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Alibaba’s Impact on Retail Supply Chains Is Bigger than You Think

By Bruce Tompkins
Executive Director, Tompkins Supply Chain Consortium

It seems as if article after article is clamoring to tell us every detail about what Alibaba is. Despite immense publicity as of recent, most people either do not know about Alibaba or they do not understand how the giant e-commerce company impacts them. 

Here’s what those articles have most likely not told you: There is a very strong possibility that Alibaba will be a complete game changer to global online sales.  Its impact on supply chains across the world is enormous and executives need to understand Alibaba’s power in order to reach consumers.  This is a tremendous opportunity for company leaders who understand and embrace the Alibaba marketplace model.

Retailers in particular can benefit from exploring how Alibaba works and taking advantage of its unique strengths. They need to decide how they are going sell their products and get them into consumers’ hands quickly.  Alibaba presents new opportunities for retailers to operate through the marketplace model.  Retailers need to decide whether to  use forward or backward marketplaces to drive sales and revenue growth:

  • Forward Marketplaces: Where retailers place their unique offerings on other marketplaces such as custom designed products or private label for generic products, proprietary brands, and exclusive “own” brands.
  • Backward Marketplaces: Where retailers place other merchants’ unique offerings on their own sites in order to increase selection available to consumers, own a category or several categories of goods, and/or drive online and in-store traffic.

In order to reap the full benefits of these online marketplaces, retailers must evaluate their supply chain performance and turn them into a source of competitiveness. Providing products in a multichannel or omnichannel environment is very challenging from a people, process, facility, inventory, technology, and organizational perspective. 

Supply chains must be capable of functioning seamlessly to the customer, and they are further challenged by the need for speed.  There has never been a time in a retailer’s life that speed of delivery and flawless execution have been so critical.  It still rings true that the real competition is supply chain against supply chain—not company against company.

Reconsider how you are bringing your products to consumers. Is Alibaba factored into the equation and  part of your analysis? Learn more about how Alibaba impacts the supply chain by watching The Alibaba Effect, a video that has exposed thousands of retailers to this force in global online sales.

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Article

Alibaba’s Impact on Retail Supply Chains Is Bigger than You Think

By Bruce Tompkins
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