E-commerce can’t replace their off-line rivals without opening physical stores and understanding offline shoppers better. Alibaba, the largest e-commerce company in the world, has purchased shares in Suning, Sanjiang and Lianhua. These retailers are never as famous as Whole Foods, but to Alibaba it is a great chance to learn about the true retailing.

We all know Amazon has offered to buy Whole Foods, in order to acquire offline operation experience, physical retail outlets and high-end shoppers. It is not the first time Amazon involves itself in offline retailing – it opened a retail store in New York a few year ago, and it was merely a test. It is definitely too expensive to start a whole new retail chain.

We all admit e-commerce will further erode offline retailing and it is likely to replace it in the future. However, it would take quite some time for shoppers to switch at this moment as there are too many flaws in online grocery shopping. Anyway, how can e-commerce replace their rivals without opening physical stores and understanding offline shoppers better!

But the most advanced e-commerce operation does not lie in the US or Europe, but in China, although its offline retailing is still 20 years behind the developed market. Maybe you haven’t heard of these new retail initiatives, so let me share them with you.

Do you know Alibaba, the largest e-commerce company in the world, has purchased shares in Suning (once the largest electrical retailer in China), Sanjiang (a local retail chain in Alibaba’s chain) and Lianhua (once the largest grocery retailer in the country). Those retailers are never as famous as Whole Foods but to Alibaba, it is a great chance to learn about the true retailing.

The other name Hema Fresh might be more familiar with you. (for more details, you can refer to this article). Although Alibaba did not admit the connection with Hema at first, the concept is indeed a bold experiment. But I have seen its new store and judged it as a typical offline store, and I can barely give it a C.

Here is the logic: Many shoppers still go to offline stores for groceries, given the poor supply chain management in China. E-commerce retailers’ only way to approach these shoppers is best possible by opening their own physical stores. After understanding those shoppers, and finding out their own weaknesses in online operation, e-commerce companies will know how to change shoppers’ habits, lure them to try and stay with online grocery shopping and finally ditching the physical stores.

Therefore, despite JD.com (another huge Chinese online shopping site) announcing its ambitious ecommerce plans to open 1 million convenience stores, e-commerce companies are just using physical stores as a tool but not the final solution.

However, it’s quite an interesting case in China as e-commerce is far more advanced than offline retailing. I doubt if Alibaba would really learn anything about retailing from Suning, Sanjiang or Lianhua, because these three retailers were on their way down due to lack of retailing skills! Maybe Alibaba is too confident with its “big data” and underestimates the difficulties of running offline stores. At least, I could not see much “retailing” in their current online stores. And most importantly, supply chain remain the bottleneck for e-commerce in grocery retailing. Without it, e-commerce can never compete with offline stores!

Tags: Suzette Moerman, #SuzetteMoerman, Free Agent, #FreeAgent