‘New retail’ is a boom in China, but too early for SEA

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This is a Discuss post, where we feature short but insightful opinions from the Asian tech community on startup, entrepreneurship, and tech topics.

After Alibaba and JD, the term “new retail” is back in headlines as Luckin Coffee, China’s most recent unicorn, challenges Starbucks with app-based ordering system and cashless payments.

According to Hans Tung of GGV Capital, “Moving ecommerce offline is only half of the story of new retail. The other more important half is about selling beautifully designed, quickly manufactured, and frequently iterated products at the lowest prices possible, making customers pleasantly surprised.”

What makes new retail work? How will things play out in Southeast Asia? Sheji Ho (aCommerce), Kate Whitcomb (Hax), and David Jou (Pomelo) share their insights.

Editor’s note: Answers have been edited for clarity.

Sheji Ho, group chief marketing officer at aCommerce

The irony is that there is really nothing new in new retail. Ecommerce companies in China are going into new retail because the ecommerce growth itself is slowing there. Beyond expanding into Southeast Asia, new retail is a way for ecommerce companies to grow their market by tapping into the remaining 80 percent of the retail market which still happens offline.

The ecommerce industry in Southeast Asia is still in its early stages. So, there’s still plenty of growth opportunity before companies start thinking about tapping into offline retail channels.

It’s too early for startups to approach the space. New retail at its core is marketplaces bringing offline merchants onto their platforms so the former can control the users and data. All the QR code scanning and AR stuff are just—no pun intended—window dressing.

So, unless startups can generate that much demand to control the top of the funnel and force merchants onto the platform, there won’t be a lot of opportunity for smaller players.

Let’s discuss