Sandra Weiss examines how digitalisation and shopping trends are influencing China’s omni-channel shopping experience.
Over the past couple of years, China’s digitisation has created a unique environment where online and offline channels are becoming increasingly integrated, forming new hybrid models of shopping and purchase. Although China’s level of digitisation was already high pre-COVID-19, the virus has caused an acceleration in both the acceptance and implementation of these new technologies.
When the term “O2O” is used in a marketing context, it usually refers to “Online-to-Offline”. However, China’s innovation when it comes to O2O commerce has caused an integration of digital and offline channels, creating unique experiences that combine offline participation with online or digital components. This has created a new omni-channel shopping experience that has altered how brands and customers engage with each other.
Digitization and trends impacting O2O
The Mobile Revolution
Smartphones are now more widely used than ever before, and an average of 7.3 hours is spent on mobile Internet every day in China. Two thirds of this time is spent on social apps, engaging with friends, family, and KOLs. In China, E-commerce transactions occur more frequently on smartphones than on computers. Moreover, as 5G technology becomes more prevalent, this will allow Chinese consumers to live even more digitised lives.
Digital Payment Methods
China is moving towards becoming a cashless society, as most consumers have become accustomed to using digital payment methods through their smartphones. This trend has further integrated online systems into everyday offline shopping, making the entire experience more convenient, as payments can be completed by simply scanning a QR code, which will then connect to the customer’s Alipay or WeChat Pay account (the two most popular digital payment systems in China).
Use of QR codes
QR codes are also widely used outside of digital payments as a simple method of connecting with brands and other users both online and offline. QR codes can be easily shared online, or printed on marketing collaterals such as posters, brochures, banners, packaging, etc., then scanned through any smartphone device. These QR codes can link to websites, social media accounts, or any other relevant online channel.
For most people in China, social media has become a part of everyday life. Thus, it has become essential for brands to also have a social media presence to attract customer interest, build brand loyalty and capture repeat purchase. Brands need to have their own accounts on the major social media platforms and run digital marketing campaigns that can be linked to offline events or activities. Moreover, building a following on social media allows for easier targeting of consumers and re-targeting of past customers, reducing acquisition costs, and increasing customer loyalty.
In China, different sales and social channels have become integrated into a greater social experience, causing the rise of social commerce. Online commerce has increasingly become a social activity through the sharing of product experiences on various social platforms, and e-commerce has become a form of entertainment, especially when considering e-commerce livestreaming. As a result, all channels have become a part of the customer journey, and are used for anything from product research, comparison, purchase, delivery, customer service, and review/recommendation/advocating.
The concept of New Retail
In 2016, Alibaba introduced the term “New Retail” to describe their efforts to create a fully integrated and seamless online and offline experience for consumers, pushing the idea of “O2O” to a greater degree and digitising the entirety of commerce. Nowadays, O2O and New Retail are concepts that every brand should consider when expanding their reach in China, while still ensuring that the consumer remains at the core of the brand’s mission and goals.
New Retail encourages the development of new efficiencies and innovations in logistics, marketing, product development, and consumer experiences. This leads to:
- Supply chain and distribution logistics
The combination of online and offline channels allows for multiple streams of data to be unified and analyzed. Through more accurate sales information, optimisation of logistics and supply chain allows for more customised restocking of physical and online stores.
- Value-added services for producers and retailers
Through New Retail and the integration of offline and online, products, merchants and retailers get access to tools that will allow for better management of production processes and stocks through a digitisation of payment systems, inventory monitoring, restocking, sales analytics, and customer services. Alerts can be set in place for when items start to trend or run out of stock, allowing inventory to be more easily managed.
- Fully integrated shopping experience
New Retail aims to digitise the offline shopping experience in an intuitive manner and create a customised experience that shoppers bring with them even after they have left the physical store.
Specific changes that New Retail could potentially bring to the offline shopping experience include:
- Contactless curbside pickup.
- AI-enabled, smart shopping carts.
- Radio frequency identification technology for tracking products in-store.
- AR or VR systems both at offline locations and online.
- Product traceability.
A feature that many New Retail stores currently offer is the ability for customers to shop at the offline location, choose the products they want, make a purchase at the store, then have the products delivered to their homes within 30 minutes, depending on how far they live from the offline store. Moreover, most New Retail stores also allow for customers to scan the QR code or barcode displayed on every SKU for additional information on the product, such as origin, ingredients/material, expiration date etc. These added services increase the convenience of offline shopping and encourage customers to purchase more as they are no longer restricted by what they can carry.
Hema/Fresh Hippo, owned by Alibaba, and 7Fresh, launched by JD in competition with Hema, are examples of this new form of retail, and both offer many of the mentioned features.
Selling products in or having an offline channel that offers digital integration, even if it is just a pop-up store or offline event, can allow for greater brand awareness and brand recognition. Hybrid models that digitize the offline shopping experience allow brands to provide a more convenient and personalized experience for customers, while also receiving more data on the customer and allowing for a brand connection that follows the customer online even after they have left the store.
Sandra Weiss is a member of the RedFern Digital team and this article was originally published in the China market-focused magazine ‘The RED Edition’. To access the latest issue of The RED Edition visit https://redferndigital.cn/worth-the-read/#the-red-edition-issue-5(link is external) RedFern Digital is a China specific, full-service agency that helps brands navigate the digital ecosystem, increase their brand awareness and convert that awareness into sales.
7Fresh Store image source: TechCrunch. Hema Store image source: Alibaba Group’s YouTube Channel