Free shipping does not a loyal customer make
The reason that Alibaba is serving customers better than you, can be summed up in two words: margins and shipping. According to eConsultancy, Amazon’s average margins are around .5% – margin levels for Alibaba are closer to the 50% mark. This is in part due to the access to cheap manufacturing in Asia, but that is not the only factor. Alibaba uses strategic price discounting – something it is able to do to retain customers in the busy season and increase sales. Alibaba also charges for ‘value added services’ such as shipping and handling – and by so doing – provides a better services and favorable shipping capabilities.
Predict my next move
Alibaba is using data mining to glean valuable insights and predictors of consumer behavior, thus becoming proactive in what they offer to customers – and becoming more efficient. One example of this is where Alibaba analyzed and used bra size data to predict consumer behavior. Women who purchased bras in larger sizes were likely to buy more additional items than those purchasing smaller-sized bras. Considering possible age discrepancies, there may not be a big story here, but it may help estimate propensity to buy. Alibaba’s marketing team can strategically choose offers based on these and other behavioral learnings.
According to Quartz.com Alibaba ‘learned’ to better serve customers by analyzing the data.
“Throughout Singles Day [similar to Cyber Monday], the company’s data team and operations managers watched and analyzed shopping volumes in order to communicate with merchants and logistical partners to keep supplies and deliveries going.” And just because it’s China’s Cyber Monday – doesn’t mean that the learnings stop there. “Executives also kept an eye on how people paid for their goods, and whether they made their orders on their smartphones.” They’re being able to tease out better mechanisms to engage customers by “smoothening” the process by which consumers decide to transact.
The check’s in the mail
Sometimes, good customer service is more about providing the proper climate for your customers to do business with you than it is merely buying products from you. According to Bloomberg news, Alibaba’s finance affiliate “Alipay” service solves credit and payment problems for customers. And both Alibaba.com customers and even Amazon.com customers in China benefit. So, this arm of Alibaba can help on the infrastructure side; the underpinnings of all ecommerce no matter which retailer makes the final sale.
Are we selling razors, or razor blades?
Forbes contributor Walter Loeb sees things slightly differently. He sees Alibaba purely as a technology company – serving the retail businesses of China through an enabling ecommerce platform. As such, however, the different divisions of Alibaba – an eBAY equivalent, a PayPal equivalent, a retail online shop equivalent and more – each play a role in making it consumer –centric. Alibaba is aiming to provide more and varied financial services and banking relationships. According to Loeb:
“Customers will be able to invest, as well as buy insurance with the Alibaba credit card. It is time for a wake-up call to many on-line retailers that free delivery is not the only incentive customers demand when they shop on-line. There must be a service orientation that will anchor customers to a shopping site (Zappos does this well.) It may even be necessary to develop loyalty cards with incentives to encourage repeat on-line shopping.”
Cyber Monday and Valentine’s Day all in one
Many of which Alibaba either has today fully functioning, or they are planning to offer down the road. And if Singles Day is any indicator (China’s answer to Cyber Monday and.or Black Friday and.or Valentine’s Day all combined) this perspective has already earned Alibaba the world record for an online sales day: $9.3 Billion transacted November 11, 2014. The Guardian believes that with the number of consumers who are able to purchase from Alibaba increasing, combined with data predictive analytics-driven discounts and other incentives that Alibaba has to offer consumers, are both driving supply and demand for Alibaba; with ‘the long haul’ proving to be the only end in sight.
For more on e-commerce and customer engagement in the Chinese market, please read “An Insight Into The Chinese Market for Single’s Day” Here on The Customer Edge.
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