The term “new retail” was coined by Alibaba chairman Jack Ma in 2016 to express how he, CEO Daniel Zhang and his team built the Alibaba Group ecosystem by integrating online and offline channels. This approach expanded ways of living, communicating, sharing, building, teaching, consuming and doing business. Ma considered new retail a centrepiece of the “five new” – new retail, new manufacturing, new finance, new technology and new energy. Back in 2016, Ma felt that the era of pure e-co
-commerce had come and gone and that in the future, even the term “e-commerce” would go by the wayside. Traditional online commerce would be replaced by an integrated combination of online and offline experiences, data, technology and supply chains that hadn’t existed in such a seamlessly interconnected way until then.
However, the concept of new retail isn’t exclusive to Alibaba. Tencent has a similar concept that it calls “smart retail”, while JD.com calls its version of it “boundaryless retail” but these terms are far less popular than the one proposed by Alibaba. All these concepts have the same underlying motivation – to make retail more personalised, fun and efficient by merging on- and offline experiences.
What’s ‘new’ in new retail?
All of the elements that make up new retail weren’t born or invented in China – or by Alibaba, JD, Tencent, Kaola, Pinduoduo or Xiaohongxu. New technologies, new retail concepts, innovations in e-commerce, fulfilment, logistics and media, store formats, digital marketing, and consumer-journey plotting were simultaneously being developed in the US, Europe, Asia and other parts of the world.
What is new and specific to China and its tech giants is the idea of “retail as a service”. In China right now, massive corporations such as Alibaba, JD, and Tencent are breaking down retail into elements and offering services to brand partners that want to engage in new retail. For example, the A100 program, powered by the Alibaba Business Operating System, allows brands to choose whichever Alibaba services they would like to adopt. Essentially, one can just plug into an existing ecosystem and enjoy the benefits.
The 5G opportunity
In June, three domestic carriers and a broadcaster in China were given the green light to launch 5G commercial services months before the licences were expected to be issued, indicating an acceleration of the roll-out process.
What does this mean for new retail? It relies on high-speed networks to achieve a deep integration of online and offline. It also relies on big data and AI systems. The availability of 5G helps to speed up this integration and the immense transfers of data that are required. Especially for large enterprises, using 5G to power artificial intelligence can further improve its efficiency.
For new retail, improving the consumer experience through the prudent application of 5G is important. For example, 5G can help bring more fun and realistic interactive activities to consumers, such as in-store VR and AR experiences.
There’s no way around live streaming
In 2018 and 2019, Austin Li illustrated how powerful live streaming was by selling over RMB10 million worth ($2.06 million) of lipstick. The beauty blogger, known in China as Li Jiaqi, “Taobao’s King of Lipstick” or “Iron Lip”, is very popular on video app Douyin. He entertains and informs viewers about the lipsticks he’s trying on during his live streams in a way that’s intuitive and engaging. This kind of promotion also allows brands to communicate with consumers through an influencer in real time, functioning as a sort of virtual customer service, and also helps consumers bond with brands through shared, fun experiences.
[reference link FYR http://m.sohu.com/a/300417878_427244]
US startup fashion brand Welden used live streaming to bring in 1.7 million views, sell close to 1000 bags and make nearly US$300,000 ($425,000) in gross merchandise volume in just two days. The brand, located in Connecticut, was helped by AndLuxe.co, which assists international brands sell on Taobao.
During a panel discussion at Harvard with founder Sandy Friesen, Mark Yuan, AndLuxe.co’s head, described Taobao Live as “Facebook Live plus QVC plus Etsy all in one app”.
[reference link FYR] https://www.alizila.com/small-biz-welden-teaches-global-execs-about-new-retail/]
Live streaming is a trend that will continue to grow exponentially. Platforms supporting live streaming and new retail are rapidly developing. In China, there are fewer and fewer pure social media or pure e-commerce platforms. The two are merging fast. Players like Douyin (TikTok), BilliBilli and Miaopai have already developed their e-commerce functions, while e-commerce mainstays, like Taobao, are actively pushing social media functions.
Consumers are co-creators
In the new retail era, producers and consumers are no longer isolated and separate. The two roles are interrelated and more brands are collaborating with consumers to make their own personally tailored products, as consumers volunteer to promote products that they like. The average consumer has evolved into a “prosumer” who helps to design and produce products, and the business model is no longer B2C (business to consumer) but C2B (consumer to business).
This shift has been accelerated in China because of the fast pace of digital change and the wide adoption of new technologies. It’s created a market where retailers have to adopt big data analytics to deal with this transformation or be left behind.
A simple example from July: a DIY Selfie bottle from Coke, shows this relationship well. In Macau, the company released six special-edition cans featuring iconic tourist spots in Macau. Fans who spent more than MOP500 ($88) at The Venetian and purchased one of the special cans could take a selfie at their special booth and receive a 500ml personalised Coca-Cola bottle with their selfie on it.
Unforgettable experiences
New retail is based on long-term relationships with customers. It’s the story of unforgettable and inspiring experiences. Brands, retailers and manufacturers have realised that they need to design a distribution process that centres around the consumer, instead of their individual agendas. If companies don’t understand these new relationships, it will cost them in the end. If they do, even simple initiatives can reap huge rewards.
Brands must present the consumer with a unified channel that can be accessed on- or offline. If you enter China, it means partnering with Alibaba, JD.com or Tencent, but no matter where you are or where you plan to do business, no mega-legacy retailer is safe or sacred.
Digital-only companies are going physical. And Bricks-and-mortar companies are going digital. B2B companies need to add and bulk up on D2C. Retailers are brands, brands are retailers, and everyone and everything is a private label.
No matter what happens with the current trade standoff between China and the US, retailers who bury their heads in the sand do so only to their own detriment. The next retail revolution is here. Don’t miss out.
By Ashley Galina Dudarenok. Additional research by Stephanie Chung
Ashley Galina Dudarenok is an entrepreneur, author, vlogger, podcaster, speaker and the founder of several startups. Her new book New Retail: Born in China Going Global is now available