With the additional retail stores in Beijing and Shanghai, that brings the number of Alibaba physical locations to 13 in China. Part of its so-called Hema strategy, in which Alibaba melds online data with physical stores, 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. The Hema app lets users search and purchase items from the closest store, keep tabs on their purchase history, make recommendations and, thanks to its use of big data, enables customized product pages for its users. (See also: Alibaba Leads $1Bn Investment In Chinese Food Startup.)
A 35% Conversion Rate
In a press release, the company said that while the initiative is in the early stages—the first stores opened in 2015—it has yielded the company some “promising results.” Customers of the Hema stores 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. “Hema is a showcase of the new business opportunities that emerges from online-offline integration.”
For some time, Alibaba has been pushing its offline-online vision in which the new buzzword signifies the ability of mobile platforms to facilitate the interaction between traditional offline business and their customers online through mobile apps. The business strategy draws customers into the physical offline premises via online traction and relies on big data to make that possible.
Its ability to harness that data to entice consumers to shop more has drawn interest from Wall Street, which has been growing increasingly bullish on the company. In June, HSBC upped its price target on the company to $162 from $145 a share. In a research note to clients at the time HSBC, said the company is in the beginning stages of “data-driven growth.” The Wall Street firm has a buy rating on the stock. (See also: Data-Driven Growth Will Send Shares Of Alibaba Even Higher: HSBC.)