Two of China's biggest e-commerce players have been ramping up investments in physical assets and partnerships, as they look to meld offline and online platforms to transform the retail experience.
Alibaba and JD.com in the past year made several announcements aimed at expanding their footprint in the brick-and-mortar retail space. Both companies strongly advocated the merits of delivering retail services that integrated offline and online environments, offering consumers a seamless shopping experience.
Alibaba, for instance, had been beefing up its chain of Hema supermarkets, which doubled up as fulfilment hubs for online orders processed via its e-commerce platforms. It currently operated 25 such stores across China, including 14 in Shanghai, with plans to open another 30 in Beijing by end-2018.
Last week, the e-commerce operator also unveiled plans to invest US$486 million to acquire a 38 percent stake in big data vendor, Shiji Retail, which specialised in hotels as well as retail. In a filing to the Shenzhen stock exchange, Alibaba said.
And just today, the company said it forked out another US$867 million for a 15 percent stake in Beijing Easyhome Furnishing, which was China's second-largest home-improvement supplies and furniture chain. "The investment will combine the strengths of the world's largest e-commerce platform and rich offline sources of Easyhome," Alibaba said, adding that this was on top of previous investments in Sun Art Retail Group, Suning Commerce Group, and Intime Retail.
On its part, JD.com last December teamed up with Chinese real estate developer, China Overseas Land & Investment, to open unmanned convenience stores operating on the e-commerce company's technologies, including RFID as well as facial and image recognition.
More recently, JD.com last week unveiled a new partnership with Fung Retailing to develop an artificial intelligence (AI) platform as well as AI-powered "smart retail" applications that integrate offline and online services.
The alliance would encompass the development of an "AI Boundaryless Retail Centre" to drive and manage research and development (R&D) projects and facilitate data-sharing between both companies.
Part of Hong Kong conglomerate Fung Group, Fung Retailing owned a network of more than 3,000 stores across several markets including China, Singapore, South Korea, the UK, and Thailand.
"Leveraging AI, and combining JD.com's extensive online expertise and Fung Retailing's offline expertise, the two companies aim to develop a new retail format for China and Asia," the two companies said in a joint statement.
They aimed to build a system that could manage products, storage, orders, pricing, and payments as well as improve customer experience through services such as AI-powered virtual fitting areas and unmanned stores.
According to JD.com, founder and CEO Richard Liu championed a "boundaryless retail strategy" that aimed to transform the company's retail business into "an open platform to support other retailers by providing retail as a service". This would require JD.com to "open up" its capabilities in supply chain, logistics, big data, marketing, finance, and technology, it said.
Acknowledging that it was "late to the AI race", JD.com said it had increased its push to develop technologies in the space, including new hires in AI skills over the past few months. Its vice president of AI platform and research, Bowen Zhou underscored the importance of AI to JD.com's future success. He pledged to focus on recruitment to "play catch-up" with other big tech vendors in China.
Zhou added that his team would be trialling several AI applications, such as a recommendation engine and smart warehouse and logistics tools, including unstaffed vehicles.
Alibaba, too, had been making inroads into the AI space, where its deep neural network model last month clocked a score in a global reading test that surpassed humans. It also launched a smart city AI platform in Kuala Lumpur, Malaysia.