The next frontier of shopping is digital and experiential
U.S. businesses are looking to China for retail innovation — and scores of new customers.
At a department store in China called Intime, the future of retail is happening now. China's leading brick-and-mortar chain, which includes more than 60 stores owned by Alibaba, seamlessly blends online and offline shopping experiences throughout the store. From morning through night, shoppers can go online and, via Taobao Live — Alibaba's livestreaming channel — view more than 200 livestreaming sessions from the stores each day, featuring more than 5,000 sales associates highlighting different products. If the shopper sees something they like, they can purchase it with the tap of a finger. At Intime, this integration of online and offline means that digital technology underlies everything that happens in the store, bringing shoppers to the store and bringing the store to shoppers — wherever they may be.
Experiences like this are part of a new retail phenomenon that is both digitally driven and consumer centric. And as more and more American businesses plan for the future of commerce, this approach is becoming critical — especially for U.S. retailers and brands doing business in China, home to the world's largest ecommerce market.
To connect with Chinese shoppers, U.S. businesses are finding success in using popular — and trusted — platforms, said Matt Shay, president and CEO of the National Retail Federation. "New global ecommerce platforms reduce barriers and create pathways for American retailers to reach consumers in Asia and other parts of the world. These platforms help make it possible for retailers to take their business operations global and tap into demand for their products in other countries, especially in Asia," said Shay.
"Ecommerce platforms, like those offered by Alibaba and others, help retailers access the global marketplace, particularly with payments, logistics and marketing, which remain critical for continued industry growth and to help retailers compete more efficiently in the global economy."
In 2020 alone, thousands of U.S. businesses sold $54 billion in goods via Alibaba to its 900 million consumers. To support those businesses, Alibaba provides retailers with the tools and infrastructure they need, such as logistics, product innovation, digital marketing services and more. "We provide all the tools to help U.S. businesses build their brands in China and to sell to local Chinese consumers," said Michael Evans, president of Alibaba Group. "This includes fully customizable online storefronts, marketing tools, inventory and management services, as well as translation and logistics."
The goal, added Evans, is to make it easy to do business anywhere. "We give great American brands, retailers, small businesses and farmers direct access to the Chinese consumer opportunity that can power their growth and success for the long term," he said.
"New global ecommerce platforms reduce barriers and create pathways for American retailers to reach consumers in Asia and other parts of the world. These platforms help make it possible for retailers to take their business operations global and tap into demand for their products in other countries, especially in Asia," said Matt Shay, president and CEO of the National Retail Federation
How U.S. brands are connecting with Chinese consumers
In China, brands and retailers don't just compete for shoppers' dollars; they immerse customers in new, entertaining experiences that keep them coming back time and again. Online shopping is gamified and customers can virtually try on sunglasses, sneakers, makeup and accessories; and even browse 3D replicas of brick-and-mortar stores. U.S.-based businesses are also finding ways to put the shopper at the center of the digital experience via Alibaba platforms, in order to cater to Chinese customers.
"Think of Alibaba as a massive digital mall. We offer innovative services like livestream commerce, AR shopping and gamification to help businesses connect with consumers in highly engaging ways. One of our strengths is the deep insights we have into the Chinese consumer, which can be very valuable to U.S. businesses as they tailor and market their products to fit the demands of new Chinese consumers," said Evans. "These are the important reasons why so many U.S. brands trust us and work with us in the China consumer market."
Rothy's, a sustainable lifestyle brand based in San Francisco, is known for its shoes and handbags made from plastic that would otherwise go to waste. They found success in Alibaba's online marketplace known as Tmall, where they invite customers to join in their livestreams and directly share their stories after wearing Rothy's products.
"Tmall has really helped us spread our mission by connecting us with the consumer in China and allowing us to tell rich stories around our products and how they're made and why they're better," said Roth Martin, co-founder of Rothy's. "Tmall has really helped Rothy's to reach millions of consumers in China."
For Fender, the musical instruments company headquartered in Los Angeles, CA, COVID-19 posed an enormous challenge — as well as an opportunity. When lockdowns closed 90% of its stores, the business relied heavily on its ecommerce infrastructure, and invested in digital marketing to expand its online presence. That investment paid off when shoppers became interested in learning new skills during their quarantines.
On Tmall, Fender sales rose over 50% between January and July 2020, while sales from offline channels in China grew by just about 10%. Edward "Bud" Cole, president of Fender Asia, says the increase was remarkable. "The biggest learning to come out of COVID-19 is the exaggeration and heightened increase in consumers gravitating to online purchasing and, specifically, for a brand like Fender to fully embrace digital shopping," said Cole. "The next step is just a double, triple and quadrupling down on the Tmall platform, on our investment on every level and what we're offering to our consumers."
Embracing the digital future
It's clear the future of commerce and retail will be digital. Since 2000, retail has seen a massive digital shift, and it's been accelerated by COVID-19, said Gary Shapiro, president and CEO of the Consumer Technology Association. "60% of consumers reported increased online shopping since the start of the pandemic — a preference that's likely here to stay. In a CTA survey last year, consumers reported ordering products online as a top retail activity when the pandemic is over, and nearly 70% expect to start buying immediately."
In China, that future is already happening. This year, according to eMarketer, China will become the first country where ecommerce sales outpace brick-and-mortar transactions. Further, as purchasing power in China continues to grow, the Chinese market presents boundless opportunities.
"There's no question China has a significant ecommerce market and many businesses around the world desire to tap into that opportunity," said Shapiro. "The strength and importance of China's online retail channel is a reminder of how different the marketplace can be across different countries and cultures."
The key is knowing how — and where — to access those online retail channels. For that, said Shay, platforms such as Alibaba can help.
"China represents an enormous opportunity for the U.S. retail industry as it looks to continue the recovery from the pandemic," said Shay. "All U.S. businesses should pay attention to the growing demand from Chinese consumers. The prevalence of ecommerce in China makes this lucrative market that much more accessible for U.S. businesses from thousands of miles away. Companies like Alibaba and many others are making it feasible to serve the Chinese market, especially for small and medium-sized businesses."