Here’s How Alibaba Is Leveraging Its Data

Recently, PepsiCo entered into a strategic agreement with Alibaba (NYSE:BABA) to leverage the latter’s data in order to enhance its customer experience and drive growth in China. This is the second such deal entered into by Alibaba allowing companies to use its data and insights to serve its customers better. A few months earlier, the company entered into a similar partnership with Mattel wherein the toy company would sell its products in China via Alibaba’s platform and get access to data in order to customize toys according to the preferences of Chinese customers. (Read Here’s How Alibaba Can Benefit From Its Partnership With Mattel). Alibaba is the largest e-commerce platform in China, and given that its annual transaction volume is more than $450 billion, the company has a huge database of consumer spending patterns. Companies can use this data to understand consumer preferences better and modify their products accordingly. In addition to providing an e-commerce platform to foreign players to tap into the Chinese market, Alibaba is now also looking to become a data and insights provider. While the details of these partnerships are not known, we believe the e-commerce giant can generate additional cash flows by luring foreign players on its platform through intelligent data on consumer preferences.

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Monetizing Data And Insights To Deliver A Better Customer Experience

E-commerce is an integral part of retail, and even beverage giants such as PepsiCo are looking at developing their online channels to expand their customer bases. By tapping into the insights generated by Alibaba’s customer data, PepsiCo can work on product innovation and brand building, thus driving growth in China. According to Alibaba, this collaboration “leads the evolving digital transformation of the food and beverage industry in China”.

China can be a tough market for foreign players; entering this market via Alibaba’s platform has been a successful method for many players, given the regulatory complexities. However, in order to grow in the region, companies need to understand customer preferences and adapt to changing customer trends. Leveraging the huge data mine available with Alibaba in terms of spending patterns and product preferences can benefit these companies significantly. Alibaba appears to be looking to monetize this data as it partners with several brands to provide a suite of solutions. Alibaba already generates significant revenues from its cloud computing business, and as it looks at expanding its corporate customer base, data and insights could become another significant source of revenue for Alibaba in the long term.

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