Amazon and Alibaba: What is going to happen next?
Retail world has changed unrecognizable in recent years. It is not a surprise that the biggest influence was done by e-commerce giants such as Amazon and Asian behemoth Alibaba. But how is it going and what are current trends?
To understand these emerging trends we need to look to the ‘mass market’ history. In a time where buyers and sellers were geographically constrained, serving the mass market meant selling nearly every good in every vertical at the lowest possible price point. However, this is no longer true in today’s smart phone-enabled world.
The global mass market is largely influenced by buying habits of millennians and the consumer upgrade happening in China where recently people are shaping their lives through travel, goods, food, fashion and more. They all are seeking luxury, unique products at low prices – exactly what new e-brands in China can suggest.
Search vs. Discovery
According to TechCrunch, the main the main competition appears between “search” and “discovery”. Amazon and Taobao are virtual warehouses that are doing “purpose-based” shopping. Consumers visit sites to find a product that they want. Free shipping and next day delivery aside, the experience is too cluttered for absent-minded browsing on smartphones.
E-brands and vertical marketplaces aren’t going to compete with this kind of warehouse search. Instead, they focus on “discovery” – curating a body of products in a specific category that customers want to peruse and occasionally purchase. Mobile shopping is becoming entertainment, and a well curated group of products makes for a more enjoyable experience. Online brands are approaching curation in different ways and their popularity is evident in the app store.
Products can be curated by professionals – as with Houzz, a social commerce platform for designing your home. Others are curated by price or are built for easy browsing, as LetGo or OfferUp, Craigslist style resale apps.
None of these apps target consumers who feel they need access to every single product right now. But they do offer consumers a curated experience to discover affordable luxury products in apps built for smartphone users.
Things become personal
Even people love Amazon and Taobao, they see them as tools, not physical brands. Successful e-brands and vertical marketplaces such as Xiaohongshu, AirBnB and Houzz are creating a social bonds and sense of community.
They are turning their communities and values into consumers’ loyalty and feeling as belonging to kind of sub-culture while shopping. Personalization of products and cultivation of community drive users to demonstrate these brands on social media. This is happening everywhere.
The industries and tactics are diverse, but they all create one thing: a personal and social reason to buy in the app, not through Amazon or Alibaba. Similarly, offline big box stores are continuing to be challenged by changing customer buying habits – and like Walmart, may become more acquisitive to survive.
What is going to happen next?
Is it possible to surpass Alibaba and Amazon? The answer is yes, and the reason is the massive amount of growth that remains to be realized in e-commerce.
According to TechCrunch, Amazon and Alibaba may be gobbling up the lion’s share of the two markets, but e-commerce still amounts to just 8 per cent and 16 per cent of the total ~$9 trillion retail market in the U.S. and China respectively. A lot of e-commerce dollars remain to be created and claimed. Projecting forward, the e-commerce market segmentation may end up looking more like traditional retail but with a new twist on shopping as an experience, and likely aided by AR/VR technology and artificial intelligence.
Winning these markets means appealing even more to millennials through their values and their communication channels. As e-commerce markets grow and evolve, the startups that curate, personalize and optimize community have the chance to take home a big piece of this ever-growing pie.