The platform has been dubbed the Digitised Store Operation Centre (DSOC), and will be run by both Nestle and the Alibaba Ling Shou Tong (LST) platform, which helps connect FMCG brands with traditional mom-and-pop stores in China.
“The DSOC will operate by first understanding product coverage in traditional trade stores, via [the collection of] coverage data collected by both Alibaba LST and Nestle,” Nestle China Head of E-Commerce Sales Jay Qin told FoodNavigator-Asia.
“[It will also seek to] understand the demand of stores in different locations, or [demand] seasonality via store transaction data (including category, pricing, flavour, packaging, etc.) and consumer data (geographic, income, behaviour, preference, etc.).”
“[The aim is to] operate customised product portfolios and promotion mechanisms for different stores, via [their] programmatic app visibility and sales force teams.”
He added that the platform would focus on improving Nestle product distribution, sales value and overall efficient and precise distribution.
“[We want to] have a clearer overview about traditional retail distribution [within the outlets that sell our products], and to identify a digitized method of operating this sort of traditional retail with higher efficiency,” said Qin.
Detailed platform model
According to Nestle China, the DSOC can provide visibility for all of Nestle’s retail outlets throughout the country, regardless of the city tier (first to fifth) that it is located in, in addition to customising product portfolios for these outlets based on consumer requirements and demands.
“For example, [our data] has helped us see that a certain physical store that is located near a university in in a third-tier city has seen many purchases of the large packaging of Nestle crispy wafer product Cui Cui Sha [so more of this product can be directed there],” said the company.
“In addition, DSOC also has the capability to determine which retail outlets are not fulfilling consumer demands or needs based on the existing products or product volumes they currently carry.
“For example a store near a hotel in a first-tier city was found to require smaller packaging for products, or more convenient, portable packaging for high-end coffee products, [so we could work towards this].”
Despite the DSOC platform being the brainchild of both Nestle and Alibaba LST, Qin told us that it would most likely not remain exclusive just to Nestle products sold via Alibaba.
“[DSOC] is a platform that can apply to other brands within Alibaba LST as well,” he said.
“[This might in fact be more beneficial] – With more brands joining in the DSOC, there will be more data gathered so as to understand the stores.”