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Why Alibaba should combine its asset light and heavy strategies to enhance efficiency?

By ESC Editorial Team, over 5 years ago Business
Why Alibaba should combine its asset light and heavy strategies to enhance efficiency?

Founded in 1999, Alibaba is now worth $458 billion.

In an interview with Bloomberg in September 2017, Alibaba’s chairman Jack Ma, Vice Chairman Joe Tsai (Tsai Chongxin) and CEO Zhang Yong said the company is focusing more and more on the traditional retails. 

In the interview, the three executives discussed about Alibaba's strategy of competing with the rivals, data perceptions and the challenges. 

At the current scale, Jack Ma thinks that Alibaba needs to change its mind, abandon its asset-light strategy and occupy a higher market share of the global trade. He said, “The asset-light strategy was right at the beginning when Alibaba was small. Now the company has grown big and strong in scale and business, it is time to shift to the heavy asset strategy. To enhance the efficiency, we will mix the light and heavy strategies together, investing in infrastructure construction to support our light asset business.”

When talking about the increased competition between Alibaba and rivals in online payments, cloud computing and financial services, Alibaba is very confident about its performance. 

About the competition with Tencent, Jack Ma said, “We are interested in the cross-border trade and e-commerce, where we have already had 15-year experiences. And I do not think Tencent is able to do as well as Alibaba in e-commerce. Tencent is good in the payment sector with Wechat-pay, especially when they have local Wechat users. But there will be limitations for Tencent if the local people do not use Wechat. For example, the Indians are not Wechat users, so it will be very difficult for Tencent to get the Wechat-pay users in India.”

At Hema supermarkets Alibaba does better than Amazon and other competitors to improve the food shopping experiences for customers. Hema is a non-stop online shop where the customer can use mobile apps to pay, scan barcodes to get shopping advice and let the store cook seafood on site. With a developed delivery centre, Hema supermarket makes it possible for customers to receive their goods within 30 minutes after payment.  

Alibaba’s CEO Zhang Yong said, “At present, we have about 55,000,000 orders daily on Hema. It is believed to be 1 billion after several years. The scale of the Chinese retail business scale is about $46,000 billion, and the key to this business is how to realise a smarter delivery service. Instead of transporting the packages by air to cities 200 km away from the warehouses, we have stores nearby to deliver the goods to the customers. It makes our express delivery faster, although there will still be many order packages. So, we are working with our partners to integrate all the logistics systems into the business system.”

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Book Recommended:
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