The recent Singles Day in China has set yet another record for
Alibaba, who reported a gross sales value of ¥213.5 Billion Yuan (£24.3
Billion) passing through its portals.
Although sales growth rate was reported as having declined
(down from 36% in 2017 to “just” 27% in 2018), this still represents a massive volume
uplift in excess of ¥45.3 Billion Yuan (£5.1 Billion).
Originally set up in 1999 as a B2B portal providing direct
access between Chinese manufacturing and overseas customers, the business
expanded in 2003 to include the C2C marketplace Taobao, and in 2008 the B2C
online retail TMall. In March 2018 the group had a reported annual turnover of 250
Billion Yuan (£28.4 Billion).
For Alibaba, who are currently estimated to have over 55% of the
Chinese market, (eMarketer) the step changes in value are immense, even within
an economy with GDP that continues to grow in excess of 6.5% in 2018.
With the growth in value there is of course a directly
representative growth in volume of transactions, throughout the whole of the
supply-chain, which impacts on every aspect of the business.
The resilience of the technology, and the capacity needed to
handle such massive volumes is quite simply enormous, and again this
demonstrates the integral strength that Alibaba and other e-commerce-based
businesses in China are building into their systems.
With Supply Chains becoming ever more integrated, the
transaction data volume needs to be handled through every stage of the process,
with demands made from manufacturing right through to inventory, payment
processing and logistics, and its critical that each element of the process can
cope with and handle these same volumes.
For businesses developing new e-commerce solutions and tools
to assist their business growth there is a certain attraction in partnering
with Alibaba and its own technology providers, due to both the ongoing
continuing investment and volume capacity capability, but also because of the
growing investment in AI and every aspect of the supply-chain expertise. Large
product ranges, multiple vendors and fast changing demand patterns require
maximum efficiency throughout every aspect of the supply-chain and enabling
vendors to have good visibility of demand significantly contributes to better
fulfilment.
Increasing use of AI to provide live-time focussed information
enables sellers to manipulate product offering and price driven by demand,
availability and competition, all of which adds to the ability to further
influence marketing decisions and consumer spend, and feed demand data back into
the supply chain.
Future trend?
Although the technology is proven capable of handling current
and future transactional volume growth, and best in class performance, there
are aspects of the Supply Chain, delivery logistics and manufacturing that are
suffering from this spectacular sales volume peak.
Delivery centres and delivery vehicles are literally buried
under the volume of orders requiring fulfilment, and for most of November all
aspects of these operations are under severe strain. For any organisation,
having to handle volume fluctuations that can often be as much as 10 times the
annual average daily rate is a real challenge.
Perhaps in future the better use and application of AI in
this arena will be used to spread out the consumer spend over a much wider
period, creating demand at multiple frequent events throughout the year, and
the future success of e-commerce will be judged on using this advanced
technology being able to achieve similar overall levels of business growth that
are profitable, sustainable and manageable, rather than on a single day.
China is committed to developing a world class leading AI
business sector with a market value in excess of 1 trillion Yuan by 2030, having
invested ¥162
Billion in 2017, and ¥258 Billion in the first half of 2018 (Tsinghua
University). China Money Network recently published their top 50 AI
Companies, including 14 “Unicorns” – start-ups with a valuation in excess of ¥6
Billion.
Alibaba currently invests in many different AI businesses,
and stated in 2017 a ¥95 Billion investment plan over the next three years as
part of their research programme called the Alibaba Academy for Discovery, Adventure,
Momentum and Outlook.
