Spending a Trillion on ‘mom and pop’

Wednesday 23 May 2018

Article

In another astonishingly bold move by Alibaba they have recently announced that they are investing 1 Trillion Yuan ($158bn) in the street vendor channel.

The investment is part of a package of services being offered up to street vendors which has ‘code payments’ as a central pillar. The uptake of these QR payments for even the smallest of street vendors shows the clear consumer appetite to change behaviour and is hugely compelling from the vendors perspective.

The smart part of the strategy is that the payment services are really a Trojan horse to allow a far broader suite of services to be sold into the vendor channel. As an example, financial services (loans) are being offered to vendors which gives them a credit line to be able to then source more actively from the Alibaba platform.

The visibility of the payment / income stream allows Alibaba to reduce the risk of the financial services offering and in doing so, unlock a huge new platform for the Alibaba ecosystem.

The challenge of course is the sheer scale and fragmentation of the channel which is why Alibaba are having to commit such huge sums to developing it.

Clearly they are convinced that it is a bet that will pay back however – and their track record suggests - it would be unwise to bet against them!