Chinese eCommerce companies could face “tremendous challenges” as Alibaba aims to transform the the mainland’s traditional retail industry, worth an estimated US$4.5 trillion.
In a letter to shareholders, CEO Daniel Zhang says the company hopes to “upgrade” traditional retailers through improvements to distribution, service and product manufacturing.
“The most important opportunity on the horizon is not growing online sales in isolation but rather helping traditional retailers upgrade into a brand-new retail model,” he writes. “The consumer retail industry as a whole is experiencing radical disruption driven by digital transformation.”
Alibaba chairman Jack Ma has set a target of 20 years to attain 2 billion customers and support 10 million profitable businesses globally.
Zhang cites cloud-based infrastructure and data as two areas where Alibaba sees future growth.
“Cloud computing and big data will become ubiquitous,” he says. “Data has already become the new ‘natural resource’ that is as vital as oil and electricity. Cloud computing is the new ‘engine’ powering commerce.”