21 October 2018
Alibaba is making it increasingly hard for traditional retailers to compete. Photo: Reuters
Alibaba is making it increasingly hard for traditional retailers to compete. Photo: Reuters

How new retail can change our buying habits

November 11th of every year is Singles’ Day in China, but internet giant Alibaba has transformed it into an online shopping festival.

The shopping event actually originated from the United States, where retailers would offer steep discounts to boost sales on Black Friday, the first day after Thanksgiving Day.

It’s no longer news that this shopping festival sets a new sales record each year. What is more noteworthy is that Alibaba called this year the first year of the new retail era. New retail refers to the seamless integration of offline and online channels.

The emergence of new retail may reshape many industries and change our everyday habits.

Like many people, I shopped at many stores during the shopping festival. I placed an order at 10 in the morning, and my order was delivered to my office in Hong Kong at 3 p.m. of the same day. The seller was in Shanghai. How is that possible?

The answer: big data and artificial intelligence. With these technologies, Alibaba can anticipate the demand in a particular area based on past sales data and arrange for pre-stocking in a warehouse nearby. This explains the speedy delivery.

Alibaba is expanding the system to cover fresh products, which require more accurate time control.

By integrating sales, warehousing management, logistics and services, Alibaba makes it increasingly hard for traditional retailers to compete.

About 80 percent of the items on our shopping list are daily essentials such as toilet paper, milk, cereal, pet food, etc. The remaining 20 percent are impulse purchases like seasonal fruit and chocolate.

If these e-commerce platforms deliver our daily essentials just before we run out of them, that could change our shopping habits.

With new retail, it is quite possible that in the near future, we can make purchases while traveling and have them shipped to our homes without worrying about luggage overweight anymore.

This article appeared in the Hong Kong Economic Journal on Nov. 24

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Information Technology Federation Chairman

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