Brands spend hundreds of millions of US dollars each year trying to figure out what consumers want. Alibaba Group Holding Ltd (阿里巴巴) is offering to help by vacuuming up data from the legions of people shopping, searching and sharing on its various platforms and providing it to companies eager to create products that will resonate with Chinese consumers.
Alibaba has helped Mars Inc create a candy bar and given Unilever NV valuable data for a new line of pollution-fighting cosmetics. Then the e-commerce giant advised both companies how to market the products.
It is all part of executive chairman Jack Ma’s (馬雲) “new manufacturing” strategy, which he hopes will help define the future of the Chinese economy and cement Alibaba’s place in it.
“Nobody else has this ecosystem where one player has all the pieces together and can put together a single profile of you,” e-commerce industry expert Ken Leaver said.
The Chinese behemoth operates the world’s biggest e-commerce platform with 600 million monthly active users and the nation’s biggest online ads business, and hosts a financial transactions platform called Alipay (支付寶).
Alipay’s dominance in mobile payment systems and Alibaba’s retail software also means it can track consumer behavior offline in brick-and-mortar retail locations.
Alibaba’s market research arm, Tmall’s (天貓) Innovation Center, can crunch data and show companies what Chinese consumers are seeking, but cannot find.
“We can see where there are blank spaces and unmet needs in the market,” said Duan Ling (段玲), Tmall’s director of brand marketing, who heads the innovation center.
Alibaba can also test products in consumers’ news feeds and search results, based on their profiles and real-time purchase behavior. It is like the world’s biggest focus group.
Alibaba is able to sell user data with relative impunity, because privacy is less of an issue in China than elsewhere. While the data is anonymous, users cannot opt out if they want to use the company’s platforms, much the way people using Facebook or Amazon do.
“The Internet boom reached China later, yet Chinese consumers have embraced it at a faster pace than anyone else,” said Pedro Yip, a retail and consumer goods partner at consultancy Oliver Wyman.
This means that consciousness of digital privacy issues are only just now starting to grow, he said.
Earlier this year, Alibaba researchers noticed growing demand from urbanites for pollution-fighting personal care products. Some premium brands already sold cleansers and shampoos designed to strip off pollutants, but there were not many mid-priced options.
Unilever acted on this insight and came up with a line of affordable anti-pollution products, starting with a skin cleanser. Its researchers and designers developed 48 prototypes of the cleaners at different price ranges.
These were shown to users, such as young mothers, on Alibaba’s online malls Tmall and Taobao (淘寶).
When someone tried to buy a prototype, a pop-up message told them that they were participating in a consumer testing exercise and offered them a voucher for taking part.
Last month, Unilever launched the Purifi line, starting with a skin cleanser based on the purchasing decisions of tens of thousands of those young mothers.
A bath gel, wipes and face masks are to follow.
The entire process of conception, design and testing took Unilever just six months with Alibaba’s help, down from the usual 18 months to two years for a new product, Unilever data and digital development senior director Susan Ren said.
“Alibaba gives us a real environment to test new products,” she said. “Because consumers have no idea that they are taking part in a survey or study, their reactions and purchasing decisions are real. It makes the feedback real, which is a huge advantage in an industry where product innovation is essential, but costly and risky.”
Alibaba’s data trove also held revelations for Mars. It turns out that the same people who buy a lot of chocolate also like spicy snacks. That prompted the creation of the Spicy Snickers candy bar, which incorporates the Sichuan peppercorn.
Typically, Mars spends two to three years developing a new product, but the Spicy Snickers came together in less than one.
The launch helped the China division meet its goal of having new products account for more than 10 percent of revenue, Mars Wrigley Confectionery China president Ian Burton said.
“The age-old tradition is that 90 percent of innovation fails,” Burton said. “This helps us bring the rate of failure down.”
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