Retailers throw the word omnichannel around like it’s candy, but Jack Ma just might create the world’s best retailer — online and off — and in the process send Alibaba Group Holding Ltd (NYSE:BABA) and BABA stock rocketing higher.
It also might teach Amazon.com, Inc. (NASDAQ:AMZN) a thing or two about growing a retail business.
Forget About Singles Day
It’s ironic that the world’s biggest single-day retail event — Alibaba generated $25.3 billion in revenue Nov. 11, 40% over last year and almost double 2016’s Black Friday and Cyber Monday combined — is held on Veterans Day, the anniversary of the armistice signing to end World War I.
Our freedom to splurge was earned by a heavy price, one that we should always be thankful.
InvestorPlace’s Laura Hoy recently discussed how Alibaba is using the cloud and logistics to help convenience stores in China compete. Customer data from its Ling Shou Tong app provides independent convenience store operators with a better idea of how and what to sell its customers. Once those sales occur, Alibaba then ships the items from its dedicated warehouses.
Alibaba isn’t about Singles Day or the cloud — although both are significant revenue generators for the company — but rather the omnichannel shopping experience.
Online and Offline Will Co-Exist
Last October, Alibaba executive chairman and founder Jack Ma revealed the company’s thoughts about the next 10-20 years invoking the “Five New” strategy of New Retail, New Finance, New Manufacturing, New Technology and New Energy.
Notice which comes first?
Alibaba plans to develop the other four strategies to build its core retail business in China and beyond.
“Alibaba’s mission is more than just growing online retail and achieving our goal of US$1 trillion in GMV by fiscal year 2020. We also want to help offline retail partners achieve digital transformation and upgrade existing retail formats,” Ma stated in his October 17 letter to shareholders. “We aim to create a new value proposition for consumers by redefining the key components of traditional retail — customer flow, merchandise and space – in partnership with traditional retailers as well as through pioneering new retail experiences.”
It’s this overarching strategy that has seen it spend more than $9 billion over the past two years acquiring brick-and-mortar retail because Ma knows that good retail is about more than just e-commerce.
Recently, the company announced that it was investing $2.9 billion for 36% of Sun Art Retail Group, China’s largest hypermarket grocery-store chain.
“Physical stores serve an indispensable role during the consumer journey and should be enhanced through data-driven technology and personalized services in the digital economy,” Alibaba Chief Executive Officer Daniel Zhang said in the company’s statement announcing Alibaba’s investment.
Bottom Line on BABA Stock
As Laura Hoy stated in her Nov. 14 article about Alibaba, it is making a lot of “game-changing” moves which will continue to provide significant growth for the company in the years ahead.
I could not agree more.
Now approaching $200, BABA stock is one momentum stock you shouldn’t say no to just because its valuation might appear expensive. Innovation will continue to drive BABA stock higher making long-time shareholders very wealthy.
And it all starts with delivering the omnichannel experience.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.