More a user sticks to an ecosystem, tougher it becomes for a merchant/ advertiser to ignore the strength of such 3rd party platforms.
Amazon, Facebook, Google etc. are examples of the same, but the challenge is much more imminent for foreign brands, including travel companies, when it comes to dealing with the trio of Baidu, Alibaba and Tencent (BAT).
A marketing technology stack that a foreign company has set up for a non-Chinese market isn’t likely to operate straight out of the box in China. Another example, as shared by IHG, is a market-specific consideration of demand side platforms (DSP) and data management platforms (DMP) as far as China is concerned. The trio of BAT operates in silos, inhibiting the ability to run data-driven campaigns. And with massive traffic that resides in these ecosystems continuously finds more reasons to stick to them, brands, too, need to go with the flow.
In this context, what Alibaba is doing, clearly indicates that the group isn’t just focused on digital commerce, but rather it is about being an integral part of the lifestyle of the consumers. Be it for flagship stores, loyalty benefits, content consumption (reviews, destination content etc.) and facilitating payment via Alipay, brands like Lufthansa, Marriott and American Airlines have signed significant deals in the last 8-12 months to capitalize on what Alibaba’s Fliggy has to offer.
Other than facilitating transactions, there is plenty more to read into why Fliggy is being favored by foreign travel brands at this juncture. The answer lies in what is being done to capitalise on the activity of over 550 million monthly active mobile users on Alibaba’s retail marketplaces by leveraging cloud computing, data and technology:
Stickiness via innovation: Alibaba is shaping up new experiences and this means users wouldn’t venture out of the ecosystem. The inquisitiveness about what new technology can do, be it for shopping, viewing content or any activity, keeps a user going. Examples are new experiences via AliOS operating system for IoT device networks (so as part of offering for connected devices, information on the windshield of the car rather than the smartphone), cloud technology (opening the lock of a bike hired via an app) and video streaming (for instance “See Now Buy Now”, buying something what a model is wearing during a live fashion show). All of this has been witnessed in the last few months – CES 2018 or Alibaba’s 11.11 Global Shopping Festival.
Consumption of a product isn’t about only paying for it. For instance, Starbucks opened its most interactive location to date in Shanghai. Identification of an app user from the moment they enter in a location to personalized page as per the preferences to engaging with content about products, fun visuals and animations via augmented reality, all of this is being powered by Alibaba.
Digging deeper into a user’s life: Alibaba has built on the entire platform model on the belief that data only has value when it’s aggregated, analyzed and, to some extent, shared. So if a traveller on Fliggy.com is clicking on certain sections, then via reinforcement learning done in real-time, Alibaba strives to make an apt recommendation. And this recommendation is a result of what a user does in different areas of life, incorporating preferences in travel buying. This one of the reasons why groups like Alibaba and Amazon are looking at customers’ behavioral data at the grocery store. So by being a part of a true platform environment, featuring the connectivity of a robust database coupled with the technology of Alibaba and its group companies, organisations can bank on data and the science behind it to come to grips with the trends within one industry, understanding the consumer behavior and all of this across the whole consumer journey – whether they eat, shop, sleep or play. It is fascinating to assess how Alibaba is capitalising on maching learning by training “data” around their massive user base.
So if the open platform is facilitating sharing of data, can it facilitate experiences never experienced before? Say, a consumer regularly orders a fresh food item, a dessert via an online retailer, and this same item is available on a flight. Can it be served to the same consumer on a flight? “With data, connectivity and the ability to map data, anything is possible. By attaining a single view of the customer, and since consumers are heavy users of Alibaba commerce apps for their activities, and one can further learn about preferences, spending pattern, likes and dislikes, and this can even be shared with other partners. Again, the permission to share is still with the consumer. But this (provisional) sharing becomes a catalyst for shaping up the journey or experiences that they are likely to appreciate. This is the prowess of the platform solution,” shared a source.
Algorithms for valuing loyalty: One of the major developments as part of the Alibaba’s “New Retail” push has been the merging of Tmall and Taobao Marketplace loyalty programs into a single membership club, 88 Membership program. Unlike the increasing trend of revenue-based loyalty programs of airlines, loyalty in case of Alibaba looks beyond metrics of pure transaction. So the algorithm for loyalty isn’t just about rewarding for purchases, but even for stores visited, the types of goods bought, sharing product pages to social media, writing sharing product reviews etc. There are more than 50 brands, including global ones, and loyalty schemes of each brand can be connected to Alibaba’s membership system. Also, if there is a hotel or any travel brand, then there could be an exchange and redeeming of points between the two programs for travel planning and retail purchases.
As per the recent deal with American Airlines, there will be a collaboration with the airline’s loyalty program, AAdvantage. It would depend upon the level of a user’s membership with Fliggy. For example, Fliggy F1 members will earn preferred boarding when taking an economy class flight. Similarly, Marriott and Alibaba are also running an initiative for delivering personalized trip-planning services, VIP travel experiences and exclusive benefits to each company’s membership clubs.
Paying with Alipay: One of the reasons why Fliggy is being chosen is also owing to the fact the ecosystem can facilitate completion of a transaction via Alipay. Rather than committing an error (that can result in banning of a service) or taking time in localization for any offering, including payments, foreign brands are tying up with WeChat Pay and Alipay to be a part of a streamlined mobile payments process. So be it for a transaction that takes place within China or offline, at a location outside China, it is much more convenient for foreign brands to close the loop with a payment option.
Unified ID: Alibaba is focusing on crafting one id of the shoppers, naming it as “Unified ID”. Based on the activity within the ecosystem, the team is offering an online dashboard that shows brands who is interested in their products and where they are in that product lifecycle. But realistically speaking, describing a lot about a particular customer to a merchant isn’t going to happen, and privacy issue is one of the major reasons. “The information is going to be shared in a subtle manner, what a consumer’s likes and dislikes are,” a source said. “These dashboards, as Alibaba asserts, are going to help in identifying, targeting, reach and retain buyers. All of this would be powerful enough to come up with relevant product recommendations, personalize the storefronts in the digital domain.”
It is clear that where shoppers are spending time, travel brands need to be there.
So if Alibaba’s platform model can trigger an action from the shopper, make every offline and online touchpoint relevant, contextual, and reward their userbase for money they spend with any merchant on their platform, then travel e-commerce players would find it tough to ignore the prowess of the Alibaba’s platform model.