"Online commerce is not going to wipe out the physical store"

"Many people thought that the main people affected by the digital transformation would be small businesses, neighborhood businesses. But the opposite is true," says Terry von Bibra, director general of Alibaba in Europe. The Chinese e-commerce giant wants to move away from the image of a company that dominates the world. In his speech, he did not forget to highlight the company's ability to advise small and medium-sized enterprises to take full advantage of the benefits of digital transformation.

Its maxim is not to replace physical commerce with purely digital commerce, but to combine the best of both worlds to improve the customer experience and business performance. Something that Alibaba's founder, Jack Ma, baptized as 'the new retailer' and that employs techniques such as gamification, streaming and data analysis to try to make the retail shopping experience more fluid. 

One of the 10 Emerging Technologies that MIT Technology Review has selected in 2018 is Artificial Intelligence (AI) services in the cloud. These platforms would make it possible to democratize AI and take it to any company in any sector. How is your company preparing for this technology?

Artificial intelligence is taking its first steps, but its evolution is going to be even more disruptive than mobile technology. IA, combined with big data, is going to become a super transforming technology because it is going to allow us to anticipate the needs of both customers and businesses. In our case, for example, it will make it possible for us to offer many services that we cannot offer right now.

This technology works by processing and storing a large amount of data. How is this data used in your company and for what purpose?

Alibaba is not only an e-commerce platform, our businesses also include cloud computing, logistics, intelligent payments, digital media and entertainment, and other innovation initiatives. This complex ecosystem serves more than 500 million active consumers and connects them with merchants and partners worldwide. Data is the unifying force of that ecosystem. The insights we gather from the activity on our platforms enable us to help our merchants market better and more efficiently, resulting not only in increased sales, but also in increased customer participation and satisfaction.

And what have you been able to do so far? Have you used the data to customize products or services or anticipate customer needs?

Yes, the ability to anticipate customer demands and personalize their shopping experience is one of the main benefits of this technology. The data is allowing us to help small traditional shops, those that give life to neighbourhoods, to get to know their consumers in order to have the products demanded and thus increase their clientele. For consumers, the benefit is that they increase the chances that the store below their home offers their favorite products.

What actions are you taking to capitalize on this volume of information?

One of the things we are doing to take advantage of all this information, precisely, is also giving advice to businesses on how they could improve their returns with new products, new customers and new forms of advertising. The aim is for them to adapt better to the demands of the market.

We also leverage mobile devices to dynamize the customer experience in the physical trade. This is the technology we are currently betting the most on and which we are going to bet the most on in the coming years. The success of the half online, half offline model is so popular that many people [in China] are moving to live near the supermarkets that already offer this combination.

Recently, Inditex launched an augmented reality (RA) pilot project in its stores. Do you think this technology will revolutionise the sector? What impact will augmented reality have on your company? 

Alibaba is also using RA to revitalize offline retail consumption. In shopping malls in China, which everyone thought were going to disappear, we are deploying digital applications to a physical environment to enhance the consumer experience. 

For example, we have installed 'magic mirrors' in women's services, showing how different types of make-up look. You can choose between lipstick, eye shadows and blushes. The mirror returns the image of the user with the cosmetic on and, if you like what you see, just order it and finalize the transaction with the mobile.

We have also incorporated this technology in clothing stores. If the customer likes a garment, but it is not in the size or color he likes, you can order it in the machine and receive it at home without having to wait to be attended. In the testers, there are other screens that suggest garments that match those that the customer has passed to the testers [see Alibaba injects artificial intelligence into stores and achieves a record-breaking Day of Singles].

Another recent example of the implementation of the 'new retailer' approach is the Intersport megastore made possible by Alibaba's Tmall in Beijing [China].

Do you think that companies in the sector are involved in a race to be the first to implement new technologies? What is the differential factor of your company to face the competition?

We don't want to choose between digital and analog. We focus on that third way, which combines the best of each. We don't believe that online commerce is going to put an end to the physical store, we simply have to transform ourselves. For us, the future is not to dominate all e-commerce, but to digitize all businesses. That may be the key to saving international trade, and in Alibaba we call it 'new retail'. This approach is already helping even the smallest and most traditional businesses.

How are you, as Europe's CEO, adapting to these transformations in both business and industry? What new capabilities do business leaders need to address these changes?

In Alibaba we live very closely the values of start-ups and we pay a lot of attention to those of our environment because we believe they share our same philosophy.

We also bet on horizontality instead of hierarchies, we invite everyone to talk and participate.

All these transformations require a profound organisational change: accepting new risks, adopting the culture of error... How was this need to innovate transmitted to the board of directors?

We have 25 very different business units that were not born by chance, they are the fruit of the entrepreneurial spirit of our company. We firmly believe in it and we are convinced that in the future many more initiatives will be born from within.

How do you imagine your company in the future?

We are convinced that SMEs, as well as larger companies, will be our allies. What interests us is to see how we can help discover scalable businesses and how we can support businesses to do better.

In the future, Alibaba is going to be an enabler of international trade, which is particularly complicated by regulation, fees or logistics.  It's a very complex challenge, but we think it can have a lot of impact on the world.

By Editors of the MIT Technology Review in Spanish