Weblog with daily updates of the news on a frugal, fair and beautiful China, from the perspective of internet entrepreneur, new media advisor and president of the China Speakers Bureau Fons Tuinstra
Paula Macaggi, the founder of OFFBounds, sets off for her first trip to Shanghai and questions e-commerce expert Sharon Gai, the author of Ecommerce Reimagined: Retail and Ecommerce in China on what she can expect on her journey. Key Takeaways: • The super app experience with WeChat • How China’s retail is about content and entertainment • Unique consumer behaviors and retail experiences only found in China • The rise of sustainable consumption in Chinese e-commerce.
Retail sees a fast-moving playing field, as data analysis, AI, AR, and an ongoing integration of online and offline developments. Hong Kong-based marketing expert Ashley Dudarenok dives into the future of retail at her updated website.
Ashley Dudarenok:
What is the future of retail and how is it evolving?
The future of retail is evolving towards a more integrated and personalized experience driven by advancements in technology like AI and omnichannel strategies.
What sets the Chinese market apart in the future of retail compared to others?
China’s retail market stands out due to its rapid adoption of innovative technologies like AI, mobile payments, and livestream shopping. This market’s agility in integrating these advancements has transformed consumer experiences, driving significant growth and setting new trends globally in the future of retail.
What can others learn from the future of retail in China?
Observing China’s effective integration of omnichannel strategies and innovative marketing techniques such as livestream shopping provides insights into adapting retail models to meet evolving consumer demands and preferences worldwide in the future of retail.
What trends are shaping the future of retail?
Key trends in the future of retail include the rise of omnichannel retail, AI and automation integration, personalized customer experiences, and the growth of e-commerce.
How is AI impacting the future of retail?
AI is enhancing the future of retail through predictive analytics, personalized recommendations, inventory management optimization, and customer service automation.
How leveraging data analytics help the future of retail?
Retailers use data analytics to understand consumer behavior, optimize pricing strategies, personalize marketing campaigns, and forecast demand, improving overall business performance in the future of retail.
What are the challenges facing brick-and-mortar retailers in the future of retail?
Retailers use data analytics to understand consumer behavior, optimize pricing strategies, personalize marketing campaigns, and forecast demand, improving overall business performance in the future of retail.
What are the emerging technologies transforming the future of retail?
Emerging technologies like augmented reality (AR) for virtual try-ons, the Internet of Things (IoT) for smart inventory management, and blockchain for supply chain transparency are revolutionizing operations in the future of retail.
What impact does globalization have on the future of retail?
Globalization expands market reach for retailers, influencing product diversity, international logistics, and cross-border e-commerce, shaping retail strategies worldwide in the future of retail.
How is consumer behavior evolving in the future of retail?
Consumers today prioritize convenience, personalized experiences, and ethical considerations, influencing how retailers innovate and adapt their strategies to meet evolving expectations in the future of retail.
Former Alibaba executive Sharon Gai looks at Drugstorenews back on how the company conquered retail in China, focusing on pharmacy with Alibaba Health. “What this medical doctor app did was digitize that entire process,” she said.
Drugstorenews:
Gai took the discussion to Alibaba Health, noting that China only has about 1.8 doctors per every 1,000 people compared to 2.4 in the United States and 2.8 in the U.K. “This means that resources in health care are very strained in China. When there’s a lot of competition, it breeds innovation. That‘s exactly what Alibaba Health has in terms of its growth trajectory,” she said.
AliHealth started as a cloud pharmacy, but its product managers recognized that people were searching for grocery and skin care items, OTCs or certain drugs. “Ali pharmacy was pulled out of Tmall and a separate app was created,” she explained
“The product managers noted that there were people searching to buy contact lenses and prescription eyeglasses, they needed eye exams and physical exams, they were looking for sexual health products, or wanted to do STD tests or pregnancy tests. This became a snowball effect and the number of services this app started to cater to. Today Alibaba Health is a full fledged telehealth app.”
Gai also discussed how a medical doctor app was created for traditional Chinese medicine, a huge Chinese sector that she described as “a very old school brick and mortar place to play.” “What this medical doctor app did was digitize that entire process,” she said. “You open the app, consult with the Chinese medicinal doctor and he will tell you what you need and an entire packet of ingredients will be shipped right to your doorstep.”
Addressing the last pillar of Alibaba Health, a business to business pillar in which the creators built out a health knowledge map and traceability code, Gai said, “AliHealth set a standard in creating a QR code that every single brand would need to stick on their packaging so when this product is shipped to the end customer, they can scan it and see exactly where this medicine came from. This is the interface of the telehealth app, where you also can see the balance on your health insurance card, nearby hospitals, a doctor for an online experience, get medicine delivered in around 30 minutes to an hour, order vaccinations, get eye exams, mental health services and medical beauty.”
The app also features short-form videos that offer health advice from doctors, who are becoming influencers. “As a user, you’re constantly learning about health care in general. What AliHealth really did, the big innovation, is consumerization of healthcare services,” Gai said.
Lastly, Gai said that AliHealth is good at “new retail,” a term developed by Jack Ma in 2016. “It’s basically the unification or the synchronization of online and offline services,” she said.
Data is the new oil, and China is already in a leading position to show how data changes the way business is being done, says marketing guru Ashley Dudarenok at her vlog.
China’s biggest change over the past two years has been the development of its retail ecosystem, says marketing veteran Ashley Dudarenok at her vlog. Not only by thinking it out, but by implementing a change that has affected retail profoundly.
COVID-19 has changed life for sales professionals, says marketing guru Ashley Dudarenok. The early coronavirus crisis in China has accelerated online retail with live streaming at its core and will do so also as the rest of the world comes out of the corona crisis.
China is one of few countries recovering from the coronavirus crisis, after an initial dip. Most foreign brands are still lacking a strategy to deal with the upsurge in China’s retail, says marketing expert Ashley Dudarenok at InsideRetail.Asia.
Inside Retail Asia:
Author and speaker Ashley Galina Dudarenok, who will lead a masterclass on Chinese retail trends in November, says China has experienced one of the world’s fastest recoveries from the pandemic, even after having the world’s first large outbreak of the disease.
“For the first time in eight months, there’s a positive retail sales report showing 0.5-per-cent year-on-year retail growth in China, and 15.8-per-cent growth in online retail sales of physical goods,” Dudarenok told Inside Retail Asia.
She says Chinese consumers are already confident about an economic recovery next year, with 43 per cent of Chinese consumers optimistic about it occurring in the second quarter.
“This, along with growth in e-commerce, will bring new business opportunities for foreign brands in Mainland China.”
Live-streaming services is expected to be a standout sector of online retailing next year and the following one, with sales expected to reach US$28.57 billion as younger consumers embrace the concept.
She expects millennials, who are getting older and building their income levels, will increase their consumption to US$2.6 trillion next year.
China’s food shipping was already far ahead of competitors in the US, but making a profit is still not possible, says marketing veteran Ashley Dudarenok to 90xtra, although the restaurants are griping about the percentages the shippers ask. And the COVID-19 crisis did not improve relations between retailers and shippers.
90xtra:
Ashley Dudarenok, co-writer of “New Retail Born in China Going Global,” notes how most Chinese shipping workers use maneuverable and mild e-bikes, though their Western counterparts generate cars extensive distances and incur steep labor, parking, and refueling costs. She also says Ele.me motorists are pressured by rigid evaluate systems, which penalize them RMB 200 Chinese renminbi (RMB) per weak assessment and RMB 1200 for every complaint. Another incentive: Meituan’s Supply Time Coverage alternative that charges end users simply RMB 1 ($.14), and refunds portions of service fees for any late orders…
Dudarenok, in the meantime, details out that “franchisees, HR businesses, and other third get-togethers involved in the system are in the middle. The agent on your own can even account for 25 % of Meituan’s supply profit.” Her conclusion: “Meituan’s deliveries are not sufficient to make finishes meet. It has been at a reduction for 5 many years, and it has only been successful in 2019.”
Those figures did not increase all through the pandemic, even with some restaurateurs grousing about substantial expenses. In its place, Meituan’s 1st quarter earnings announcement in depth a 12 months-in excess of-year revenue drop from RMB 19.2 billion to RMB 16.8 billion, citing offer and demand from customers difficulties (having said that, Dudarenok factors out “after the resumption of function in March and April, the volume of supply orders… has returned to practically 80 percent of the orders in advance of the outbreak” very first started).
What can brands learn from China for the post-corona crisis? Marketing expert Arnold Ma from Qumin in London joins a discussion at Retail Marketing. Building loyalty during a crisis is key, he says. Some traditional behaviors will return to the old patterns, but consumers will stick to newly developed insights, he adds. Arnold Ma is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form. Are you looking for more branding experts at the China Speakers Bureau? Do check out this list.
China is going to be the most expensive and complicated market in the world, says marketing expert Ashley Dudarenok to Rethink Industries. How the new normal looks like in retail after the coronavirus crisis.
Retail in China has changed after the corona crisis and marketing expert Ashley Dudarenok explains how brands have to adjust themselves to reach those much-wanted consumers in China, she tells in Valtech.
Valtech:
Ashley Dudarenok:
So you see definitely a lot of shifts, and it’s going to be very interesting. What I definitely see is that Mainland Chinese is definitely recovering first, because it just originated in China first, and also very severe measures were taken to contain the virus after the initial first weeks where the time was wasted outside. So it is definitely going to be a very interesting adjustment period, and we’re all looking forward to that. Julia Raymond:
We certainly are. Streaming is a trend that perhaps in your agency, you’ve seen take off in China. Is that something you think brands and retailers will specifically continue doing, even after the pandemic has ended? Ashley Dudarenok:
Absolutely. In China, live streaming is not something new. So, in China, this is a reality of life. In the West, we live stream for fun primarily, but there’s very little e-commerce live streaming. In China, because the whole blogger world is operating very differently, they actually started live streaming for fun. So basically, when you watch somebody, you give them gifts, and that’s how the blogger makes money. Ashley Dudarenok:
But in China, they went to step forward and they said, “Okay, live streaming as e-commerce channel is a phenomenal opportunity, because I can show you my farm, and I can sell you oranges.”
So, it’s live streaming turned into a bizarre copy of early ’90s TV advertising and people love it. It’s entertaining and people feel that it’s also a place to talk to others. And the social isolation has not completely shifted or changed the way people purchase right now, but it has accelerated this move towards live streaming. So, it’s definitely there to stay. In China though, a lot of people do live streaming, but everybody but the brands is making money. Ashley Dudarenok:
The platform is making money, the agencies are making money, the bloggers are making money, but the brands obviously, are on the suffering side, because it’s not for them. They are going to sell a lot, but the cost to operate a live stream is very expensive. So, you need to make sure that after selling, you are able to get a repeat purchase, or you’re able to somehow retain your customers. So that’s what I think in the West when we talk about this live streaming in China, people do not understand. E-commerce live streaming comes at a price, it comes at a cost, but it’s a great opportunity to acquire customers, but essentially, it’s not going to make or have a positive ROI, initially. Julia Raymond:
It sounds like it’s a bit of a long play then. Ashley Dudarenok:
Yeah, absolutely. Like everything else, China is a very complex market. Consumers are very spoiled by having so many products and services that target them. They’ve got a lot of money, they are very excited, but they also know the good stuff. And you need to be reasonable in terms of price, you need to be good quality, and you need to be adapted to that market in order to cater to them.
US discount retailer Costco made a blast this week in Shanghai with the opening of their first flagship store. Can it succeed where Carrefour, Amazon, Tesco, and others give in to domestic and online competition, wonders branding expert Ashley Dudarenok.
China's retailers, with Alibaba's Hema at the helm, are leading the AI revolution in online and offline space. Consumer expert Ashley Dudarenok explains how AI, online and offline retail combine at a dazzling pace, at CFOinnovation.
CFOinnovation:
Shoppers at (Alibaba's) Hema experience a seamless integration of its online and offline stores. Customers ordering groceries online for home delivery will have a staff member going through the supermarket’s aisles, bagging groceries, and passing the orders onto a conveyor belt to the deliverers. To date, it has opened more than 100 stores in China. Retail experience is taking on a new form in China.
“So essentially in China these giants are actively merging offline spaces into the online environment. It’s not like offline to online or online to offline. It’s more like [both] becoming one experience. So it’s much deeper than omnichannel and all these other concepts that we’ve been aware of and trying to implement for the past 15 years in the West,” said Ashley Dudarenok, founder of Alarice, a digital marketing agency in Hong Kong.
Alibaba’s grocery stores are an example of digitizing and integrating inventory, supply chains, logistics, payments, delivery, and order fulfilment of retail.
In the bigger scheme of things, what’s happening in the retail landscape is another manifestation of technological changes, especially due to development in AI. “This ‘new retail’ is the integration of the technological advancements that has been happening for the past 20 years. Retail is just one aspect very close to businesses — we all understand we buy services and products,” Dudarenok said.
A glut in big cities and some high-profile failures like Mark&Spencer have raised doubts on the growth possibilities in China for premium brands. But there is still room for growth, if you pick your locations right, says retail expert Ben Cavender to the China Daily.
The China Daily:
According to Euromonitor International data, revenue of department stores in China grew from $153.3 billion in 2014 to $159.57 billion last year, but it forecast the same to fall to $148.49 billion by 2023 after peaking in 2020 at $160.2 billion.
"I think there is still a feeling among high-end retail operators that there is room for more premium retail in China. While some may argue that commercial retail space is overbuilt in China, there are still opportunities for developers to select underserved locations," said Ben Cavender, principal of Shanghai-based China Market Research Group.
In the past decade, some major multinationals have been incredibly successful in China. However, the exit of brands like UK-based Marks&Spencer from China in 2017 are a good example of what global department store owners should not do, he said.
M&S initially sold the same apparel in China that it was selling in other markets leading to confusion among Chinese consumers who could not figure out sizes or read price tags. They also did not have a clear understanding of who was actually shopping at their stores. M&S wanted to be selling to Chinese millennial women but most of their customers were 10-20 years older and hunting for bargains rather than brands, said Cavender.
China is leading the innovation for retail and two to three years ahead of the US, says business analyst Shaun Rein, author of The War for China’s Wallet: Profiting from the New World Order, to CSB News. Internet giants like Alibaba started on mobile and then turned to brick-and-mortar, unlike the traditional retail who try to force online upon their customers.
A: Traditional retail is still the biggest retail channel in China, but this is changing rapidly. When we talk about e-commerce and offline retail, what is happening is that people don’t want to migrate either to one or the other, but instead radiate into the middle ground – the ‘new retail’ experience. That shift happens one the one hand because of the tastes of the consumer, but also the competitive drive from Alibaba and Tencent.
How big is e-commerce itself? It’s big, but I’d say more important is mobile commerce. Last year, mobile commerce overtook e-commerce in terms of number of purchases made in China, but both are still smaller than offline channels. The key is that new retail is going to merge the online and offline into one ecosystem. We will not see offline stores disappear, certainly not. Instead we are about to see the evolution of these brick-and-mortar stores into the ‘new retail’ experience. I don’t believe employees are going to disappear from grocery stores or coffee shops, for instance, as people all seem to imagine when they picture the future of Chinese retail, they’re just going to be doing different jobs. They won’t be changing the price tags but entertaining us in the store in some way.
Lots of people still misunderstand e-commerce and think it is omnichannel, with a company present across the spectrum, from mobiles to websites to stores. In reality, new retail is all about putting the consumers at the top and creating a huge data pool around their shopping trends – where, how, and what do they buy. From this, retailers both online and offline, distributors, suppliers etc. plug in and communicate with each other to optimally serve that individual. That’s the uniqueness of this experience.
So we shouldn’t ask how big is e-commerce now, but how big will it be in three years.
CER: You make the distinction between e-commerce and mobile commerce. Are they not just variations of the same thing?
A: In China there is a huge difference. E-commerce is the traditional desktop ordering platforms such as Taobao. Mobile commerce is accessible by apps that often do not have a popular desktop version, like WeChat or some live-streaming platforms. This ability to use a phone to quickly complete the entire transaction is the main idea, and it is a huge business in China.
CER: Why do you think online retail and mobile payments are so much more popular in China than in other parts of the world?
A: There are many factors, the first probably being privacy. Westerners are very paranoid about privacy, but the Chinese just have a completely different approach to personal information. Just having a WeChat account, for example, basically requires uploading a passport – imagine how many users would flee Facebook if they started asking for such details. I think Western consumers tend to think beyond just convenience and are sceptical of how retailers might abuse any information provided. In China, there is less fear of being harassed or spammed, but instead giving out more info may just lead to better service. Take WeChat again: they do not allow many types of advertising or spamming etc., and really do focus on quality of service for the user over quantity of payments generated. Its users are at the centre of things, and users themselves know that if they give WeChat their bank info and other data, when they step out of their house later they will get a notification about a discount on their favourite coffee at a Starbucks they are about to walk past.
A second is the integration of technology and society. The technology in the West just isn’t there. But in China the speed at which people adopt new ideas is rapid. Grandmas and grandpas are using mobile payment and shopping apps to guide their daily lives, but in Europe and the US people of that generation would most likely need their sons and daughters’ help. This extends to companies too, which expand and develop so fast here. There is that saying: ‘perfect is not fast enough.’ Trial and error will push forward progress much faster than a perhaps more mature approach of Western companies to achieve perfection before moving on to the next stage. This cautiousness and adherence to procedure is exactly why many foreign retail brands are suffering in China – they just can’t keep up with the locals.
CER: Let’s focus on the companies themselves then. How are foreign retail brands competing with the homegrown players?
A: It depends on the market segment. International B2B (business-to-business) firms just don’t have a clue what to do in China. FMCG brands are also losing market share year on year.
Luxury brands, on the other hand, have retained their prestige for historical reasons, it has nothing to do with their adoption of technology. They are certainly going through a digital transformation right now, but they can afford to go a bit slower for this reason. They don’t have to worry about local firms beating them in terms of quality or image. Furthermore, luxury brands’ core Chinese consumer base is around the 35+ age group, which still has an affinity for traditional retail practices.
But make no mistake, they want in on China and know a special approach is needed. A common strategy for a luxury group is to pick a single brand and digitalise it for the Chinese market, and if it works apply it to the other brands.
CER: Lastly, what effects do you think there will be on businesses from Beijing’s increasing oversight of industries like mobile payments and peer-to-peer lending?
A: Beijing is getting concerned with the amount of money flowing around in blockchain, cryptocurrencies and individual lending, but let’s remember China’s general policy: if it’s not forbidden, it’s allowed. So in the short term, until there are acute changes in policy, companies will keep doing what they’re doing.
There will be more regulation in the long term, however, and an adjustment period will be necessary for retail companies. But I think once this is over it will be good for the industry. Are some brands going to be hit? Yes. But once the playbook is laid out, once firms know what they can and can’t do, companies can start setting up a solid, long-term infrastructure.
China is leading the way in digitalizing the consumer experience in retail, but both major competitors - Alibaba and Tencent - have different retail strategies, says WeChatexpert Matthew Brennanto the News Lens. Alibaba focuses on the offline experience, Tencent's WeChat will stay online. In 2018 the battle will be on mobile payment, he adds.
The News Lens:
Matthew Brennan, founder of China Channel, a consultancy on China's digital market, said that the trend is apparent across all consumer-facing industries. "China is leading the rest of the world in terms of digitalizing the customer experience and blending this experience seamlessly between offline and online elements," Brennan said.
According to Brennan, retailers are moving back to offline as online growth matures – being a purely online play will no longer sustain the rapid growth that Alibaba and Tencent are used to.
Tencent’s payment service, WeChat Pay, already has about 800 million users in China, and together with Alibaba's Alipay, the pair dominate China’s massive mobile payment space.
The majority of retailers here, from supermarkets to street vendors, now accept either or both forms of payment. As such, the latest official data showed mobile payments reached 81 trillion yuan in the first 10 months of last year, up 40 percent on the whole of 2016.
While Tencent has its fingers in many pies, it is not a direct retailer, and instead relies on a partnership with e-commerce major JD.com in place since 2014 to drive sales through WeChat Pay.
The two companies announced in October that they would expand the cooperation via the launch of the JD-Tencent Retail Marketing Solution, which according to a press release promises to “integrate insights on consumer behavior from Tencent’s social platforms with online and offline shopping data from JD and its brand partners.”
Pushing into unmanned stores is thus a natural next step for Tencent as it attempts to remain relevant in "new retail" while building on its existing strength in the mobile payments market.
"WeChat does not have ambitions to open its own stores across China, Tencent's strategy is to partner with existing retail players and help digitalize the retail experience," Brennan explained. "Both [Alibaba] and Tencent are now moving into a wide variety of vertical industries for a variety of reasons, retail though is the most important battleground for 2018.
“In the short term, new retail is in large part about mobile payments. Tencent and Alibaba are blocking each other's moves to protect their market share in payments."
Department stores in China are losing their shine, but convenience stores keep on doing well. Convenience stores offer consumers better what they need compared to department stores, says retail analyst Ben Cavender to the China Daily.
The China Daily:
Qi Xiaozhai, director of the Shanghai Commercial Economic Research Center, said that nearly all the goods supplied at convenience stores are daily necessities so the demand is hardly affected by other modes of shopping.
Ben Cavender, principal of China Market Research Group, echoed this point.
"Convenience stores continue to see strong growth in China because consumers need fast access to pre-prepared meals, snacks and beverages. When they cannot find affordable restaurants or supermarkets, the convenience store is a natural choice," said Cavender.
"Department stores haven't done well because they are not really providing a unique, compelling product or experience to consumers, so consumers have no reason to go. But convenience stores right now are often the only choice to buy cheap food that consumers are familiar with, such as mantou, or baozi (steamed buns), especially as a lot of street food sellers are no longer operating."
