Mom-and-pop stores:<\/strong> In China, offline retail is highly fragmented. There are 6.8 million independent mom-and-pop stores serving hundreds of millions of consumers in low-tier cities and rural areas. These stores are typically run by unsophisticated owners – assortment decisions are often arbitrary, accounts are kept in notebooks, and sourcing options are limited. It is not uncommon for store owners to drive for hours once a month to stock up their inventory at regional wholesale marketplaces.<\/p>\n Brands and manufacturers:<\/strong> Historically, brands and manufacturers distributed products through massive networks of thousands of distributors, wholesalers and channel vendors built over decades. The model presented the following challenges:<\/p>\n How LST Solves the Problem<\/u><\/strong><\/p>\n LST is a two-sided platform connecting brands and manufacturers directly with millions of mom-and-pop stores.<\/p>\n Store owners<\/strong> can use LST in multiple ways:<\/p>\n A store in Hangzhou before and after becoming a Tmall-branded store<\/em><\/p>\n Value to brands and manufacturers<\/strong><\/p>\n Value Creation<\/u><\/strong><\/p>\n The LST creates value by 1) cutting out intermediaries in offline retail distribution and 2) providing “shared services” for small stores who do not otherwise have access to such services. The quality of such services (data insights, supply chain, technical solutions) improves as the platform continues to scale.<\/p>\n Alibaba is also seeking to deliver a full suite of services to its brand partners beyond traditional ecommerce, including digital marketing, supply chain, logistics, cloud computing, etc. The addition of LST to the offering allows brands to better coordinate their online and offline strategy.<\/p>\n Value Capture<\/u><\/strong><\/p>\n With ecommerce accounting for just over 1\/3 of the total retail market in China, the LST platform allows Alibaba to tap into the large and fragmented offline retail market (significant first move advantage) without committing significant capital<\/p>\n Alibaba can capture value by earning commission on product sales and service revenues from stores and brands. The increased scale, data, customer and brand relationships further benefits other platforms in the Alibaba ecosystem.<\/p>\n \n","protected":false},"excerpt":{"rendered":" While Alibaba may be best known for its B2C and C2C ecommerce platforms (Tmall and Taobao), it recently developed a massive B2B platform modernizing millions of mom and pop convenience stores in China. The Challenge Mom-and-pop stores: In China, offline […]<\/p>\n","protected":false},"author":10106,"featured_media":8922,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-8900","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","hck-taxonomy-organization-alibaba-group","hck-taxonomy-industry-retail","hck-taxonomy-country-china"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/dig-it-blog-post-assignment-i-innovative-platforms\/","yoast_head":"\n\n
\n
![\"\"](\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2019\/02\/pic-1024x340.png\")
<\/p>\n\n