Merging digital & physical shopping – why exporters need to embrace new retail

2019-01-26 5 minute read

Alibaba New Retail demonstration / courtesy of Alibaba Group

New Retail is a concept that is being introduced to consumers by China’s leading online retailers. It’s a new wave of making the experience of ‘buying’ more relatable, more interesting, and more accessible.

China’s retail landscape is merging the digital e-commerce boom and the long-established traditional market.

New Retail is a concept that is being introduced to consumers by China’s leading online retailers. That’s why, in China, this move isn’t seen as a regression of retail. Instead, it’s a new wave of making the experience of ’buying’ more relatable, more interesting, and more accessible.

China’s e-commerce market is growing rapidly. In 2018, its market worth was estimated to reach $1.1 trillion USD. The offline market, however, still dominates with a $4.5 trillion market value.

New Retail proposes a new deal for exporters. Instead of choosing between China’s 800 million internet users and the 85% of Chinese shoppers – who still shop offline – why not target both, at once, equally?

The Alibaba way

Alibaba’s Hema is often noted for being the complete opposite of megastores like CostCo.

The objective is different: prioritising consumers buying small, convenient amounts (with a diverse, adventurous approach) rather than buying familiar products in bulk.

Hema, specialising in ultra-fresh foods, doubles as a fulfilment and distribution centre – capable of delivering online orders in 30 minutes to customers within a 3km radius.

In 2017, 50% of the average Hema store’s total orders were placed through its app. Growing to 70% in some more established Hema stores.

Alibaba reports that conversation rates, among consumers who open the Hema app, can be as high as 35%. The app is a big data wrangler; a well-rounded database of consumers and consumer preferences. This creates a fully immersive shopping experience from the get-go.

There are more options for consumers online than in-store. Through the app, consumers have 50,000 SKUs stimulating their curiosity for foreign goods. It also gives exporters more options to sell through an O2O strategy.

Convenience shopping

Alibaba’s consumer data also flows into the reshaping of convenience stores. Within China’s $4.5tn offline market, mom-and-pop stores are a staple of traditional trade.

New Retail has given them a breath of fresh air and, in the meantime, opened up a new avenue of opportunities for exporters. These stores have been remodelled to offer the products consumers want, where they live.

Store owners are provided with data as to the preferences and purchases of the neighbourhood in which they operate. Then, store owners order the items tailored to that niche demographic from a single Alibaba source.

In that sense, it’s far easier for a consumer to come across a product that is targeted to them, but it also means that exporters selling through Alibaba and Tmall have a greater option for the distribution of their product in China, beyond online.

Next step

Exporters should be detailed in understanding their Chinese target demographic. That includes knowing where they reside, how they shop, and where they shop.

ACOLINK services launch brands on social visibility pathways to optimise sales and accelerate growth through Chinese e-commerce and O2O platforms. Contact us to find out more, or sign up for our Let’s Do China workshops.

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