Food Times Blog

E-commerce, the Chinese model

E-commerce, the Chinese model

JD.com – the Chinese e-commerce giant that is growing thanks to direct competition with Alibaba – lands the physical retail market by launching 7Fresh, a new chain of grocery stores in China.

A huge and revolutionary market, the Chinese one, with more than 500m active mobile shoppers monthly. (1) A market that is still almost unreachable from the West. Whereas Amazon, eBay and other big players cannot compete with the national champions. Not by accident Walmart has made deals with JD, to take a chance in Greater China.

JD (7Fresh) and Alibaba’s (Hema) development model is indeed in line with today’s trends in global distribution:

ultimo miglio 300x200– hyper-localization, through actual spots open to the public by which the local communities are serviced. Technology is used in these specific spots to minimize inefficiency in stocktaking and the employment of human resources (as in AmazonGo),

– vertical integration of the entire supply chain, monitoring up to the so-called ‘last mile’. According to Amazon’s ways, that is able to work on a budget even on its last mile in countries that are mainly lacking adequate regulations protecting workers (see AmazonFlex ).   

Amazon and others retailers in the West should look carefully at the growth of Alibaba and JD. Which haven’t considered the western markets so far but could sooner or later decide to step in, making use of the latest – and even more advanced – technologies.

The last threat for businesses like JD and Alibaba are Western countries policies. Protectionist practices – like the one in the US that has denied Alibaba the purchase of Moneygram these past days – represent the only barrier from the landing of companies whose turnover is higher than many countries’ GDP. 

A rampant development, anyhow disrupting either for outdated Western giants and for small-scale local businesses.

Fabio Ravera and Dario Dongo

Notes

(1) That is to say, the whole population of US, Germany and UK combined (!). More info on how China is changing the future of shopping, at https://www.ted.com/talks/angela_wang_how_china_is_changing_the_future_of_shopping/up-next?utm_campaign=tedspread–a&utm_medium=referral&utm_source=tedcomshare#t-83552