Retail vs Logistics Briefing: Amazon vs Alibaba

Sally Bruer, Head of Research, Tritax, William Kistler, Executive Vice President & Managing Director- EMEA, ICSC, Lachlan Macgillivray, Head of Retail Investment, Australia, Colliers International, Andrew Creighton, Head of Real Estate Continental Europe, Aberdeen Standard Investments and Ingo Steves, Managing Director, Northern Europe, Gazeley Discuss, compare and contrast the Retail and Logistics sectors of the European Real Estate Market

In the fast-changing world of e-commerce Amazon’s unquestioned dominance of the market in the UK and Europe could be challenged in the not-too-distant future by Alibaba, another giant who is poised to expand well beyond China, experts agreed at Real Asset Media’s Two sides of the coin investment briefing, which was held at MIPIM last week.

‘Until now we have said that A stands for Amazon, but if we are sitting here in five years’ time A could well stand for Alibaba’, said Andrew Creighton, Head of Real Estate Continental Europe, Aberdeen Standard Investments.

The Chinese giant would have to adapt its business model to fit the European story, but underestimate them at your peril, said Ingo Steves, Managing Director, Northern Europe, Gazeley: ‘Just to give you an idea, Alibaba sends 750 mln parcels out every 24 hours. The entire German market is 3.2 bn parcels, and Alibaba does that in one day. That kind of business is now coming to Europe. So far they have settled in Brussels, but we hear a lot of rumours about them wanting to expand’.

The UK and Europe are too attractive a market for them to ignore. ‘We know Alibaba are interested in entering the UK and they probably have similar aspirations in Europe,’ said Sally Bruer, Head of Research, Tritax. ‘So far they have done some toe-dipping, taking some space through their third-party logistics providers, but they haven’t dived straight in quite yet’.

It is only a matter of time, she said: ‘There is an aspiration there because they can see the great opportunity. They have been able to innovate in Asia and bring new things to an active market, but it is difficult to assess what impact they would have on the European market, which is fairly diverse and exciting. It remains to be seen what they can contribute, as there is so much going on already in Europe’.

Alibaba’s business model is very different from Amazon’s, pointed out Steves, as ‘they are not real estate-driven but rely on supply chain software. They are also less open and transparent than Amazon’. Alibaba is doing a vertical integration of its business and owning the delivery companies directly.

Contact the editor here.