Note on the Future of Commerce
In 2019, the retail and consumer product industries were undergoing a significant transformation. Over the past 50 years, what was once a highly fragmented industry began to consolidate, digitize, and increase convenience while lowering costs. The winning enterprises re-allocated their talent and capital towards new business models and capabilities while successfully managing their legacy businesses. There were also many terminal businesses that never crossed to the next generation of retailing. The note explains the major transformations occurring to the global consumer sector in 2019 and how leaders reacted.
China Commerce 2020
China's digital commerce platforms engage billions of consumers daily across a number of routine tasks, from banking, retail purchases, travel, gaming, payments, and more. These platforms are the most sophisticated/informed and highest performing/capable in the world. While often business leaders refer to Amazon as a leader in digital exchange, this case highlights the vital areas where the Chinese platforms lead. Of special note is the merging of the retailers' on and offline capabilities into a unified consumer experience. Retailers like Walmart China have fundamentally altered their business model and federated with these Chinese platforms to build a better consumer experience, sell more, and manage costs and investments. While not all of these practices are globalizing, the non-China platforms are copying them fast to reach the new global standards. Leaders need to be informed and respond.
Agile Consumer Product Innovation with Alibaba's Tmall Innovation Center
Consumer products companies were beset by changes on all sides during the 2010s. Customers were increasingly turning to ecommerce platforms rather than shopping in-store. Meanwhile, nimble, digitally-savvy competitors were gaining market share by capitalizing on the troves of newly available data on consumer preferences. Alibaba was the largest ecommerce platform company globally and operated in China, which was seen by many as an image of the future of western markets. In 2017, Alibaba launched the Tmall Innovation Center (TMIC) which provided a range of services to support innovation for companies selling through the Tmall business-to-consumer platform. These included robust consumer insights backed by data from across Alibaba and mechanisms to rapidly solicit customer feedback. Armed with the TMIC, consumer products companies were learning that effectively targeting consumer preferences required a new approach to product development which had far-reaching implications across roles, skills, and organizational structure.