- Alibaba and Amazon want to dominate as many aspects of customers’ lives as possible.
- Alibaba’s future could move beyond e-commerce to encapsulate everything from e-sports to entertainment to food delivery.
- Entering new sectors allows Alibaba to have a massive amount of insight and data into shoppers’ lives – and fend off competitors such as Amazon.
Alibaba and Amazon are two giants of the e-commerce industry. But, the two companies have aspirations that go far beyond online shopping as their determination to touch every aspect of customers’ lives heats up.
And, the e-commerce giant that can pull off the many-tentacled balancing act best is going to shape not just the future of retail, but could influence almost every part of people’s lives around the world.
“Internet companies tend to not stay within their swimming lane, and that’s because we’re all very user focused,” Alibaba cofounder and executive vice chairman Joe Tsai told Business Insider last weekend, during the company’s massive November 11 Singles’ Day event.
“If you’re serving the same group of users, they have needs to buy things online, but they also have needs to watch movies online,” Tsai continued.
Amazon’s expanding presence in customers’ lives has been well documented by American media. With the acquisition of Whole Foods, new Prime TV series, and brick-and-mortar stores like Amazon Go, it’s clear the company isn’t satisfied to simply be an e-commerce giant.
However, fewer American are aware of Alibaba’s expansion – which is, if anything, even broader than Amazon’s attempts. The company has entered markets including food delivery, entertainment, and grocery, with its chain Hema, which is slated to hit 100 locations by the end of this year.
Alibaba “pretty much wants to own everyone’s digital life,” Michelle Grant, head of retailing at market research firm Euromonitor, told Business Insider.
“Their imagination is the limit,” Grant said. “Anywhere from e-sports, to social media, to entertainment, to sports itself, to products, to food delivery – if they’re allowed to play in it, they will.”
Alibaba’s end game isn’t just boosting sales of its own brands and those of its merchants. It is intent on gathering a massive amount of data about customers and helping partners do the same as the company builds out its omnichannel New Retail business.
“It’s really about digitising the entire offline store environment,” Tsai said. “One of the biggest challenges with the traditional store environment is when someone walks into the store, they have no idea who the customer is – whether they picked up something or looked at another item.”
Now, using mobile technology, Alibaba can track everything from how customers walk through stores to what they were looking at online before making offline purchases. Basically, Alibaba wants to have its finger on the pulse in every factor of people’s lives – and use that information to get them to spend more through Alibaba.
Fear and paranoia in the ‘global land grab’
Right now, Alibaba’s mission doesn’t directly interfere with Amazon’s own aspirations to expand its reach and dominate every aspect of customers’ lives, as they operate in different regions around the world. The pair also has different business models, with Amazon developing as a retailer in its own right, while Alibaba primarily serves as a partner for other businesses.
“I think the average American thinks that we are the Amazon of China,” Alibaba president Michael Evans said. “And, we’re not the Amazon of anything.”
However, competition could become more direct as the companies look globally to grow business, with regions such as Southeast Asia and Brazil as potential battlegrounds in what Grant calls the “global land grab.”
For Alibaba, aggressively expanding into new sectors is tied to fear that another company – be that Amazon or another competitor – might beat them to the punch and gain an upper hand. If Amazon wins over loyal shoppers with something like grocery delivery in a country where both companies are battling for customers, it could set off a domino effect that threatens Alibaba’s online-to-offline retail and data collection dominance.
“Philosophically, how we look at whether we got into one business or another … we never ask ourselves whether this is a lucrative area or whether it’s going to be a commercially successful thing,” Tsai said.
“We do things out of necessity and we do things out of fear,” Tsai continued, citing Alibaba’s 2003 launch of Taobao to shut down the threat of eBay expanding in China.
“There’s a high sense of paranoia within the company.”