(BI Intelligence)

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Alibaba opened three new grocery stores in Beijing and Shanghai, expanding its Hema grocery store chain to 13 total locations across China, ZDNet reports.

The Hema stores serve as a testing ground for Alibaba’s omnichannel strategy and technologies, and hint at how fellow e-commerce giant Amazon might look to transform the shopping experience at its soon-to-be acquired Whole Foods locations.

• The Hema mobile app is central to the shopping experience at its stores — scanning product barcodes with the app allows shoppers to get additional product information and recommendations for similar products. Customers can pay with the app through an integration with Alibaba’s AliPay mobile wallet.

• Customers can also use the app to make ship-from-store orders, which are then picked and packed by the store's staff. Each store location delivers within a three-mile radius, and orders are delivered within 30 minutes.

• Shopper and purchase data collected through Hema’s app is fed to machine learning algorithms to personalize product pages and recommendations. This has enabled Alibaba to curate its fresh food offerings based on the shopping preferences of customers located near each individual store. Additionally, machine learning algorithms help plot the delivery route for each ship-from-store order.

• Alibaba says Hema stores’ sales per unit area — a common measure of store success — is three-to-five times higher than at traditional supermarkets, and the Hema app boasts an impressive 35% conversion rate.

Alibaba has said the Hema stores’ purpose is to showcase omnichannel technologies and concepts to entice other brick-and-mortar retailers to partner with it. This could allow Alibaba to bring in significant revenue from providing technology to brick-and-mortar retailers, while also gaining large volumes of data around consumers’ in-store shopping habits that can help inform its e-commerce strategy.

Meanwhile, Amazon, which is set to acquire Whole Foods for $13.7 billion, may look to leverage similar technologies and concepts to overhaul the shopping experience at its stores. In particular, Amazon could mimic Hema’s use of mobile and machine learning to learn about shoppers' preferences and personalize the experience, and may use Whole Foods locations to fulfill online grocery orders. Additionally, Hema automatically enrolls all customers in its membership program after their first purchase. Amazon may well look to enroll Whole Foods shoppers in its highly successful Prime membership program, or provide special perks at Whole Foods stores for Prime members.