Chinese e-tailing made simple

Chinese e-tailing made simple

Millennial shoppers are driving the online-to-offline boom led by Alibaba and JD.com

A vendor shows a live lobster. Customers can dine at the supermarket and take care of the bill using Alipay.
A vendor shows a live lobster. Customers can dine at the supermarket and take care of the bill using Alipay.

The retail business landscape in China has been evolving, with millennials poised to be a key factor in the game-change.

The 400 million consumers aged 20-35 spend a lot of time on the internet and prefer shopping online, a phenomenon that has led retail businesses to modernise their offerings through the hybrid online-to-offline (O2O) platform.

Behind the scenes of the new shopping experience are powerful technologies like data analytics, artificial intelligence (AI), Internet of Things (IoT), facial recognition, automation and, most importantly, mobile payment and mobile applications.

An automated belt is used by supermarket workers to sort ordered products for delivery.

The model of China's modern retail business could be a trendsetter for Thailand, as 32% of Thailand's 68 million in population consists of millennials -- the powerful shoppers of the future.

Hangzhou, home of Alibaba Group and a cashless capital city, is the testbed for the e-commerce giant to demonstrate its innovative technology for retail business, the O2O platform based on Alipay online payment.

"Of the 10 million people in Hangzhou, it's hard to find someone who is not an Alipay user," said a spokeswoman for Alipay's Ant Financial.

Alibaba's Hema Fresh Alimall is one example of the new retail strategy in which the online and offline consumer experiences converge through mobile and technology. Hema Fresh at Alimall Hangzhou department store, owned by Alibaba, is a testing ground for retail and support facilities.

A Hema spokeswoman said Hema Fresh in Hangzhou opened in April with the entire operations of the supermarket digitised. Amenities include online delivery, seamless in-store purchasing and in-store dining.

With the smartphone-powered experience, shoppers can buy goods at home on their mobile via the Hema app and their order will be sent to staff inside Hema Fresh and then delivered.

Fresh food at Hema Fresh is supplied by Alibaba's Tmall sourcing of fresh products such as seafood, lobster, fish and more, so the price is cheaper because there is no middleman.

Consumers can choose fresh seafood at the store, pay using the Alipay app and await the cooking process. They will be notified via app once the cooking is done, then they can pick it up at the counter and dine at the supermarket or opt for home delivery service.

At Hema Fresh, fresh juice is available at automatic vending machines that can mix oranges or whatever fruits users scan using the QR code at the machine. Or they can order the juice by app and confirm payment in the app. The machine will make a fresh bottle of juice, with no human work as part of the process.

Powered by data analytics technology, the supermarket is able to understand and predict consumer preference, then select which products to display and how much inventory should be kept.

Above and below A man tries out products at Alimall. At Wu Fang Zhai, a self-service restaurant in Hangzhou, a diner orders food and pays via mobile app, then picks up the meal at an automated locker.

For online orders, staff will pick up product items and prepare them within 30 minutes for each order to be delivered to customers who are within three kilometres of the supermarket.

To date, Hema has 50 stores in China in cities such as Hangzhou, Shanghai, Ningbo, Beijing, Shenzhen and Guiyang.

A robot at 7Fresh

JD.com, another Chinese internet titan, has a vision of "retail as a service", whereby it brings technology to the retail sector to attract millennial shoppers.

JD.com's 7Fresh supermarket in Beijing features a robot that works like a "smart shopping cart", enabling visitors to shop comfortably with their kids in tow.

Shoppers get a wearable device provided by the supermarket. The device sends a signal to the robot, which will help navigate while shopping.

During shopping, when a fruit or vegetable is placed on a barcode reader, a smart mirror on the shelf will show information and details of each particular product such as production area, weight and nutritional facts.

Some fresh products also embrace blockchain technology, helping to secure and trace the product's origin for food safety.

Those who have no time to go shopping can choose online service. When a purchase order is made, it will be sent to the supermarket. Workers will then arrange products and place them on an automated belt to prepare for delivery.

The delivery process can be completed within 30 minutes, but customers should be within three kilometres of the supermarket to guarantee the freshness of the selection.

Most customers of this supermarket are young people aged 20-40 years. JD.com is planning to open 10 branches of these "automatic premium supermarkets" by the end of this year and have 1,000 operating within the next five years.

Automated convenience

Both Alibaba and JD.com have also built their own convenience stores for selling souvenirs at their headquarters.

These unmanned concept stores embrace facial recognition technology for detecting customers who come into store or scan a QR code using an app. Consumers can choose the products they want and walk through a check-out gate, where an RFID sensor will detect all the items carried. Upon departure, the store will show the receipt and charge customers' mobile payment account, such as Alipay or WeChat Pay.

The concept stores help optimise staffing and provide shopper with a "grab and go" experience with more convenience.

Smart restaurants

Alibaba's local services platform Koubei has brought in technology to transform Chinese restaurants in Hangzhou.

Wu Fang Zhai, a franchise restaurant famous for traditional Chinese food, has invested up to 400,000 yuan (1.9 million baht) per branch for digital transformation. The company claims to have reduced operating costs by 300,000 yuan.

The technology helps reduce customers' pain point of queuing and trims the number of service workers from seven to just one. Unneeded staffs can be allocated to a new branch.

At Wu Fang Zhai, diners can order food via the Alipay app. Once the cooking preparation is finished, an app notification assigns a numbered automated locker for self pickup.

The restaurant also has a 24-hour space with automated vending machines to sell frozen food and drinks. Customers use a mobile app to access the space and scan a QR code at the vending machine. The buyers opens the cooler to take the product, which has embedded RFID sensor in the package, and when the door is closed the e-wallet account is charged automatically.

High-tech home store

Another real case in Hangzhou is the Home Times smart store at West Lake Intime Mall. Home Times is an offline retail store opened in 2017, where more than 20,000 product items are available, such as furniture, kitchenware, home decoration items, stationery and travel essentials. Most of the products come from Alibaba's B2C shopping platform Tmall.

Tmall analysed consumer preferences within an eight-kilometre radius of the store. Products were handpicked based on users' top preferences and added to the shelves.

Each product has an electronic price tag that can automatically sync with the online platform, so users can scan a QR code to view item details.

A large-screen display on the wall allows customers to see their desired furniture and decorations in a virtual home setting. This reduces space for product display and enhances the user's experience.

Consumers can order online or buy products at the store through a grab-and-go process, then check out by passing through the RFID sensor at the exit door.


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