There are bound to be speculators who would like to invest in Tmall. The fast-moving consumer goods market is growing as China’s consumers realise it is practical to order in fresh fruit – and have an intermediary courier it to their homes. Alibaba recently pumped a further 1 billion Yuan (approximately US$155 million) to extend the service from Jiangsu, Zhejiang, and Shanghai further into Beijing.
Was It a Smart Move to Invest in Tmall Like This?
It has been so far, for Alibaba. After teaming Tmall supermarket with Cainiao’s same-day delivery service network, sales in Beijing region jumped 740% year on year, which is astronomical growth by any standards. With 90% of orders placed by mobile, clients were clearly happy to invest in Tmall via giving them their business, as opposed to using Walmart’s O2O service platform on its newly acquired Yihaodian platform.
Tmall Not the Only Newbie on the Beijing Block
The Beijing virtual market is awash with new entrants striving to come up with a better idea. Alibaba’s decision to invest in Tmall to the extent it did will have managers at Jingdong and Yihaodian straining at the leash for more venture capital, and conventional supermarket owners popping antacid tablets by the handful. China’s consumer market is extremely tough, and Alibaba will be wise to watch its back.
How the Tmall Market Discriminator Works
While many bricks-and-mortar offline supermarkets in Beijing are reluctant to hand the service platform a share of profit, they may find it impossible to block it out. When Alibaba decided to invest in Tmall to the tune of 1 billion Yuan, it would have been thinking of the multiplier effect. Its centralised distribution depots allow it aggregate orders per individual customer and send them in a single van. This is a great relief for consumers previously anxiously waiting for several different couriers.
Perhaps one day I will be able to order a grand piano, a crystal vase and a pink carnation on the internet and see them arrive together in a single Alibaba delivery van