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How CE Retailers Can Use Start-Ups To Ride The Alibaba Wave

There’s a perfect storm of retailing that’s brewing on the horizon. If you’re in the consumer electronics sector, then you have two choices as to how to deal with the approaching front: Either ride the wave or batten down the hatches.

I recommend the first option. The consumer electronics industry is evolving fast and you need to position your store to reap big rewards associated with the upcoming initial public offering of Alibaba. The China-based web retailer has rewritten the rules of digital commerce and is likely to bring its “online-to-offline” strategy to America later this year.

Bricks-and-mortar consumer electronics firms have lucrative opportunities ahead of them, which come as a relief, because many of them have been hit hard during the past decade. Their tough times came to a head when consumers discovered showrooming. If they were looking to buy a camcorder, they’d scout out big stores like Best Buy and get advice from the knowledgeable sales staff. When they’d settled on a model, they’d go home and order the camcorder from an online retailer.

The good news for retailers is that there is a wave of new trends that is likely to change the way consumers buy things — especially how they deal with web-based commerce. The first trend is Alibaba itself. The company will be flush with billions of dollars from its impending IPO to exert its savvy, time-tested sales strategies across the North American market.

The second trend is the emergence of new start-ups that blur the lines between online and in-store shopping.  Consider Instacart, a start-up offering same-day delivery, often time in as little as one hour. Instacart uses crowd-sourcing to find deliverymen when it needs their services. What an efficient labor model. Then there’s WeDeliver, a same-day delivery service for local business offering to “bring your store to the door” of consumers.  Don’t forget Streethub, a click-and-collect marketplace that helps you discover and buy unique items from local shops.

What start-ups like these are doing is bridging the last mile between the brick-and-mortar store and the consumer. It’s all about laying out a convenient path so that the product reaches the consumer or the consumer reaches the product. This method enables CE retailers like Best Buy to treat their network of stores as warehouses — all of which are extremely close to most consumers.  They’re close enough so that the cost of delivery is nominal, especially when paired with a start-up that uses crowd-sourced labor.   

CE retailers can also use a start-up like Streethub by helping consumers discover great products that happen to be close to them, and then providing a convenient and economical way for the consumer to either collect the product or have it delivered.

Is the retailing storm I’ve just outlined an example of disruptive innovation? You bet it is. The fascinating thing is that the three start-ups I described are only a small sample of the innovative omnichannel start-ups that are emerging.  Bricks-and-mortar retailers should watch this space closely for innovative firms with which they can partner in order to stay competitive with the likes of Amazon and Alibaba.

Girish Pai is client services associate VP for retail, consumer packaged goods and logistics at Infosys, a global technology and outsourcing solutions consultancy.