Two big names in the world of traditional retail and ecommerce, Kroger and Alibaba, were linked in recent news. We’ll look at what this means for each company, and the ecommerce landscape in general – as well as learnings from other organizations in this space.
Kroger, which was founded in 1883 in Cincinnati, Ohio, is the United States’s largest supermarket chain, and in fact is one of the largest such chains in the world. With stores in 34 states, Kroger is a household name that for many typifies traditional brick & mortar stores. This week they announced a partnership with Chinese internet giant Alibaba, specifically to open an online storefront on Alibaba’s platform for international brands, Tmall Global. This first move into overseas sales is part of grocer’s online retail push.
Organic goods, dietary supplements, and other private-label products are expected to be included in the initial product offering.
Competitive Landscape And Why This Is Big
Kroger’s move comes as its traditional competitors aggressively cross into the digital space, while “digital” companies barge into what used to be Kroger’s exclusive territory.
Walmart, for its part, recently acquired a majority stake in Indian ecommerce giant Flipkart Group. It has been pursuing a strategy of leveraging their physical store base to drive them forward in the ecommerce landscape. What’s more, Walmart owns a 12% stake in JD.com Inc., Alibaba’s largest rival in China.
Amazon has been doing the opposite, particularly with their Whole Foods purchase, as they seek to expand their physical footprint while taking advantage of their digital strength.
Alibaba already owns 2 of China’s most popular ecommerce websites and is staving off competition from the aforementioned JD.com. They have also been active in signing on other US brands, such as Macy’s, Costco and Starbucks.
In terms of the competitive landscape and “why this is big”, this new partnership shows that even the most traditional retailers are seeing their future in the ecommerce space. And it doesn’t get any bigger than partnering with potential Amazon rival Alibaba, which makes a huge statement. Kroger has made it clear that they will be investing more resources into their digital business, meaning that this is another big player in the ecommerce game, and will directly affect competitors such as Amazon, Walmart, and Target.
Digital For The Win
Digital is the way forward for even the most traditional brands. While perhaps a bit late to the party, the Kroger-Alibaba deal shows that companies not harnessing the power of ecommerce effectively have to have a smart strategy to catch up – and succeed – in the new era of ecommerce. This could be through acquisitions, mergers, or allying with the right digital partner.
When it comes to that right partner, companies both large and small are seeing the need for a holistic picture of their own operations, as well as the industry at large. Today, successful companies are leveraging data to spot future trends and markets, as well as to fine-tune minute details such as ensuring that their products are priced better than their competition.
Sign up to our newsletter to get the latest news about Market Beyond