Alibaba Group will extend its digital operating system to 1.5 million small neighborhood stores in China. Under the so-called Plan W, Alibaba is looking to develop a number of smaller shops with a daily revenue of over 10,000 yuan ($1,456) in lower-tier cities, townships and villages.
The latest move falls under Alibaba's Ling Shou Tong (LST) business unit, which connects the millions of street stands in China and improves marketing, delivery, and inventory management abilities through digital means. The data-backed retail management system has been designed to digitize the business of millions of mom and pop stores and neighborhood convenience stores.
Alibaba will offer a smart point-of-sale system, some 10,000 new product offerings, and a variety of online touchpoints to help users access offline stores virtually. Alibaba intends to help these mom and pop stores double or even triple their revenue, and they can sell more efficiently, and get flexibility to refill stocks based on their changing needs.
Its POS machine performs every function throughout the retail process and provides real-time suggestions. For instance, it would send out alerts on potential stock shortage, and would recommend cost-effective purchase to enhance the store's profitability. The machine also collects average selling price for a certain product in the nearby areas, thereby giving references to shop-owners to make informed pricing decisions.
Furthermore, an inventory monitoring system is in operation to give real-time advice on product display. This is coupled with a three-layer warehouse system covering 200 cities and townships to ensure the timely delivery of products, based on geographical shopping preferences that are present in Alibaba's data book.
Despite slow consumption growth at home and abroad, one in every five small shops surveyed by LST reported they have witnessed positive revenue growth. Average daily revenue surpassed 7,000 yuan, compared with the 3,000 yuan to 5,000 yuan range for average offline stores.
