Tencent invests in physical retail

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Tencent plans to invest in the Chinese division of Carrefour SA, a France-based retail company, according to Bloomberg. The company, along with recent investment Yonghui Superstores, a local supermarket operator, has agreed to take a stake in Carrefour, and intends to improve its operations.

Carrefour has over 200 hypermarkets in China, but its sales have slid as of late. Tencent will certainly try to turn its performance around.

Tencent appears to be positioning itself to contend with Alibaba in brick-and-mortar.

  • Alibaba recently made a $2.88 billion investment in Sun Art Retail Group for a 36.16% stake in the store operator, making Alibaba its second-biggest stakeholder; the largest stakeholder is Auchan Retail, a France-based retail group that Alibaba has partnered with. Sun Art’s stores have the leading market share (15%) in China’s hypermarket industry, according to a Euromonitor report cited by Bloomberg, giving Alibaba a formidable partner. Alibaba plans on leveraging its online capabilities and some of its brick-and-mortar innovations to strengthen Sun Art’s stores, and to become more involved in brick-and-mortar retail.
  • Between investments in Yonghui and Carrefour, Tencent would have a stake in approximately 800 stores, giving it a large footprint to try to contend with Sun Art, Walmart, and other retailers in China. Tencent will have the opportunity to utilize its data capabilities, WeChat user base, and other internet-driven skills to bolster Carrefour’s and Yonghui’s offerings in order to compete with Alibaba in physical retail.

Because of its relationship with Tencent, Alibaba’s rival JD.com may work with Tencent’s investments. Tencent is the biggest stakeholder in JD.com, and the two have made investments together in the past, so JD.com may be part of Tencent’s plans for brick-and-mortar, even if it isn’t an investor. JD.com would be a valuable partner for these stores, as it could help them sell online by giving them prominent placement on its e-commerce marketplace. It could also lend them its logistics capabilities to help with fulfillment.

The e-commerce titan may also help revolutionize their in-store experiences, as it recently developed an unmanned store concept that would allow these stores to offer a unique and convenient shopping experience. Additionally, there are pieces of technology that can be added to existing stores to upgrade them. Such improvements would help Yonghui and Carrefour compete with Sun Art and others, and, in turn, help Tencent and JD.com compete with Alibaba.

Jonathan Camhi, research analyst for BI Intelligence, Business Insider’s premium research service, has laid out the case for why retailers must transition to an omnichannel fulfillment model, and the challenges complicating that transition for most companies. This omnichannel fulfillment report also detail the benefits and difficulties involved with specific omnichannel fulfillment services like click-and-collect, ship-to-store, and ship-from-store, providing examples of retailers that have experienced success and struggles with these methods. Lastly, it walks through the steps retailers need to take to optimize omnichannel fulfillment for lower costs and faster delivery times. 

Here are some of the key takeaways from the report:

  • Brick-and-mortar retailers must cut delivery times and costs to meet online shoppers’ expectations of free and fast shipping.
  • Omnichannel fulfillment services can help retailers achieve that goal while also keeping their stores relevant. 
  • However, few retailers have mastered these services, which has led to increasing shipping costs eating into their profit margins.
  • In order to optimize costs and realize the full benefits of these omnichannel services, retailers must undertake costly and time-consuming transformations of their logistics, inventory, and store systems and operations.

 In full, the report:

  • Details the benefits of omnichannel services like click-and-collect and ship-from-store, including lowering delivery times and costs, and driving in-store traffic and sales.
  • Provides examples of the successes and struggles various retailers have experienced with omnichannel delivery.
  • Explains why retailers are having trouble managing costs with their omnichannel fulfillment efforts, which are eating into their profits.
  • Lays out what steps retailers need to take to optimize costs for their omnichannel operations by placing inventory where it best meets customer demand.

Interested in getting the full report? Here are two ways to access it:

  1. Subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you’ll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
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