HANGZHOU, China (Reuters) – Robots whirr around, shifting fabrics and clothing, on the evening before Singles’ Day at the Hangzhou site for Xunxi, Alibaba’s first wholly-owned smart factory.

The site is one of three plants Alibaba has launched under its manufacturing division, which marks the company’s latest foray into the offline world as it seeks to diversify from e-commerce.

Speaking at a media briefing during Alibaba’s annual shopping festival, CEO Alain Wu said Alibaba established Xunxi to help China’s small merchants respond to consumer demand more quickly.

The division will expand, not by opening more factories but by getting more companies to use its services and by finding out which parts of its technology can be scaled up, Alain Wu, Xunxi’s CEO, said.

Together with Taobao, one of Alibaba’s main e-commerce sites, Xunwi will serve the “long tail” of the apparel industry – which is made up of brands that blossom online but lack access to advanced manufacturing services, Wu said.

“A lot of these small-and-medium-sized brands, their advantage is that they can adapt to changes in the market and meet consumer demand, but their disadvantage is in manufacturing because their technology and skills are limited,” he said.

As part of its diversification, Alibaba also runs a supermarket chain called Freshippo, launched in January 2016, which has grown to operate more than 100 store fronts.

In addition, it runs a programme to help small convenience stores with product-sourcing and data analytics services and has opened a mall and a hotel in Hangzhou, both of which serve as pilot projects to test its new retail technology.