Alibaba on Wednesday unveiled a pilot digital factory in the eastern Chinese city of Hangzhou as part of its smart manufacturing business initiative.
The digital factory, powered by technologies such as real-time resourcing, process and cost planning, automated in-house logistics and Xunxi’s manufacturing operating system, is able to produce small-batch orders at reasonable costs and with shorter delivery times, increasing manufacturing efficiency from 25 percent to an average of 55 percent.
The factory has collaborated with Taobao and Tmall merchants, livestreaming broadcasters and streetwear designers to explore and experiment with new possibilities of apparel manufacturing.
The announcement marks a continuation of Alibaba’s expansion beyond its core business of e-commerce and into sectors on other parts of the online retail supply chain.
Alibaba said the factory, run by a division called Xunxi Digital Technology Company, at present will primarily work with apparel companies.
The Hangzhou-based factory, powered by Alibaba’s cloud computing infrastructure and IoT, offers SMEs a digitalized end-to-end manufacturing supply chain that allows for fully-customized, demand-driven production.
“This gives smaller businesses and manufacturers in particular the ability to benefit from the digitalization of China’s over RMB30 trillion (over USD4 trillion) manufacturing market
through being able to respond better and quicker to customers’ changing needs, Alibaba Group said in a statement.
The company in an explanatory video said it will use data it garners from e-commerce traffic, searches and sales to help brands anticipate what items will be popular and bring them to market quickly, Reuters reported.
In 2016, Alibaba founder Jack Ma identified new manufacturing as one of five trends he referred to as future business opportunities for Alibaba. The others were new retail, new technology, new finance and new energy.
The move into manufacturing comes as China’s e-commerce players look for ways to work more closely with the country’s legions of factories.
Rival Pinduoduo rose to prominence in China’s online retail sector by enticing manufacturers to sell directly to consumers.
Alibaba’s opening of the factory also marks another move into the offline realm for the e-commerce giant.
In 2016 the company opened its first Freshippo store, marking its foray into offline grocery retail. The chain now has hundreds of outlets across China.