Alibaba: ‘Instant Commerce’ Market Could Draw ‘Every Person in China’

Last month, Chinese tech conglomerate Alibaba debuted a fast delivery service it dubbed “instant commerce.”

On the company’s earnings call Thursday (May 15), analysts wanted to know: Why now, especially given recent intensification in the food delivery space?

Fan Jiang, CEO of the company’s eCommerce segment, argued the company has some notable advantages, having built up its delivery capabilities for years, while also investing in and developing the Freshippo grocery chain.

“One thing to note about this instant retail market is that it’s a huge market because basically every person in China, every consumer in China will have demands for instant commerce,” Jiang said. “Today, it could be a market of some say 500 million to 600 million consumers. Going forward, that could easily be 1 billion consumers.”

He added that Alibaba also had an “extremely mature and experienced merchant base” in place … and “extremely robust and mature logistics system to support instant commerce.”

Robust logistics are critical for merchants and retailers at this moment, PYMNTS noted in a report last week.

“Consumer behavior post-COVID has made fast, reliable delivery non-negotiable,” that report said. “Putting an exclamation point on this operational reality, Walmart announced last month it is planning to deliver to 95% of consumers in the United States within three hours by the end of the year, a milestone that would have been unimaginable even five years ago.”

Speaking with PYMNTS CEO Karen Webster, Radial CEO Tom Schmitt said success in the logistics race comes down to mastery of three “currencies”: money, time and carbon footprint.

Retailers have to discover their “sweet spot” across these competing demands, he said. Amazon and Walmart, for example, have created next-to-ubiquitous networks, letting them lean heavily on the currency of time. Smaller players, who don’t have a nationwide footprint, are forced to be more creative.

Also Wednesday, Alibaba noted strong demand for its artificial intelligence (AI) cloud model, where revenue was up 18% for the quarter, and AI-related product revenue reached triple-digit growth for the seventh quarter in a row.

CEO Eddie Wu told analysts that this signals that there are a wealth of new companies that have begun to use AI services.

“So as we said before, a lot of the companies that started out initially adopting AI were ones in the Internet space or Internet finance, education, autonomous driving, those early adopter kinds of sectors,” Wu said. “But what we’re seeing now is a lot of new scenarios and a lot of newer kinds of companies in other sectors that are taking up AI services.”