It was half-past midnight on November 12, and Alibaba Group Holding had just announced a record-breaking US$30.8 billion in e-commerce purchases for Singles’ Day 2018. Instead of joining the steady stream of reporters filing out of the media centre to return to their hotels, I was standing in front of a robotic arm that was twisting itself from side-to-side as it prepared the cocktail I just ordered.
I had scrolled through a list of drinks available via a mobile menu – which included a gin and tonic and a hot toddy – and settled on a lychee martini because the (human) bartender manning the exhibit said it was the drink the robotic arm had prepared for Jack Ma, Alibaba’s co-founder and executive chairman, about an hour ago. If a lychee martini was good enough for China’s richest man, it was good enough for me.
“Jack Ma did not drink the martini … but [Alibaba chief executive] Daniel Zhang had a pandan latte,” the same employee told me, after explaining that the robot doubles as a mixologist and a barista to create alcoholic concoctions and caffeinated beverages with ease and precision. If consumers want to customise their drinks they can do so on their smartphones and the machine will precisely adjust the proportion of alcohol to mixers in their cocktail or coffee.
The robotic arm, the brainchild of Shanghai-based start-up Ratio, was one of the many exhibits on display at “The Ideal Living” exhibition – a glimpse into what future living could look like if Alibaba, which owns the South China Morning Post, had its way.
Ratio’s robotic arm takes orders via smartphone, where customers scan a QR code, select drinks off a menu and pay via mobile payments service Alipay. The start-up, which operates a physical store in Shanghai’s Raffles Place mall, uses Alibaba’s cloud services and its payments system help facilitate customer orders, founder Gavin Pathross tells me.
An exhibit shows what a Flyzoo hotel room would look like, equipped with smart appliances and a facial recognition check-in process. Photo: Handout
Next to the robotic bartender was a mini Hema supermarket – Alibaba’s so-called New Retail grocery store concept – complete with shelves of fruit, platters of raw oysters, and several chefs nearby who could prepare sushi and even offer you a fresh coconut on the spot. Across the hall, Alibaba had recreated a room from its upcoming Flyzoo Hotel that will open its doors to guests in December. Described as a “hotel of the future”, guests check-in via facial recognition and the room is outfitted with smart appliances that can be controlled via its Tmall Genie smart speaker.
The exhibition, located next to the Singles’ Day media centre that accommodated hundreds of journalists who just hours before were watching Alibaba’s real-time GMV ticker cross 200 billion yuan, demonstrates Alibaba’s ambition to not only dominate e-commerce in China today, but to play a leading role in powering the technology upgrade of the entire consumption industry for China’s 1.38 billion population.
That includes everything from dining, entertainment, travel, and grocery shopping, amid a growing Chinese middle-class that is becoming increasingly affluent, and as millennial Chinese consumers rise to the forefront with bigger spending power.
“The majority of online shoppers [today] are those born in the 1980s to the early 2000s, who grew up in an era of high growth in the economy and consumption,” said Chu Junhong, an associate professor of marketing at the National University of Singapore’s Business School. “They are often the only child of the family and will not easily feel the pinch of economic hardship and respond to it.”
In the coming years, and despite economic uncertainties posed by current US-China trade tensions, Alibaba wants to capture the “long-term trend of an upgrading in consumption by the Chinese consumer”, according to Alibaba executive vice-chairman Joseph Tsai, who was speaking to reporters in an interview on Singles’ Day.
The company is also in a “unique position” to help enterprises become more digital, he said.
Journalists at the event were invited to tour the Hema supermarket that boasted a restaurant with robots as servers, as well as the Starbucks Reserve Shanghai Roastery, which makes augmented reality features accessible through Alibaba’s Taobao app. Starbucks customers curious to learn about the coffee roasting process while sipping on a cup of nitro coffee can simply point their smartphone cameras at the machinery in the store to find out more.
Media also got a tour of an RT-Mart hypermart outlet, outfitted with Alibaba’s New Retail technology, featuring an overhead logistics system that carries bags of groceries ordered by customers online to a delivery depot for dispatching.
The stores are all part of the Hangzhou-based company’s New Retail concept, which integrates online and offline commerce to provide customers with a better experience, allowing them to shop wherever and whenever they want. Merchants benefit as well, as Alibaba believes the technology solutions it offers can help them operate more efficiently and make more money.
“The purpose of New Retail is … to help digitalise the whole consumption market, which today is about 36 trillion yuan (US$5 trillion) in China,” Daniel Zhang Yong, Alibaba chief executive officer, told reporters during the Singles’ Day event on Sunday.
“If you look at the online pace [of consumption] we are now at about 20 per cent [of the market], but if we can digitise the offline bricks and mortar stores, then the whole consumption market is one market, facing one customer base.”
The idea is that by helping connect a store’s online and offline retail operations, both can share the same inventory, supply chain and customer management system – thereby enabling brands to serve just one group of customers, regardless of whether they buy in-store or browse for items online.
Examples of this include providing smart display technology to fashion and even cosmetic stores, allowing users to virtually “try on” different outfits with the item superimposed onto their image as captured by the camera. The same can be done for makeup, where users can try on multiple lipsticks or eyeshadow shades. After “trying” the items users can order online for home delivery.
Alibaba, with its massive trove of consumer data on what 600 million consumers on its platform are buying, has taken the future of consumption a step further. A year ago the company launched its Tmall Innovation Centre (TMIC), a research alliance with professionals that works with brands to examine consumer insights and purchasing habits to reverse-engineer the kind of products that will appeal to consumers.
The best example of this is the chilli-infused Snickers bar, a creation that came about after data showed that Chinese consumers who buy lots of chocolate often tend to be a fan of spicy snacks.
TMIC has also worked with other brands, including Dove, where it helped come up with two different flavours of chocolate gift boxes – tea and dessert. The centre has also assisted Chinese skincare brand Pechoin in launching a mid-range skincare serum after data showed that there was a market gap for such a product in the skincare industry.
“It takes about six months to come up with a new product, reducing the amount of time it takes [by traditional methods of product creation] by at least half,” said Duan Ling, head of the Tmall Innovation Centre or TMIC.
By using algorithms and big data, TMIC is able to help global brands create products that appeal to Chinese consumers as they become more particular about the brands and quality of the products they purchase.
TMIC already works with 600 brands across 15 industries, Duan said. Over 300 products have been created, with many of them sold on Tmall, giving brands immediate access to consumers rather than having to conduct expensive marketing campaigns to encourage purchases in offline stores.
To be sure, much of Alibaba’s technology is still relatively nascent and often viewed as a kind of consumer novelty. The company’s move into New Retail, which saw it pump billions of dollars into the offline retail space, has squeezed margins and spooked investors. The New York-listed company has seen its share price slide about 30 per cent since it hit a record high of US$210.86 in mid-June, and is currently trading around US$150 per share amid a global tech rout.
Furthermore, the technology that it employs in its over 90 Hema supermarkets is not yet commonplace across China’s hundreds of thousands of supermarkets, although the company has already teamed up with hypermarts like Sun Art and RT-Mart to help them digitise some of their offline retail stores. Rivals such as JD.com and Tencent have also invested heavily in offline retail as China’s internet giants race to develop the most ideal solutions to crack the online-offline retail puzzle and profit from it.
Similarly, the concept of augmented reality fitting rooms and mirrors is still somewhat of a novelty, while the use of smart speakers in cars and even in homes to control appliances remains a relatively new concept to many Chinese consumers.
Until merchants across China and even globally start adopting technology from internet companies like Alibaba, consumers like myself will look forward to the day when everything – whether it be buying a dress in a store, remotely turning on the lights and air-conditioning, and even collecting packages – can be done through a tap on a smartphone, a voice command or a facial scan.
Meanwhile, I am content to taste the future of consumption via a perfectly-shaken lychee martini prepared by a sleek, robotic arm. It was as delicious as any of the lychee martinis I have had in the past that were prepared by humans.
Credit: Zen Soo on South China Morning Post 16.11.18
Robotic bartenders and smart hotels: Alibaba’s vision of future consumption