What we can learn about e-commerce “twins” Amazon and Alibaba about CX
You may have already noticed that Pascal Coppens and I have launched a series of Youtube clips where we compare similar Western and Chinese technology giants.
Now, for those of you who prefer reading to watching, I wanted to give a version of our conversation here on my blog as well. This is the first episode where we “twin” and compare e-commerce giants Amazon with Alibaba, along the lines of my Offer You Can’t Refuse (OYCR) concept. Rather than transcribe the clip, I wanted to zoom in here on what we can learn from both of them in CX. If you want to hear about the challenges they face as well, I highly recommend you watch the clip.
Before we go deeper into the OYCR model, I want to briefly summarize where they differ the most and where they resemble each other the most.
The biggest difference
The biggest difference is probably that Amazon is hugely customer driven, where Alibaba is highly relationship driven. That might seem the same but it really is not. Most of us know that Amazon is deeply customer obsessed and does everything in its power to make the purchase process as well as the lives of customers better. But in their case, this approach unfortunately sometimes comes at the cost of their relationship with employees (how they treat the blue collar workers) and suppliers (issues of trust).
Alibaba, on the other hand, focusses on the entire chain of human relations, empowering and helping their retail partners so that they can offer better services and products to their own customers. In short: Amazon helps customers while Alibaba helps its sellers help their customers. In that aspect, Amazon can be seen as a huge company, while Alibaba is a huge ecosystem. I won’t go deeper into this, but this probably has to do with the Chinese culture that is much more holistic and relationship driven than the individualistic West.
The biggest similarity
The one thing that they have both understood exceedingly well, is that staying within the lines of your core business and industry is a thing of the past. If you want to be a useful part of the lives of your customer, it’s better to diversify your offering into (adjacent) services that can help them save even more time or up the quality of their lives. That’s why Amazon is truly becoming a whole network of organizations and brands in order to have as much influence in the day to day life of people as possible. Over the years, it has for instance entered movie streaming, healthcare, pharmaceutics, grocery shopping, logistics and other sectors.
Alibaba has a similar approach of diversification: they have launched themselves in logistics, in cloud, in healthcare, entertainment and many more industries. What’s extra clever about that, is that all these services are embedded in their Alipay superapp, which is not just a financial service but a social platform as well, connected to millions of merchants around the world. And that is how they get an enormous amount of data, which allows them to give tips and tricks to their ecosystem of merchants to help their customers even better.
Creating an Offer You Can’t Refuse
So, let’s move on how they both create an Offer You Can’t Refuse (OYCR), each in their very own way. Just a little recap for those of you who aren’t familiar with my OYCR concept, here are the three values that are the pillars of that concept (obviously on top of the offering of great products and services at a reasonable price):
- Transactional or digital convenience,
- Emotional convenience or Partner in Life,
- Saving the world.
Digital convenience first. This is the use of new technology in a smart way to make interfaces ever more automated, so that the customer needs to make no effort to do business with your company. This leads to the perfect transactional relationship.
Since the very beginning, Amazon has had a very strong reputation in digital convenience thanks to it’s incredible friction hunter mindset. I’m sure you’re familiar with the Amazon go stores, where you scan your phone, walk in and take what you want from the shelves. Thanks to state-of-the-art technology, they removed the friction, the annoyingpart of shopping from the buyer experience. You would think ‘this is the most perfect digital convenience in the offline world’. Yet, still, someone at Amazon decided that process could be simplified even more. Instead of needing to look for your phone, take it out, open the app and scan it, they added a hand scanning device, making the experience even more frictionless, almost invisible. And you see that in everything they do: they permanently look for these small details and then try to go the extra mile.
According to Pascal, Alibaba, too, is doing great things on the convenience side: the “new retail” being one of them, which is all about merging the online with offline. The Freshippo or Hema stores are really a good example: high-tech supermarkets that are completely designed around the smartphone and function as fulfilment centres for online shopping at the same time (being so close to customers, allows for superfast delivery). Chinese people really love this approach and the stores’ unified ecosystem is also a gold mine from a data point of view for Alibaba, which allows them to continuously monitor and improve the buyer experience.
Partner in Life
This part of the OYCR pillars is about the life journey of your customer, going beyond ‘just’ their customer journey. Which aspects in the lives of your customers create negative or positive energy? What things cost them too much effort? If brands can provide answers to these questions, they can optimize their emotional relationship with your customers.
Amazon takes the partner in life philosophy very seriously. They always keep the scarcest resources of customers in mind when they invent or further refine a new offering: today these mostly are time, money and energy. Jeff Bezos actually did the math: if you buy your products with Amazon, you’re saving 75 hours a year, which is bringing quite a lot of value to the table. But, as a real Partner in Life, they are not content to stay in the single lane of being an online retailer, as mentioned above. They’ve been moving into financial services. They are ready to roll out the once internal healthcare program Amazon Care nationwide and for everyone. So now all the American people can use Amazon care to get online medication and online help. They’re continuously broadening their offering to become that partner in life.
Pascal explained that Alibaba, too, is a partner in life, but – as we talked about – not just for the users, but also for all the retailers on their platform. Even a long time ago, they had products like Aliwangwang and Alimama to help sellers and buyers to connect better with each other. It also assists these smaller players to become better, more efficient and more convenient so they can boost their sales, which is obviously an advantage for Alibaba as well. Their advice to sellers is extremely valuable because they have so many touch points in so many industries that they have an incredible amount of information about the user journey. And let’s not forget about their technology – Alipay or their CRM and ERP systems – that helps the retailers become more efficient.
Save the World
This last pillar of the Offer You Can’t Refuse is about companies taking their responsibility to do good for society as a whole. Every company has strengths that it can use to create a societal added value. Search for concrete solutions and contributions that will allow your company to make a truly tangible impact.
When it comes to sustainability and the impact on environment and society, we all know that e-commerce – especially package delivery – is a big discussion point. But Amazon is really serious about improving itself here. They are investing in more sustainable processes and logistics, and they put the bar up quite high for the next couple of years. An example is that they want to make sure that the largest percentage of their fleet will be EVs. They’re also working on renewable energy. I think they could do more still, because just think about the influence that a company the size of Amazon could have on sustainability. What if they started to push the more sustainable products? It works both ways of course, consumers need to be ready for this, too. Society still has a long way to go in that aspect.
According to Pascal, Alibaba is trying to make a real difference for society and the environment. One part is inclusion: it’s giving all these micro loans through Ant Financial or helping farmers everywhere with e-commerce. Chinese culture is much more network and collective driven and so Alibaba is deeply invested in helping the less fortunate with upward social mobility. It also has CSR programs like the Ant Forest tree-planting mini program in the Alipay app that enables users to earn virtual points for making low-carbon lifestyle choices (like riding a bicycle or taking the bus). And they’ve already planted more than a hundred million trees in China, all because of this one application.
Their logistics, however, will probably have the most impact on ‘saving the world’. Its “Green Logistics 2020” initiative includes the improvement of material recycling, packaging, route planning and delivery methods by leveraging its technological capabilities. It will be launched across a number of business entities within the Alibaba Group, including its logistics arm Cainiao, online retail sites Tmall and Taobao and second-hand platform Xianyu, as well as on-demand food delivery site Ele.me.
These are just the highlights of what Pascal and I talked about, though. If you want to learn more about Amazon’s membership approach, B2B section, employee experience or how Alibaba handles trust, customer service and its struggles with the government, I highly recommend you watch our clip: