> Alibaba has succeeded in large part because brick-and-mortar retailing is so challenging on the mainland. Roughly a quarter of the world's cities with more than 500,000 people are located in China -- twice as many as India, the next country on the list. Real estate prices in those urban areas are astronomical, which limits how big stores can be and thus the range of consumer choices.
Shops are everywhere in Chinese cities. Rents are often pretty low, even in the new fancy malls where they’ll offer good deals for new shops. Consumer choice in physical stores is often limited by the ‘herd mentality’ of retailers who crowd hundreds of identical shops together and rarely attempt to cater to niche markets (eg. I’m a woodworking enthusiast and it’s almost impossible to find hobbyist tools in a physical store in China).
Alibaba succeeded because of convenience and customer service - before Alibaba/Taobao, the idea of getting a refund, exchange or return on a faulty product was unheard of. Shopkeepers would often just shrug when you told them the product you bought broke the next day. Alibabas policies on returns and the competitive environment for stores to distinguish themselves changed everything.