As ecommerce steamrolls retail, China’s brick-and-mortar stores fight back with tech

Photo credit: wangsong / 123RF.

Chinese consumers love shopping online. And no wonder – thanks to mobile payments and speedy logistics, consumers can order groceries, gadgets, clothes, and more in just a few taps.

The ease of online shopping is an important part of China’s booming ecommerce industry. According to the country’s National Bureau of Statistics, online sales hit US$581 billion last year, about half of which were made through a smartphone. Offline retailers, on the other hand, are suffering a decline – a global trend that’s plaguing big box retailers and department stores in the US as well.

But physical stores still have a role to play in the world of retail, especially when they’re combined with online resources. In China, brick-and-mortar shops are increasingly driving online sales in an offline-to-online process called “showrooming.” According to a KPMG report last November, about a third of online shoppers in China said that seeing products at a physical store led to a digital purchase, an increase from 24 percent in 2015.

About a third of online shoppers in China said that seeing products at a physical store led to a digital purchase.

Chinese ecommerce companies are also paying attention to foot traffic. In January, Alibaba led a US$2.6 billion bid for department store chain Intime Retail Group to expand the company’s physical footprint. Last week, competing ecommerce giant JD unveiled a chain of offline experience centers to let consumers try products before making purchases online.

For these tech-savvy ecommerce companies, physical shops are not only an opportunity to experiment with new ways of driving sales, but also an extension to their ever-growing logistics network.

Here are five ways that tech is redefining China’s offline retail industry:

Unmanned shops

Screengrab from Bingobox video.

Scan a QR code. Walk in, pay with your phone, and leave. That’s the kind of 24-hour convenience promised by unmanned shops like Bingobox, the brainchild of a Chinese startup based in Zhongshan, southern China.

Roughly the size of a shipping container, Bingobox’s shops are filled with the usual goods of a convenience store: soft drinks, toiletries, snacks. To unlock the door, users scan a QR code with their phone, while a camera equipped with facial recognition checks for unregistered entrants. To checkout, customers place their items on a platform, where it’s recognized by Bingobox’s system. Payment is via QR code – the ubiquitous portal for mobile payments in China.

Alibaba is also toying with the concept of unmanned shops. Last month, the tech giant showed off its own cashier-less shop called Tao Cafe, which utilizes QR code scanning and facial recognition to facilitate automatic payment and purchasing.

Self-checkout

Turning WeChat traffic into foot traffic

Stores as nodes in the logistics system

Experience centers