For those working in retail, one of the biggest puzzles of these times is how to integrate e-commerce (online) with physical stores (offline), creates a unique and continuous experience for the consumer. A commercial sector likes to call it Omnichannel: the presentations of companies and their consultants are studded with this term, but in reality, nobody has yet figured out how to make it work. For those working in Marketing, one of the biggest puzzles is the same: the omnichannel integration to create a fluid and continuous experience for the consumer between online and offline.
Perhaps Alibaba, the Chinese e-commerce conglomerate and one of the largest retailers in the world, has found the key to integrating online and offline in a new genuinely unique Retail model for the future. In October 2016, Jack Ma, founder of Alibaba, writes a letter to the shareholders indicating that “in the future, e-commerce alone will become a mature business and will fade away being replaced by the concept of New Retail, which positions at the convergence of four forces: online, offline, logistics platforms and Big Data”.
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The most surprising thing was to hear the president of one of the largest e-commerce companies in the world say at a time of great expansion, and above all the vision that the future of retail does not reserve the total dominion of e-commerce, but rather the extreme digitalization of traditional commerce. According to Jack, Retail has a future, but with a model that is completely different from the current one.
HEMA: investment and revolution
Alibaba takes action: it buys a small chain of supermarkets, Hema, and begins to radically transform its business model, offering consumers a completely new experience, integrating online and offline experiences and offering every possible permutation of the experience of purchase: consumers can buy online through the app and receive free shopping at home in half an hour if they live within a radius of 3km from the point of sale. In fact, Hema stores split their role by organizing themselves as logistical platforms from which goods are taken and shipped to consumers’ homes.
Or you can buy online and withdraw in the store at a set time, perhaps returning home from work; but the app is also at the center of the traditional in-store experience, where you can scan all the products and get in-depth information on the origin and origin; and lastly you can do physical shopping, but virtual, in the store: observing the products, scanning them, but requiring home delivery without having to pick them up and transport them in person. Suddenly, online and offline experiences become a single thing for the consumer, who chooses and alternates them according to the time available, the mood or the commitments of the day.
The Chinese digital revolution indicates the new frontiers of marketing
But the real keystone of Hema’s New Retail lies in the fact that the Alibaba group is vertically integrated through different digital platforms that share a single login, as told in a previous article (see here on the side). At Hema, the payment is completely cashless through Alipay (Alibaba’s PayPal) and in this way Alibaba effectively hooks Hema’s customers to its ecosystem through the unique login that allows you to link the data of all consumers.
And here it is that suddenly Alibaba integrates the data of 800 million registered users in China following their mental path even before buying: for example, becoming aware of where they are physical, what they searched for on search engines, what they like and interested through social media like, and of course what they bought online (on Alibaba Taobao and Tmall platforms) and offline from Hema. To make a parallel, if we think that Amazon has great power in suggesting the books that we might like based on the books we purchased, let’s try to think what a retailer like Carrefour might suggest if he had access to our Google searches, to likes our Facebook, to our purchases via Amazon …
Beyond the considerations on privacy, the real insight is how our shopping experience and the suggestions that are proposed to us could be changed, the discovery of new foods and products, all personalized according to our true preferences. In China, this is already happening from Alibaba with Hema.
The extraordinary new vision of Jack Ma and Alibaba, the New Retail.
How to judge the success in the first two years of the Hema experiment? The results and KPIs are exceptional and are the envy of any retailer: on average, Hema customers buy 4.5 times a month, or more than 50 times a year, with a conversion of 35% in the app. Online orders represent 50% of transactions, with peaks of 70% in large cities. Not surprisingly, Hema, which currently has thirty stores in the central areas of Beijing and Shanghai, expects to expand to hundreds of stores throughout China. The integration of stores, online, logistics platforms, but above all the massive use of data available on consumers has perhaps created the embryo of a generation of Retail, the New Retail. Once again China is showing us the future.