Alibaba mines huge data trove for consumer insights
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Alibaba mines huge data trove for consumer insights

Ever fancied a ‘spicy’ Snickers bar? Well, Chinese chocoholics do, apparently. And Mars (the company that makes Snickers) managed to discover that fact thanks to Chinese giant Alibaba’s huge data set of consumer preferences. It’s a new tack for Alibaba, but it makes sense: brands spend millions to get to the heart of consumer preferences, and China represents a huge, but (to western companies) relatively opaque market. Alibaba might have the world’s largest data set when it comes to understanding this market, and now, it’s willing to share.

On-going trade disputes between China and the US have pushed Alibaba’s share price down 2% over the last five days

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Source: Yahoo Finance

Alibaba is often described as the ‘Chinese Amazon’. That’s a fitting description, given the two companies’ positions in their respective markets. But it’s not the whole story – if westerners want to conceptualise Alibaba more completely, they should imagine a combination of Amazon (online retail mastery), PayPal (through its market leading digital wallet Alipay), Google (Alibaba has the largest online advertising business), and Netflix (through its control of Youku). As you might imagine, that gives it possession of a huge amount of data – and, Chinese internet regulations being less concerned with data privacy than their western equivalents, Alibaba’s in a position to use it.

Jack Ma, Alibaba’s executive chairman, calls this strategy “New Manufacturing”. He hopes it will help to define the future of the Chinese economy, and solidify Alibaba’s position within it. Given the prize on offer – an unparalleled insight into what China’s 1.4 billion-strong population craves – Ma is unlikely to run out of companies like Mars and Unilever, who are looking for an advantage.

Ken Leaver, an ecommerce industry expert, says that Alibaba is the only player currently able to offer such a comprehensive service. He said: “Nobody else has this ecosystem where one player has all the pieces together and can put together a single profile of you. Alibaba has the ability to use this to get their seller base to create their product, which is a holy grail in e-commerce.”

Disclosure
Dominion holds Alibaba in its Global Trends Ecommerce Fund.


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.