Alibaba Hopes To Blend eCommerce With Traditional Retail In China

Alibaba warns that Chinese eCommerce operators could face “tremendous challenges” as it aims to transform the country’s traditional retail industry, worth an estimated $4.5 trillion.

According to Internet Retailer, Alibaba CEO Daniel Zhang said his company hopes to “upgrade” traditional retailers in China through improvements to distribution, service and product manufacturing, he wrote in a letter to shareholders this week.

“The most important opportunity on the horizon is not growing online sales in isolation but rather helping traditional retailers upgrade into a brand new retail model,” Zhang wrote. “The consumer retail industry as a whole is experiencing a radical disruption driven by digital transformation.”

Alibaba has said it plans to continue its aggressive expansion in China, particularly geographically, even if it compromises the company’s short-term earnings.

Chairman Jack Ma has set an ambitious target of Alibaba reaching 2 billion customers — the eCommerce marketplace giant currently serves less than 1 billion customers in China — and supporting 10 million profitable businesses globally in 20 years.

“Many internet companies have failed and will fail in the future, because they do not change themselves for future needs of internet users,” Ma told Bloomberg in an interview last fall. “Because the users, the consumers of the internet, they change so fast, so quickly. It’s almost impossible to keep yesterday’s wonderful life.”

Zhang cited cloud-based infrastructure and data as two areas where Alibaba eyes tremendous growth in the future.

“Cloud computing and Big Data will become ubiquitous,” Zhang told investors. “Data has already become the new ‘natural resource’ that is as vital as oil and electricity. Cloud computing is the new ‘engine’ powering commercial operations.”