the fashion show. Consumers could use a “Buy Now” button in the Tmall and Taobao mobile apps while watching the event (they could also watch a stream on Alibaba’s online video hub Youku.com) to pre-order items. Transactions will be completed on Nov. 11, the day of the 11.11 24-hour sale, at discounted prices depending on products ordered. For brands, the event was a chance to interact with sophisticated Chinese consumers who shop for entertainment largely via mobile devices.
- Singles Day 2015 we sold 100 Maseratis in 18 secs Background: Tmall is Apple’s only official ecommerce channel in China, aside from its own site r a 2 week promotion we sold 168 tonnes of Washington cherries- A large supermarket would take 9 years to sell the same volume. The Results: Reached over 200 million consumers, generating over 120 million unique store visitors Sold over 100,000 units within 24 hours
- Context is DATA
- Mobile phones and sensors will continue to supply more data
- -On large, people-based platforms, you’re not reaching an email address or an account number. -You can reach real people and gain a deep understanding of their intentions. -Lots of signals that indicate intent Good targeting is the difference between a conversion and a missed opportunity. It’s that simple. -This takes the meaning of big data—or targeting, which is how I think about it—to an entirely new realm of possibility. -It has also changed the face of travel because you can use information to personalize experiences for people. -You can pinpoint, to a science, who you want to reach and when you want to reach them. -That is how so many businesses are seeing tremendous result.