With China's consumption of wine surging, e-commerce giant Alibaba Group Holding Ltd. is pouring more effort into boosting the product category through technology, new retail concepts and global partnerships.
During a press conference held May 30 at the Vinexpo wine and spirits trade show in Hong Kong, Alibaba's business-to-consumer marketplace Tmall signed a memorandum of understanding with trade group Wine Australia, which will connect more Australian wine merchants with consumers in China.
Tmall also entered into a strategic partnership with French wine critics Bettane & Desseauve to use their reviews alongside wine product listings.
Mike Hu, president of fast-moving consumer goods at Tmall, said the e-commerce marketplace will collaborate with more global vintners and distillers in China for brand-building, particularly through social-commerce initiatives such as live-streaming events.
"[These initiatives are] what we lack in the wine category, because it is a category we just started," Hu said. He also noted that a typical Tmall shopper expects to "read a lot of content" related to brand history and product details.
The online retailer counts Chinese brands such as Yantai Changyu Pioneer Wine Co. Ltd. and Luzhou Laojiao Co. Ltd. as early partners, and in recent years has tied up with international labels including Pernod Ricard SA and LVMH Moët Hennessy Louis Vuitton SE's Moët Hennessy.
Hu also shared consumer demographics for Alibaba, which has about 500 million monthly active users. Nearly 70% of them are women, while about 45% are aged 18 to 29, and more than 30% are looking for high-quality, healthy products.
In addition, young consumers want customization services such as printing names on bottles or getting personalized packaging, Hu said.
Meanwhile, Tmall showcased its new unmanned wine store, with a model set up at the Vinexpo event. Customers use facial-recognition technology to enter a store stacked with wines, spirits and even perfumes produced by some distillers. Items on the shelves are embedded with a tracking tag that sends product information to a nearby display screen when a customer picks something up.
When shoppers are ready to exit, scanning technology identifies items selected for purchase and deducts the payment from their Alipay accounts, which get recognized and registered upon entry. Customers can also opt for delivery with a few screen clicks in-store.
Betty Chen, director of Tmall's wine and spirits category, told S&P Global Market Intelligence that the wine store format is still at a trial stage but is expected to be rolled out across China in the near future.
"We have gained valuable experience in building smart stores for some other categories, so this one for wine and spirits will be on an easier path," she said.
Alibaba also displayed its smart wine refrigerator at Vinexpo. Consumers register their Alipay accounts by scanning a barcode that also opens the door. When they take out an item, it is tracked by technology installed inside the fridge so that the cost is automatically deducted from Alipay once the door is closed.
The smart fridge has already been installed at bars and hotels across several Chinese cities including Shanghai, Beijing, Hangzhou, Shenzhen and Chengdu.
