Progressive ecommerce, and in-store methods that could provide templates for future retailing in the U.S.
By Bjorn Ognibeni, Practical Visionary and Co-Founder, ChinaBriefs
Although there are many different online stores vying for consumers’ attention and dollars during Black Friday Week through Christmas, have you ever noticed that the design of the shopping experience has hardly changed in the last 20 years? Retailers learned how to sell online at some point in the late ‘90s. And after that? Not much since has happened in the way of fundamental change in methods.
For sure, there are numerous differences in details – faster deliveries here, a “get inspired” button there. But the core of the shopping experience is hardly different and consists primarily of clicking through endless lists of identically designed product displays: Photos, description, price and delivery terms. If things are going well, there are a few interesting customer reviews to boot. It’s all clear and functional – but also rather boring.
The design of Internet stores is somewhat reminiscent of the design of passenger cars. Where everyone is oriented to the same target variables, everyone arrives at the same solutions. And where companies and customers have only once understood how something works, one forgets at some point that it could perhaps also work differently. I noticed this myself when I was clicking through the wasteland of the most recent Cyber Monday offer lists.
‘Singles Day’ Successes
Shortly before that, I had been looking at the latest trends occurring for Chinese “Singles Day,” where many things work very differently, with a clear focus on making online shopping a real experience. Singles Day is the name given to November 11 in China because its four ones symbolize a meeting of four singles. Retail giant Alibaba came up with the idea of turning this day into a shopping event in 2009. At that time, their brand platform, TMall, was still quite new and they were looking for an approach to make it better known. So Singles Day became a day when singles gave each other gifts – analogous to Valentine’s Day for non-singles. And the gifts for were found on TMall.
In the meantime, the day has left its humble origins behind and the so-called Double11 has become a national event in China, which many other retailers – online and offline – have also discovered for themselves. Alibaba now refers to it as the “Global Shopping Festival,” and for 2020, over $74.1 billion in gross merchandise volume (GMV) was turned between Nov. 1 and Nov. 11.
This represents a 26 percent year-over-year increase and is a good indication that Chinese consumers have put pandemic worries behind them as regards their shopping behaviors. By comparison, all online retailers in the U.S. made a combined $24.6 billion in sales last year on the days between Thanksgiving and Cyber Monday.
You can also see how important Double11 has become internationally, by the fact that, according to Alibaba, thousands of U.S. brands participating in 2020 generated a GMV of more than 5.4 billion U.S. dollars on its own platforms – making the U.S. the most important country by sales after China itself.
In addition to impressive sales figures, there are also a number of other interesting aspects to the topic of e-commerce in China. For example, in large cities such as Beijing or Shanghai, many orders are not delivered on the same day, but rather, within the same hour. Or that autonomous vehicles are increasingly being used for logistics: in cities, in the form of delivery robots, and in the countryside, over the air with drones, to bridge the last mile.
Shopping as Entertainment
As alluded to earlier, another major difference is in the design of the actual shopping experience. Both Alibaba and competitors such as JD.com or Pinduoduo are increasingly trying to turn their shopping apps into a real experience – one that can also hold its own in the evening “competition on the couch” against draws such as Netflix: Instead of watching their favorite series online, people like to go shopping for a while.
Many product presentations are, correspondingly, quite lively. For example, an unpacking video of the gadget that interests you at the moment is provided, or the presentation might offer comprehensive background information on the exciting new brand. Chinese consumers sometimes spend up to 10 minutes on the pages of individual products to get detailed information.
And there are also many playful elements that suit certain target consumer groups that can make online shopping more entertaining. For example, the big stars at this year’s Singles Day were little “virtual” kittens that you could raise in your app to receive coupons and discounts in return.
High entertainment value is also the focus of another very popular store feature: live shopping. Here, retailers present their products in livestreams that sometimes run for hours. You can imagine this as thousands of individual mini-QVCs via which you can buy hundreds of thousands of items.
Depending on the sender, the quality of both the products and the presentation can vary significantly: from farmers streaming live from the field or the weekly market, to owners of smaller stationery stores, to highly professional live streamers, some of whom earn over 10,000 euros a month, a colorful streaming scene has evolved.
Chat – and Beyond
Currently, Facebook, Amazon and many brands are working on comparable offerings here in the West. But one important feature will probably not be as much of a focus here as it is in China, even though it is crucial for success there: the opportunity for direct interaction. That’s what really brings out the advantages of a live stream. Mostly via a chat function, viewers can exchange information with each other, ask questions, or in some cases even help design products. Potential buyers can click through many very lively live streams in the apps of the various providers. Instead of looking through monotonous product lists, it feels more like walking through a marketplace, with lots of opportunities to take a look at individual offers and have a chat.
The example of Austin Li, who mainly sells lipsticks via his live shows and is now famous throughout the country as the “Lipstick King,” shows that sales are also made in the process. On Nov. 11 of 2019, he was on the air for six hours, during which time he sold lipsticks worth more than 40 million U.S. dollars to his approximately 37 million viewers. Overall, the South China Morning Post’s China Internet Reports projects more than 600 million live streaming users and $16.3 billion in revenue by 2020.
Increasingly, artificial intelligence (AI) capabilities are also being used to support online shopping. For example, this year on Nov. 11, Alibaba deployed AI systems for the first time that automatically and simultaneously translated Chinese live streams into other languages to reach other markets.
Another interesting AI-based innovation: virtual anchors – animated AI avatars that assist human presenters. What currently still looks like a cartoon and a gimmick could soon enable a completely new, interactive shopping experience: individual advice from an AI avatar that knows your exact needs and enables genuine, scalable, one-to-one dialog. In doing so, the opportunities offered by this technology are likely to go well beyond what we know from chatbots and also enable interaction on an emotional level.
At this point, you’re probably wondering if you really need all this. After all, with a good search and clear lists, you can get to the goods you want quickly and easily. Of course, a lot of things that work well in China wouldn’t stand a chance here – too cluttered, too playful, too unfamiliar. Both store operators and customers here know too well how e-commerce works. Why change anything?
Rethinking What Works
This reveals a pattern that we see again and again when we compare developments in Asia in general with those in the West: we learn how to do something new, become really good at it, and then at some point we’re done. From then on, we only optimize on a small scale. It seems unnecessary to really rethink things. After all, everything works.
In contrast, the example of e-commerce shows that new ideas also bring with them completely new possibilities. On the more emotional Chinese platforms, for example, brands are also feeling at home that have so far deliberately avoided the efficiency machine that is Amazon. That is why products from companies such as Burberry, Ermenegildo Zegna and Mont Blanc are also available via the TMall Luxury Pavilion. At the same time, competitor JD.com delivers luxury brands with limousines and white gloves.
And those who manage to become part of the daily entertainment routine in the living room do not have to buy their traffic by spending a lot of money with Google – which for many Western store operators is an essential but very expensive part of their own sales strategy. That’s an option that Chinese online retailers often don’t have, by the way, because in their own mobile-only Internet, customers rarely come to them via web searches.
While in the West, established, successful companies continue to do what has made them successful in the past, in China, extreme competitive pressure combined with consumers who readily embrace every innovation means that there is no such thing as an optimizing standstill. Even big players like Alibaba or JD.com are forced to constantly try out new ideas and concepts. As a result, they often think very far ahead – further, even, than such innovative companies as Amazon.
A current example of this is the latest e-commerce trend in China: C2M – Consumer to Manufacturer. Here, consumer demand directly controls the production of individual items in sometimes very small batch sizes. Since this is hardly possible with existing industrial processes, Alibaba presented the concept for a new, digital factory last September.
This is an exciting trend and one that bears watching from the West as it evolves in the Chinese market. Stay tuned!