China will be the place to experience the latest retail innovations in 2018.
Alibaba’s founder, Jack Ma, has been pushing brick-and-mortar stores – from Starbucks to KFC – to integrate new technologies. His ambition is to create the Retail Experience 2.0 which he calls “New Retail”.
Watch our video to get a quick overview of the 5 trends from Asia that will impact retail in 2018.
Trend 1: AI and other technologies are redefining retail in China
Alibaba has opened over 20 Hema Xiansheng stores in China. The grocery stores integrate technologies like artificial intelligence, facial payments and more to enhance the retail experience. For more info on the customer journey at Hema Xiansheng stores, read our article on New Retail experiments in China.
But this does not represent Alibaba competing with traditional retail. It is instead meant to showcase Alibaba’s partnership capability for international players to introduce more tech into retail. For example, Starbucks’ new Shanghai outlet is powered by Alibaba, which allows customers to use their mobile devices around the roastery for AR to improve their coffee buying experience. At KFC’s new healthy eating concept store, Alibaba also introduced the first face recognition payment system in China, and has announced a strategic alliance with the French retailer Auchan to explore new retail opportunities in China’s food retail sector.
Trend 2: Mom-and-pop stores are upgrading to become more high tech
Last summer, Alibaba has unveiled an ambitious plan to transform 10,000 mom-and-pop convenience stores into a vast network of Tmall.com brick-and-mortar outlets.
After the upgrade, consumers will be able to shop, pick up packages, make orders online or even apply for and receive small loans with their local convenience stores.
It is the first step in Alibaba’s broader plan to turn as many as six million convenience stores into smart service centers equipped with Alibaba’s e-commerce infrastructure and capabilities in financial technology, logistics and travel services.
Trend 3: Unmanned stores are mushrooming in China
Bingobox is one of the many startups in the space of unmanned stores, with already 200+ stores across China.
With more competitive prices, by reducing the cost of human resources, BingoBox has registered a repurchase rate of 80% for products it sells at its automated stores.
In China, other big players like Alibaba, Suning, JD.com and many others are also deploying similar stores all over the country.
Trend 4: China tech players are pioneering logistics automatization
JD.com has opened the world’s first fully automated warehouse. It uses robots and other machinery to handle 9,000 online shopping orders per hour, replacing 180 human sorters for greater efficiency.
Other examples included Alibaba’s use of drones for rural deliveries. In November, in time for its mega shopping festival Singles Day, it launched its drone delivery service. Other significant developments include the use of drones to deliver packages over water for the first time.
Drone delivery service is set to cut the transportation time by half and save on logistic costs. As e-commerce grows in China’s rural market, drones have become a common option for deliveries across rural China. Alibaba rival JD.com has been the first-mover, debuting its first rural drone delivery at end of 2016. By July 2017, JD.com’s drones have delivered more than 8,000 orders and flown more than 10,000 kilometers.
Trend 5: Entertainment is driving retail engagement
For the 11.11 Singles Day Sale, Alibaba’s TMall launched a series of mobile games for brands to engage users. Some examples include an augmented-reality game which allowed users to catch the TMall mascot at physical retail stores. A successful capture would reward users with coupons to shop offline at that store.
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