How China is changing the Future of Shopping

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How China is changing the Future of Shopping

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China is an unrivaled laboratory of innovation – where everything happens immediately and on customers’ smartphones. Mobile purchases dominate, even within bricks-and-mortar stores.

Over 15 years of experience in management consulting for more than 70 consumer goods and retail projects in Greater China and other global markets makes Angela Wang the experts’ expert in retail and digital. Angela at our CMDC 2018 Conference, pulled the curtain back for us on the new business-as-usual in retail – where everything is ultra-convenient, ultra-flexible, and ultra-social. 

The concept of mobile retail is crystal clear to shoppers, young and old, in China. It is enabled in large part by the growth of two mammoth technology companies, Tencent and Alibaba, who both provide highly integrated offerings to the Chinese people.

Angela began by inviting the audience to meet her 5-year old nephew. He described in the simplest of terms how his big wish for a birthday present would be fulfilled. Before he went to bed that night, he reported, his mother would shake her mobile phone and the delivery uncle would ensure his gift was there when he awakened.

To frame the size of the market, there are currently 500,000-million Chinese consumers buying on mobile phones. Staggering numbers, of course, but it isn’t just the scale – it is the speed of adoption and the aggregation of the eco-system. It has taken China only a mere 5 years to become a nation of mobile consumers.

The two eco-systems (Tencent, focussed on connectivity and content, and Alibaba, somewhat more online e-commerce centric) when combined, own 90% of e-commerce, 75% of social, 85% of internet payment. Plus a large part of digital content, gaming, and more.

As a result, e-commerce in China is exploding at twice the rate of the U.S. Compare at 18% CAGR vs 9% CAGR. To put that into clearer perspective, online sales generation is larger than the U.S. and the U.K. combined.

In China, all shopping is mobile and all payment is virtual. This kind of growth is fully embedded with social media. This, in turn, encourages an impulsiveness that allows consumers to raise their expectations and live lives of self-gratification. An example demonstrated how China has become a huge laboratory on the growth of consumer spontaneity and e-commerce:

Average revenue-per-user has grown exponentially, driven in part by social spontaneity. Consumers who once purchased 5-8 pairs of shoes per year, have inflated to an average of 25 pairs of shoes within the same timeframe. These are self-described acts of impulse buying, fuelled by celebrity gossip, fashion, blogs and just browsing.

The stickiness of ultra-convenience shopping is superior to any loyalty plan. The audience was given an example of a new company, dense with stores in major urban areas, with a staff of 300 service people who, when not taking orders, speak to customers as a friends, and can manage delivery of fresh foods within 30 minutes.

The fashion industry has been turned upside down. Where once the seasons were dictated by a traditional Fall and Spring line, they have been rapidly truncated as fashion designs become highly responsive to custom orders and delivery of new products is performed in a mere 3-4 days.

Among the impetus for the rapid growth of e-commerce in China has also been the emergence of a new middle class. For them, to whom everything is new and mobile, commerce parallels the excitement of an amusement park, something fun, chaotic, and more than a little addictive.

Angela’s concluded by confessing she could report but a fragment of the changes percolating within the shopping experience in China. But clearly, the rest of the world could learn massively from this huge laboratory of experimentation.

Key Insights from Angela Wang

1. Social media plays a defining role between brands, the retailer, and the consumer.

2. The changes to the ecosystem are massive in terms of the supply chain, distribution, marketing, and product innovation.

3. The consumer is the ultimate winner – and is encouraged to spend and receive what they want, how they want it, and when they want it.

 

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