For Singles’ Day 2017, Alibaba invited a small group of us to come to Shanghai to attend the big gala, tour some facilities and meet with management. This is the second in a three part series about what I learned on the trip.
In Part 1, I summarized the meeting with Alibaba President Michael Evans (article here). This article is about what I learned from Chief Marketing Officer Chris Tung, who may have the coolest job in China. Note: this is my interpretation and these are not the opinions or statements of Mr. Tung or Alibaba.
Take Away 1: Alibaba’s most compelling new initiative is “uni marketing”.
Chris made an interesting point about how for most of Alibaba’s existence they have been about selling products, basically e-commerce. But recently they have expanded into the business of helping brands market and sell to customers. They call this initiative “uni marketing” and it was unveiled earlier this year. And it’s pretty awesome.
My understanding (as an outsider) is they are bringing together a sweeping amount of consumer data, from e-commerce, social media, entertainment, location and other aspects of Alibaba’s ecosystem. And plugging it into a series of marketing tools that brands can use to understand, reach, and track customers. One of these tools, the Brand Databank, in particularly impressive. You can read more about the initiative here.
But it’s worth making a couple quick comments about the likely stunning power of uni marketing in China:
- Think for a moment about how crazy it is for a company to have such a large amount of data about such a large online consumer population. Obviously, China is a very large country and everyone is online. So we’re starting with very big numbers.
- But add to that the unique situation where 3-4 companies dominate online activity (Alibaba, Baidu, Tencent and JD). And then add to this the fact that Alibaba has information about its 450M active users across not just e-commerce, but also entertainment, travel, payments, mapping and so on. They simply have a volume of consumer data unmatched by virtually any other e-commerce company on the planet.
- You also need to appreciate how different e-commerce and the consumer “path to purchase” are in China versus the West. In most Western countries, there is a long history of purchasing in online and physical stores. China is much more of a blank page, with lots of experimentation, few ingrained habits and still relatively primitive offline retail. People shop online far more through a process of exploration and entertainment. They are far more engaged than your typical shopper on Amazon, who might check the price of a product and read a few reviews.
- Chinese shoppers find the products they want through entertainment, through chatting, through reviews and through exploration. It is a much more rich and engaged process – and this gives data-driven marketing a lot more to work with. We are seeing far more personalized and curated online experiences.
There is simply a lot more consumer data in China. It is concentrated in a couple of companies. And these consumers are far more engaged in their online behavior. All of that is great for uni marketing.
Chris mentioned uni marketing will likely end up being a commercial operation at some point. He also mentioned that Alibaba is actually both an advisor and a client in this initiative. Because in addition to helping brands succeed, he also uses these tools himself to help Tmall, Aliexpress and Taobao succeed. Alibaba is itself a huge marketer.
Take Away 2: Uni marketing empowers “new retail”.
I wrote about Alibaba’s “new retail” in Part 1. And I am working on a long piece about that. But, in a nutshell, it is leveraging Alibaba’s digital tools, online data and online customers into physical retail – and reinventing these business models in the process. Uni marketing is therefore a major engine of “new retail”. Chris did mention that “new retail” is referred to as “uni commerce” internally. Uni marketing and uni commerce go hand in hand.
In my longer piece on “new retail”, I make the argument that new retail is mostly about bringing two new assets into Alibaba’s ecosystem: offline merchants and offline shopping data. When these resources are in their ecosystem, I think we will see consumers shopping across online and physical situations with a unified ID (hence the “uni” in uni marketing and uni commerce). And once these assets are in the ecosystem, I think the consumer journey is going to radically change.
And, keep in mind, offline data is a big deal for uni marketing. Alibaba doesn’t have a lot of information on what people are buying on the streets and in physical stores today (Alipay just tells you amounts). So uni marketing will empower new retail – but the offline data coming from new retail will empower uni marketing.
Take Away 3: All of this is going to be a big challenge for big brands.
Uni marketing plus uni commerce could be a game changer. And, beyond just shifting sales patterns, uni marketing could have an impact on the power of brands and their understanding of their customers.
Certainly, smaller brands and foreign brands are going to benefit from all this. Alibaba is becoming the gateway for foreign brands to Chinese consumers. That’s all positive for them. And using data and digital tools to help smaller brands and merchants is deep in Alibaba’s DNA. So smaller brands, like mom and pop convenience stores, will continue to benefit.
But how this will change the world for larger brands is a big question. As the distinction between online and offline commerce disappears, what does that mean for major retailers like H&M? Are people still going to find their stores by walking in the shopping mall? How does “new retail” change the world for brands like Prada? Can uni-marketing impact, positively or negatively, the value of their brands? These are big questions and it’s going to be interesting to see it play out.
That’s it for Part 2. Thanks to Chris for a fantastic discussion. In Part 3, I’ll list my take-aways from dinner with Vice-Chairman Joseph Tsai.
Cheers from Beijing, Jeff
I write and speak about “how rising Chinese consumers are disrupting global markets – with a special focus on digital China”.