It includes initiatives like omnichannel retail, experiential retail, integrated social media, click-and-collect, same-day or one-hour deliveries, unstaffed stores, fully automated warehouses, autonomous vehicles, drone deliveries and more. It enables people to, for example, purchase an item online at a discount using a code from an online influencer, have it delivered to their home within 24 hours and then take it to a physical store for returns or repairs.
Internationally, some of the well-known brands and businesses that are excelling in this area include John Lewis, Waitrose, Amazon, Walmart, Carrefour, Ikea, Target and Tesco. Many small brands have done very well with a New Retail approach because it doesn’t demand heavy investments in real estate and physical stores.
Globalisation has always been a strategic goal for China’s e-commerce giants and New Retail is a linchpin in this plan. They have been using big data, tech, new manufacturing methods, highly integrated logistics and supply chain systems, and innovative payments to transform the world into a global village.
Through three global initiatives – global shopping, global logistics and global payment systems – these companies are opening their ecosystems to users worldwide.
Welcome to global shopping
Chinese New Retail giants are constantly globalising their businesses and operations.
On June 26, Alibaba’s Tmall Global unveiled an English version of its application page for businesses. Previously, large brands were preferred and were admitted on an invitation-only basis. The process was handled through Chinese-language sites and communications. The new site aims to attract high-quality small, medium-sized and niche brands from outside of China. As such, it also plans to add sites in Spanish, Japanese and Korean. The portal streamlines the application process and helps businesses get the most out of their presence on the platform.
Alibaba is a bridge between foreign brands and Chinese consumers. Since 2015, Chinese e-commerce giants like Alibaba and JD.com have also been showcasing their New Retail model and technology globally. Their main focus for now is on Southeast Asia and South Pacific nations.
In April 2018, Alibaba gave Australian consumers a glimpse of Tmall through pop-up stores it called Tmall Home in Sydney. Set in an apartment-style store space, all the products in the pop-up had QR codes. People could scan the QR codes using the app for Alibaba’s e-commerce subsidiary Taobao. The link took them to the item’s listing on the app, which is similar to eBay.
There was also an interactive screen that used facial recognition technology to recommend products to people based on their mood that day.
The store also featured augmented reality (AR) elements such as mirrors with special filters that show faces with different makeup products applied and virtual shelves (called cloud shelves) that show on a screen more products that can be purchased online.
These kinds of pop-up stores are quite normal in China, but some overseas Chinese people who now live in Sydney mentioned that this was the first time they’d seen this kind of technology in Australia. It got enthusiastic reviews from shoppers
This is an example of the first steps Alibaba is taking to introduce its ecosystem to the two billion global customers it aims to serve one day. Alibaba CEO Daniel Zhang has said that he believes Alibaba’s true advantage is its ecosystem. With several e-commerce platforms (Alibaba, Taobao, Tmall), an affiliated financial company (Ant Financial), an affiliated payment system (Alipay) its logistics company (Cainiao) and more, it is a huge ecosystem honed for the e-commerce and New Retail era.
It’s also an ecosystem that offers what is being referred to as “retail as a service”. Brands can use Alibaba’s ecosystem offerings without being in competition with the platform, which is not a retailer itself, while having access to their much-needed sales and customer data.
As Erica Matthews, Alibaba’s head of corporate relations, put it, “Alibaba is developing new retail models that are transforming many retail experiences from the grocery store, the car dealership, the local convenience store and even the shopping mall. We are working with our brand partners to incubate the technology, so it can be leveraged by the entire retail industry.”
Global logistics let everything flow
According to a survey conducted by the WTO and OECD on small and medium-sized enterprises’ access to cross-border trade, the major challenges they face include trade financing, logistics costs and access to information about export opportunities.
The smart logistics services provided by Chinese e-commerce giants work well for enterprises of this size and give brands direct access to international customers, highly efficient digitised product flows, data and money.
On the outskirts of Sydney, there’s a Tmall Global Fulfilment Centre (GFC). Merchants can store their goods there to be sent by Cainiao to customers within Australia or overseas.
During the Tmall 11.11 Global Shopping Festival in 2018, Australian pharmacy brand Chemist Warehouse was the top overseas vendor for the second year in a row.
It sold more than $25 million worth of stock in 24 hours. The Cainiao GFC in Sydney has played an important role in this process.
In addition to ensuring that products can be delivered to domestic consumers as quickly as possible, Cainiao data tracking enables brands to determine which products are suitable for which markets and which markets are unresponsive.
Cainiao also launched pick-up-point services to save time, reduce costs and make online shopping easier. They have nearly 200 throughout Australia, covering every major city.
“Future logistics will cross barriers between countries. We hope to build a global logistics network in which everything can be delivered to our customers within 72 hours,” said Guan Xiaodong, general manager of Cainiao’s global business.
Digital payments expand
Increasing adoption of digital payments is paving the way for rocketing global e-commerce. Chinese tech giants have laid a solid foundation for foreign brands to sell to customers in China and get access beneficial sales-related data, which also helps New Retail approaches develop.
China has an 80 per cent digital payment adoption rate. Alipay and WeChat Pay are the largest digital payment systems in China and the world and almost all Chinese consumers have both on their mobile phones that they use to pay for anything and everything. Alibaba is aggressively expanding Alipay to Asia, Europe and North America.
For now, both companies are focused on serving Chinese tourists and travellers in retail environments, but keep an eye on them. They may become widely adopted digital payment solutions in several markets outside of China.
Chinese tech giants have not only developed New Retail, but have a substantial lead in making it go regional. The next steps are global.
As Jack Ma once said, “The future will be made on the internet and manufacturing will become C2B and personalised.”
Data is at the core of customisation and New Retail prioritises data for merchants and platforms. This means brands can provide customers with a better shopping experience and gain a more comprehensive understanding of their needs and desires.
It’s a new opportunity not to be missed.
Author: Ashley Galina Dudarenok, additional research by Amy Cheung
Ashley Galina Dudarenok is the founder of several startups, including social media agency Alarice and training company ChoZan. She has just produced her third book New Retail: Born in China Going Global co-authored with Michael Zakkour.