Logistics battle : Alibaba 1, Tencent 0.

Logistique Alibaba

In the ultimate goal of “owning the customer” Alibaba may have won the logistics battle, if not the war, against its rival Tencent.

The first battle between these two mastodons was to build and drive online traffic… Well, with 1 billion users for WeChat and $25 billion of goods sold in 24 hours during the last double 11 (11 November 2017) on Tmall we can say that both of them succeed in this first round. Let’s call it a draw.
Their second battle was to get a strong offline footprint. On Alibaba’s side: Stake or full control of Suning, Hema, Intime, Sun Art ( RTMart and Auchan China)… On Tencent’s corner: Stake in #Yonghui, #Carrefour, #D physical stores, strong cooperation on payment with #Walmart… We might think that say that Alibaba has a slight advantage for now.
Since it was not enough to control the whole value chain and share the market among themselves, they open a new front… They want to own the customer.
Their latest battlefront has moved to the logistics. But not the logistic offline retailers (between suppliers and offline stores) know. We are talking about the visible logistics between offline stores and final users / clients / customers.
Until last week Alibaba, through its stake in Cainiao, was already leveraging on its thousands delivery men… Well, that was last week…

Deliveries in more than 300 Chinese cities

Now with its latest purchase of the remaining stake of #ele.me, Alibaba overnight has just added a labour force of couple more thousands … valuing at the same time the food delivery platform at $9.5 billion… The platform claims to deliver, in more than 300 Chinese cities, to its 50 million customers (95% of them ordering on their mobile) food from more than 300 000 restaurants.

 

It is obvious that Alibaba bought nothing more than “time to market” to outpace its rival. Alibaba did not want to reinvent the wheel and go thru any learning curve… Time is money and size makes its all.
On the other corner, before we forget and before the next buy, Tencent has a large stake in Meituan-Dianping delivery service company which is dealing with hundreds of thousands of meals delivered per day.
Both of these two titans already own so much data on their users (through social media, games, but more importantly thru all of their purchases on and offline). They both want to own the relationship with the consumer at any time of the day and the night.

 

Customers might have to choose…

The same way brick and mortar retailers in China have started to choose their champion, (Walmart for Tencent, Auchan for Alipay, probably Carrefour for Tencent …) we, common consumers, might as well be forced to make a choice between one of the two banners because they might not continue accepting our fickle behavior using either one of the other according to our own benefit. Loyalty comes at a price.

 

By Stéphane Joly, Executive Vice-president, Altavia Asia