Interview with Alibaba on Alitrip and Chinese outbound travel
Tnooz interview with Sherri Wu, chief strategy officer of Alitrip and head of international e-commerce business development at Alibaba.
Tnooz, Sean O'Neill - month that Alibaba, a giant Chinese e-commerce company, rebranded its travel booking website as Alitrip (去啊) — which it then made an independent business unit.
To find out the latest on Alitrip, Tnooz interviewed Sherri Wu, chief strategy officer of Alitrip and head of international e-commerce business development at Alibaba.
Tnooz: A key initiative of Alibaba is making cross-border e-commerce more seamless. Can you shed light on this?
Wu: Credit cards are not as popular and widely used in China. About half of China’s total online shopping GMV (gross merchandise volume) is generated by shoppers using mobile phones.
Because of this Alitrip has introduced a new concept called “Hotel of the Future” that enables easier payment, secure data protection, seamless check-in, and check-out process and a brand new credit system for the Chinese travelers.
Called “Post Post Pay” under the “Hotel of the Future” program, this service allows qualified guests to reserve rooms through Alitrip without paying a deposit and to enjoy express check-out.
Post Post Pay was launched by Alitrip and Sesame Credit, the credit agency under Alibaba-related Ant Financial Services Group.
Upon check-in, travelers whose Sesame credit scores make them eligible for Post Post Pay do not need to provide their credit card information for room deposits. So check-in is faster and travelers enjoy greater data privacy.
Because room charges and incidental room expenses are automatically debited from users’ Alipay accounts, when leaving guests only need to return their room keys at reception, skipping the usual check-out routine.
We’re very excited about the “Hotel of the Future” program because it is transforming how Chinese travel. This is bringing true benefits to both customers and hotel partners and we’re looking forward to offering great services ahead.
Tnooz: For the next couple of quarters, is Alibaba Group’s strategy for expanding in the travel market focused on signing up travel agencies?
Wu: We are an open platform and always welcome quality merchants to join us to expand our products and service listing in order to fulfill our customers’ dynamic demand.
So we will use various means to get to this goal – signing up travel agencies will be just one of the traditional means.
We are also very much into innovation – trying to use new ways to make our market platform more robust for both merchants and consumers, while making our products easier for customers to use.
That is why we have come up with new products such as “Hotel of the Future,” “Park of the Future,” “Safe Fly Program” which enable our users to enjoy safe and convenient services that truly fulfill their needs.
Tnooz: What trends are Alitrip riding to success?
Wu: Mobile and C2B are the top concepts of cross-border e-commerce. Mobile is dominating the Chinese e-commerce sector. That is why we – Alibaba Group and Alitrip – have devoted tremendous effort into the mobile arena.
People often talk about B2B, B2C. However, in realty, we have to drive a C2B market place and make it a consumer driven business and product offering.
With large data inside the Alibaba family, we are working hard to introduce products that solve customers’ issues and address their needs. We believe by doing this we can also encourage our merchants to come up with better services and products, too. Enhancing the user experience is key for us.
Tnooz: After a five-year absence, Google expects to return shortly to mainland China to sell mobile services. Will Alibaba Group’s travel ecommerce services need to react?
Wu: We will be closely monitoring other market players and constantly enhancing our own product and service offerings. We can also explore feasibility to collaborate with other market players to provide the best possible global services for our customers.
Tnooz: The track record for Western e-commerce travel brands attempting to succeed in APAC has been mixed at best. Why?
Wu: This has been a widely debated topic. Let me share some of my personal experience with you.
I worked in the U.S. for more than 15 years and have worked on many APAC projects as well. I read analyst research and thought I understood how things work in APAC, especially because I am originally from China.
However, after I first joined Alibaba, I went back to live in China for about 6 months, to understand what Chinese consumers are really like.
What I learned over there is different from what I had researched in theory.
Bottom line is, you really need to understand people in China – your local customers – in order to be successful.
It is not about translation, culture difference, or even localization. It is actually deep into everything: from how you present your company value, team culture, products, to how well you understand your customer’s way of life and aspirations.
You have to connect the dots for them. If you do, you’ll be successful no matter where you are.
Tnooz: Why do the biggest Chinese tech companies prefer to invest in companies strategic to their businesses, while U.S. tech leaders prefer to acquire such companies outright?
We are well aware of the cultural differences between Chinese companies and US companies. A strategic investment usually can help companies grow, but still keep its own management independence and operation.
Eventually if both companies feel the connection is strong and the culture is a fit, more in-depth relationships can be developed.
Alibaba takes a thoughtful approach: our management describes strategic collaboration as a process where you want to know more about each other before you decide to walk down the aisle.
Tnooz: Will Alitrip be overhauling its architecture, and if so, why?
We have always worked hard on improving our infrastructure to meet and technology trend. We leverage the Alibaba ecosystem to manage big data, cloud computing, and safe payment process.
Tnooz: The Western travel industry has intense interest in Chinese outbound travel. But it has long been talked about yet has been slow to materialize. How significant is the trend?
Wu: China’s outbound traveler numbers are growing and are poised to double by 2020 to 250 million passengers, from more than 100 million last year, according to the World Tourism Organization.
When they’re traveling, they are spending. A recent report by Fung Business Intelligence Centre and China Luxury Advisors estimate Chinese overseas spending to reach $422 billion by 2020. These are some mind-blowing numbers.
Tnooz: In the next year or so, who will be Alitrip’s favorite/target customer?
Wu: All customers are our favorite – we always welcome a diversified customer base – from customers who enjoy the traditional travel packages to customers who enjoy independent travels.
However, we do see the rapid growth of independent travelers in China who are relatively young and more affluent. We’ll work to develop more products that suit their needs.
Tnooz: How does Alitrip plan to get a share of Chinese outbound travel?
Wu: While Alitrip has already made significant progress on the domestic market through various exciting innovative services and strategic partnerships, we are working hard this year to achieve more in the overseas market.
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