As the path to purchase becomes increasingly complex in China, retailers are ultimately looking to connect with shoppers both online and offline. In stores, signs for online-to-offline (O2O) services are widespread, highlighting the breadth of the assortment that shoppers can pick from stores and have delivered in 30 minutes (Figure 1).
Figure 1. RT-Mart Messaging Educates Shoppers on How to Buy the In-Store Assortment Online for Delivery
O2O capabilities are especially on display in Alibaba’s Hema format, where an overhead conveyer belt transports online orders through the store to its delivery distribution center. At the shelf, signs communicate free 30-minute delivery, available to shoppers within a 30-kilometer radius of the store. For frozen products in particular, Hema highlights how it uses a special refrigerated box to reassure shoppers that their ice cream will not melt on the way (Figure 2).
Figure 2. Signs Advertising 30-Minute Delivery at Hema
Retailers also create incentives for shoppers to download apps and use certain mobile payment providers to access specific discounts and fulfillment options. Hema, for example, rewards shoppers for adding 1,000 yuan to their Alipay accounts with 40 yuan back in its app (Figure 3). Promoting the use of digital tools in store enables retailers to monitor their shoppers’ activity across various online and offline touchpoints.
Figure 3. Hema (left) and Yonghui Promote (right) App Use
Retailers can leverage this trove of data to gain granular insight into the lifestyle habits of their audience. Alibaba, for example, assigns users a “Uni-ID” that integrates all their relevant data points across Alibaba’s different platforms, such as Taobao, Tmall, and Hema stores.
Alibaba has now aggregated this data into its Strategy Center, a tool that empowers category captains to gain a better understanding of their shopper and competitive dynamics. Through sales tracking and shopper segmentation, brands can leverage Alibaba’s data to make more informed business decisions on new product innovation, media investment, personalized targeting, consumer experience management, and other areas. Alibaba’s positioning as a data company is also on display in stores like RT-Mart, which has curated aisles based on items that are popular in that area on Tmall (Figure 4).
Figure 4. Tmall Section in RT-Mart
Kantar Point of View
Though the U.S. has more restrictive barriers around data integration than China does, retailers and brands can still apply the following learnings from this advanced market to their U.S. omnichannel strategies:
- Create incentives for omnichannel shopping by designing promotions that reward shoppers for desired behavior. The store can serve as a billboard for online shopping services, and digital touchpoints can be used to drive traffic to brick-and-mortar locations.
- Leverage online data to curate the assortment to the demands of local shoppers. Doing so will maximize the store’s shelf productivity.
- Expect retailers to allocate more store space for online order fulfillment. Retailers will need a more efficient picking process for delivery services, one that does not detract from the in-store experience.
For more information, please contact:
Meaghan Werle, Principal Analyst