New Retail: Alibaba’s Plans to Disrupt the Australian Market

April Davis By April Davis | 23 Apr 2018

Alibaba Group has opened an augmented reality pop-up at Melbourne’s QV, in a bid to introduce China’s concept of ‘New Retail’ into the changing Australian retail market.

Tmall Global, an Alibaba-owned online retail platform, has opened a ‘New Retail’ pop-up store at QV in Melbourne, where the Chinese e-commerce giant is displaying a range of augmented reality (AR) technology that could potentially be adopted by Australian retailers.

According to Alibaba, the future of retail is already happening in China, and the Australian market is in prime position to start adopting technology that brings the best of online and in-shop experiences together. For the $32 billion company, this future is deeply rooted in game-based shopper discounts, QR codes and facial recognition.

Alibaba’s founder, Jack Ma originally unveiled the company’s vision for New Retail two years ago, as he understood that e-commerce was a retail game changer, but as much as 80 percent of China’s retail revenue still originated from traditional bricks and mortar stores.

“‘New Retail’ is a bold extension of Alibaba’s strategy of pure digital competition into the physical world. And it hinges on the strange ‘economics of participation’…’New Retail’ means a massive expansion in their brands and merchants and in the participation and activities of their consumers,” wrote Jeffrey Towson, a Peking University professor, and private equity investor in a blog post earlier this year.

The Push for AR in Australia

One such innovation that Tmall has on display at its new Melbourne pop-up is its ‘Magic Mirror’. According to Alibaba, this innovative product has the ability to transform the way women shop for makeup.

magic mirror

Tmall demonstrating the use of Alibaba’s Magic Mirror at QV in Melbourne.

Designed for use in women’s change rooms, the Magic Mirror allows consumers to take a photo of themselves and then trial different makeup looks. This includes everything from ‘party’ looks to casual ‘office’ looks. If a consumer likes one, they can then select and purchase the products that were used to ‘virtually’ create it. This technology is already in use in China, where shoppers can purchase the products they like directly from in-store vending machines.

L’Oreal has also adopted the Magic Mirror technology, introducing it in its Shanghai, Wuhan, and Changsha boutique shops, as well as several pop-up stores. When consumers find the shades of lipstick, the overall makeup look or the foundation that best suits their skin tone, they can order the products from L’Oreal’s flagship store on Tmall.com.

However, L’Oreal has taken this one step further by using location-based technology to notify shoppers of where the closest L’Oreal counter is.

Tmall is also aiming to introduce Australian retailers to AR games that drive consumer engagement in-store, along the lines of its ‘Catch the Cat’ game, which is already utilised in China. In this game, customers can use their smartphones to chase a virtual cat mascot around a physical store for the chance to access special promotions and discounts. In Australia, this will take shape in a Pacman-style game where birds run around collecting points in a virtual environment.

Australia’s Adoption of Tmall’s AR Technology

To date, The Iconic is the only brand to license and introduce Alibaba Cloud’s AR technology in Australia. Australia’s online fashion marketplace, The Iconic, launched its new visual search tool ‘Snap to Shop’ in December 2017, which allows its customers to search for clothing, sportswear and accessories simply by uploading a photo or taking a snap via The Iconic app.

“With two out of three of our shoppers purchasing via The Iconic mobile device this year alone, we know there is a strong demand for a mobile-first and more personalised shopping experience,” says The Iconic’s Chief Technology Officer, Zoe Ghani said at the time of the release.

Alibaba Group’s AR tech could change the face of Australia’s retail market, however, in a walkthrough with the media in Melbourne, James Hudson, Alibaba Group’s director of corporate affairs and marketing, did point out that retailers would have to have their own e-commerce platforms and in-store technology to be able to use the company’s new AR tech.

It seems Australians are falling behind China in terms of New Retail, not only because of a lack of technology, but also because of our slow adoption of QR codes. In China, almost everything is automated through the use of QR codes, while here in Australia, very few consumers actively use the technology.

According to Hudson, this means Australian brands might need to spend some time educating their consumers before the full breadth of Tmall’s New Retail technology can become commonplace.

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