24 September 2018

Furniture malls hit back at Alibaba’s O2O model

Just as Alibaba Group boss Jack Ma {馬雲} was regaling Premier Li Keqiang {李克強} last Thursday with examples of his e-commerce platforms’ achievements, the brick-and-mortar malls hit back.

The China National Furniture Association announced that 19 major furniture mall chains will jointly boycott any unilateral online marketing at the expense of the offline channels. The move is clearly directed at Alibaba’s Nov. 11 online shopping bonanza because vendors in the real-world malls have been told to remove all of Alibaba’s point-of-sale machines immediately.

Mainland customers are still reluctant to buy expensive or large products online so Alibaba has come up with an innovative way around this. Buyers only need to make a small down payment online before they can visit offline merchants to have a look on the real thing. If the product measures up the customer then pays the remainder through Alibaba’s POS machines.

This new shopping mode is perfect for customers but furniture malls stand to lose out. Not only will they see less business, but they will also miss the chance to tap into the cash flowing to their tenants through the unified clearing service.

So before being reduced to pure showrooms, they have no choice but to try to nip Alibaba’s detrimental O2O (online-to-offline) model in the bud.

Removing the POS machines appears to be an effort to blunt Alibaba’s ambitions to extend its reach into bulk products like cars and furniture by severing a very important link in its O2O chain.

– Contact the writer at [email protected] 



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