Alibaba to open its first physical shopping mall

7 years ago - Published in Finance, Fundamental Analysis

China’s e-commerce behemoth Alibaba Group is reportedly set to open its first brick-and-mortar department store in its hometown Hangzhou next April. The space, called “More Mall,” symbolizes the “New Retail” concept, which has long been advocated by the company.

According to reports in the Chinese media, the new mall will occupy 40,000 square meters of space across five floors. It will curate brands that already have an established presence on Alibaba’s two major online platforms: Tmall and Taobao Marketplace.

Alibaba unveiled an outlet testing these technologies in June called the New Retail Interactive Store as part of the retail group’s wider strategy to merge online and offline logistics and data to transform bricks-and-mortar retail in China.

The online giant said that its aim was to digitise the 85% of sales that are made offline in China.

The retailer’s More Mall will sell a variety of products available on its Taobao ecommerce platform and will also include a Hema, the Chinese retail group’s grocery store.

In July, it open three more click and mortar Hema supermarkets, in which visitors can peruse a slew of items that have barcodes attached to them. When scanned with a mobile device, users get information about the products and recommendations for other items that are similar. The barcodes work with its digital payment service AliPay, which can be used as the payment method at checkout. The stores also acts as hubs to pick up items that were purchased online.

At the time, Alibaba said Hema customers make, on average, 4.5 purchases each month. Of those who use the Hema app, the conversion rate is as much as 35%. Online orders account for more than half the total. For stores that have been around the longest, online orders represent as much as 70% of all the orders. “We believe the future of New Retail will be a harmonious integration of online and offline, and Hema is a prime example of this evolution that’s taking place,” Alibaba Group CEO Daniel Zhang said in a statement when announcing the three stores. “Hema is a showcase of the new business opportunities that emerges from online-offline integration.”