AllDragon International sees positive future for online-to-offline e-commerce business
Growing demand from mainland mall owners looking to integrate online and offline services inspired Gong Yitao to set up a cost-effective shared platform to track shoppers' behaviour
After spending several years serving the mainland's two giant players in the internet and property sectors - Alibaba and Dalian Wanda - Tom Gong Yitao decided to start his own business last year.
He set up AllDragon International, which employs about 40 people, to offer an online-to-offline (O2O) e-commerce platform to mainland retail centre owners. In view of the fast growing O2O e-commerce market, he hopes to provide services to about a tenth of the shopping centres on the mainland in three years.
There are more than 3,000 shopping malls on the mainland and developers and mall owners all want to integrate the internet into their current offline physical presence. However, not all of them like Wanda can spend a lot of money to establish their own O2O platform. The strong demand prompted me to establish the company.
We will build a platform that sets the membership system for them, install free Wi-fi services in their malls and gather data about shoppers' behaviour. With this platform, shopping centre owners can interact directly with shoppers and better understand their behaviour. As this is a shared platform with other shopping centre owners, it is cost effective.
In April 2012, I was invited by Wang Jianlin, chairman of Dalian Wanda to integrate e-commerce to improve his shopping centres' business. He set aside one billion yuan (HK$1.26 billion) for me to develop the O2O system. By 2013, I deployed the services to the company's 100 retail centres. I left Wanda in April last year.
Prior to Wanda, I was the senior director at Alibaba and co-founder of AliExpress, the third largest English e-commerce platform in the world right now, second only to Amazon and eBay.
With the installation of the technologies, shopping mall owners can send promotional and marketing information directly to mobile users who visit the shopping centre. We can also track their behaviour such as which shops they go to and how long they stay.
With the data, it is easier for the mall owners to launch effective marketing activities, better position themselves and arrange the tenant mix for their centres.
We noticed that in one Wanda shopping mall, 30 per cent of Pizza Hut restaurant customers went to Zara after eating. That is very useful information. They can consider combined promotional activities.
When shoppers use our Wi-fi service via their mobile phones, we will get their phone ID numbers. Every But we do not know who owns the phone until they register as our members.
However, we can track where the phone owner goes and estimate what they buy. We will have an idea about their gender when they go to the washroom.
At Wanda, for example, sales revenues of 20 malls that had installed Wi-fi services and other technologies were 8 per cent higher than those without. At that time, what we did was just to improve the promotion and marketing methods. We had not yet started tracking shopping habits. When revenues grow, rents will increase.
I don't think so. Online shopping will not exceed 20 per cent of total retail sales in the future. Most trading will still be transacted offline. A shopping mall is a place for a social gathering. In the US, shopping malls are the third place people spend time after office and home. The same will be true on the mainland.
In the short term, we could have an oversupply; the market may crash. For many mall owners, this is the first time running a retail property, they have no experience. In the long run, mall owners should think how to differentiate themselves by integrating with the internet.
Our near-term goal is to serve 500 malls on our platform in the next 36 months. There will be 6,000 malls on the mainland by that time. We will accumulate 100 million registered users and their shopping behaviour data. Our profit will come from advertising and financial products utilising this data.
