Alibaba: The revolution is heading west

This article originally appeared in The Drum on June 26, 2018

Alibaba aren’t in the UK yet. But they are coming. They're targeting $1 trillion in gross merchandise volume by 2020. To put this in scale for you – this is roughly 30% of the UK’s entire GDP.

I’m in awe of Alibaba and their chairman, Jack Ma. According to their 2017 fourth quarter results, they have over 500 million active customers and 80% of their transactions were on mobile in 2017.

Jack Ma’s strategy is two-pronged:

1) Forget retail tradition.

2) Use technology and innovation to deliver to customers personalised needs.

This is music to my ears. Down with "The Man"! Up with innovation!

What does this mean for us and who needs to be scared?

While the impact Alibaba will have on global markets will be far reaching and unfold over time, top of the watch out list are no doubt big retailers. Specifically those who are not both tech savvy and militantly customer-focused. For example, I hear too often from big retailers about their legacy systems problems, impeding newer, faster, nimbler, more enabled experiences. Customers don’t care. Alibaba is rapidly expanding through partnerships and investing in innovative technologies that will empower nimble new companies to disintermediate the big boys and deliver to future customer needs.

Smart tech trumps big marketing

Part of the Alibaba’s new retail strategy is to restructure the global supply chain for the benefit of small businesses. Their target is to support 10 million profitable small businesses with their platforms and create 100 million jobs around the world. They've already hired 25,000 developers and researchers to build and support these platforms.

What this means is, as with Alibaba, small new companies can focus on their brand, customer experience and product offering to attract and retain a new customer base, while knowing that they can rely on a world-leading supply chain. If a new company can focus on customer needs and the smart use of mobile, cloud computing, supply chain and other technology, they will do a fantastic job. This will further raise customer expectations, which will reverberate within and across industries, with each new brand powered by Alibaba chipping away at existing retailers customer bases across the globe.

And you thought Amazon was the problem

Most of us are simultaneously impressed with Amazon and scared of how they are eating up our markets. We ought to widen our lens and start worrying about Alibaba, too. They’ll be on our doorstep soon, empowering a huge raft of new businesses led by fearless young entrepreneurs.

Luckily for us lots of these young people are still in high school so probably aren’t reading this. We have a couple of years head start. How are we going to spend the time?

For starters, let’s take a page from Jack Ma’s strategy – forget about retail tradition and deliver to customers’ personalised needs.

In other words:

1) be smart with and invest in technology

2) know what our customers want now

3) experiment with what they might want in the future.