In partnership with WPP The Store and Alibaba, VMLY&R hosted a “China Retail Day:How China Is Reshaping Retail” in New York City on April 24, 2019. The 130+ attendees (agency and client partners) had a unique opportunity to spend a day on the topic of New Retail: Alibaba’s vision for where retail is heading with the world’s largest, most advanced mobile-driven ecomm market. Because the number eight is particularly lucky in China, below are eight takeaways from the day.
- MOBILE IS THE CENTRAL DEVICE OF DISCOVERY FOR CHINESE CONSUMERS
In China, 80% of shoppers think of mobile first when buying, versus 30% in the Western world. And almost 90% of transactions take place on a mobile device. Shoppers open mobile shopping apps like Tmall and Taobao on average eight times a day, spending over 25 minutes on phones discovering new brands and products or seeing what other consumers are buying.
- SHOPPING AS ENTERTAINMENT; IT IS SOCIAL AND ADDICTIVE
The ample time consumers spend on these platforms is beyond discovery and transaction. Apps like Taobao and Tmall have “gamified” shopping, and brands must work hard to capture Chinese consumers’ attention. Community buying is mainstream, as it empowers shoppers to buy together at a lower cost. Friends gather, pick a leader, and then host a digital “shopping party” to buy together in real time, with livestreams blurring the line between shopping and entertainment. Items then get shipped to the leader’s house for distribution. Social shopping is extremely customized, participatory and (often times) addictive.
- CHINESE CONSUMERS ARE THE MOST DIGITALLY CONNECTED IN THE WORLD
China has gone from almost no choice to an abundance of choice in just over 15 years. The largest (and still growing) middle class the world has seen represents the most sophisticated consumers on the planet and premiumizes brands. China’s built a cashless environment by digitizing the entire retail experience from end to end, with the mobile phone in the center of all the action. Even hawkers on the streets of Shanghai will only take donations via Ali-pay on their mobile devices.
- THERE IS FEROCIOUS COMPETITION TO BE AT “CHINA SPEED”
Change is happening faster in China than any other place in the world. Things move at 10 times the speed. Products are brought to market in weeks, not months, so brands must be both nimble and prepared. There is no waiting to get it right: It’s a launch, learn and react mentality. China’s ferocious competition forces every brand to innovate or get left behind. That being said, brands can succeed by finding a great partner in China, starting small and testing the market intermittently. Particularly with Alibaba, Michael Evans suggested two elements to succeed: patience and a long-term vision.
- BRANDS EMBRACE THE POWER OF SHOPPING FESTIVALS
Shopping festivals like Alibaba’s Singles Day are spectacles that can have a huge impact on a brand’s overall marketing strategy. Started by the government as a way to stimulate the economy, shopping festivals are now fully embraced by the nation as a part of the expected retail experience. In fact, Singles Day alone brought in $30.8 billion (calculated as Gross Merchandise Value — sales) in 2018 — whereas Black Friday and Cyber Monday combined only brought in half of that. These shopping days generate infectious enthusiasm, with fashion shows, superdome broadcasts, game shows, concerts, brand activations, and more (think the Olympics for brands in the digital era).
- FROM MADE IN CHINA TO INNOVATED IN CHINA
The ripple effect is sobering. Things have come full circle as Western brands now look east for retail innovation. China is ground zero for brands to test, learn and push what’s possible in retail. With that, Alibaba’s vision has drastically changed from when it was founded in 1998 — from small business growth in China to allowing all small businesses around the world to use the internet and social commerce for growth.
- HYPER-PERSONALIZED DATA IS FINALLY HERE (OR AT LEAST OVER THERE)
China is revolutionizing data-driven marketing to establish strategic and sustainable brands while building a better retail experience for shoppers. Heat mapping and facial recognition are used to improve store flow and purchase behavior, while AI, not search engines, serves up product recommendations. The amount of data being captured is the backbone fueling New Retail.
- ALIBABA: FROM OPEN SESAME TO OPEN CHINA
Alibaba has quickly become the gateway to China for Western brands looking to tap the potential of the market. But to think of them as the “Amazon of China” isn’t quite right. Alibaba is a platform, not a retailer. It provides a complete retail infrastructure, acting as the mall operator providing space for you to showcase other brands. Alibaba’s focus is on creating a customizable space for brands to succeed — both in and outside of China.
By Adam Troyak & Logan Hassig – VMLY&R Commerce Strategy Team