PODCAST: Alibaba, the sleeping giant of retail

While Australian retailers fret about the impact of American online retail behemoth Amazon, China’s Alibaba looms as an equal threat, according to Russell Zimmerman, Executive Director at the Australian Retailers’ Association.

Speaking to A’n’Z of Economics on podcast, Zimmerman said the changes underway in retail brought by online retail giants were leading to a complete “revamping and re changing” of the sector – but warned Alibaba’s impact was being underrated.

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“I think Australian retailers have been very focused on Amazon and there's certainly been a lot of hype,” he said. “[But] I think the biggest sleeper in the online space is Alibaba.”

“I think we'll actually need to move our focus away from Amazon and realise Alibaba is out there.”

Zimmerman was a guest on the podcast alongside Richard Li, the Chief Operation Manager for Miniso, a Tokyo-based retailer which has recently opened stores in Australia. You can click below to hear an edited version of the comments – or go to the A’n’Z of Economics Soundcloud page to listen to the full podcast.

"I think we'll actually need to move our focus away from Amazon and realise Alibaba is out there.” - Zimmerman

Zimmerman said AliBaba is slightly different to Amazon in that it owns a large portion of the value chain, including not just sales but elements like data collection and AI-assisted marketing. On Single’s Day – China’s version of Valentine’s Day – in 2017, the company recorded record sales $US25.3 billion, a 40 per cent jump on the previous year’s figure.

“I think Amazon is a very interesting case study because they really haven't spent a dollar on advertising but everyone's talking about it,” he said.  

 “I know there are some retailers in Australia already dealing with Alibaba and they're doing very well but I think [more need] to at least look at it. They may or may not wish to go on that platform, but at least look at it.”

Miniso customers are currently unable to shop online in Australia but Li said the company had a strategy in the works.

“We find there's two things stopping us launching our online strategy in Australia,” he said.  “The first is there is no landmark website or something [in Australia] like an Amazon or AliBaba.”

“The second thing is the lack of logistics. We find Australia is one of the most-expensive in the world when we're selling different commodities. We need to find different ways to move product at the most-efficient cost. The good thing is right now things change very fast.”

The conversation also touched on why overseas retailers were moving into Australia and the surprising true size of the Australian online retail market. Listen to the podcast above to find out more.

Jo Masters is Senior Economist at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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