The world’s online shopping giants are following smaller web retailers into what might appear to be the merchandising past. Amazon, Alibaba and most recently Alibaba’s rival, JD.com, are operating brick-and-mortar stores, joining companies such as the formerly web-only Warby Parker, Athleta and Chinese smartphone maker Xiaomi. Even Tencent, the Chinese games and social media giant, is doing deals in retail. These companies are part of a new “bricks and clicks” trend blurring the division between online and in-person sales. Traditional store-based retailers are joining in by elevating their web game.
1. What explains web giants establishing stores?
Not everyone wants to shop online, or to buy everything that way, and some people simply can’t. While China has close to 800 million people who access the internet, that leaves hundreds of millions who don’t. But much of the population lives a short drive from one of the stores now backed by Alibaba, the Chinese e-commerce giant, or JD.com. In the U.S., 70 percent of millennials, now the biggest consumer group in the country, prefer shopping in a store to shopping online, according to one survey. Fresh food, furniture and appliances are among the items some shoppers prefer to inspect before buying.
2. How are they going about it?
Mostly by investing in brands with existing store networks and retail expertise. Amazon, the world’s biggest online retailer, bought the U.S. grocery chain Whole Foods and its more than 460 stores in 2017 and has also opened 13 bookstores since 2015. Alibaba acquired a department store chain with 29 stores and 17 shopping malls last year and also bought a slice of a China’s largest hypermarket chain. JD.com recently opened the first of a chain of high-tech supermarkets in…