How China is changing the future of shopping | Angela Wang

327,617 views ・ 2018-01-30

TED


Please double-click on the English subtitles below to play the video.

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This is my nephew,
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Yuan Yuan.
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He's five years old,
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super adorable.
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I asked him the other day,
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"What would you like for your birthday this year?"
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He said, "I want to have a one-way mirror Spider-Man mask."
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I had absolutely no idea what he was talking about,
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so I said, "Wow, that's really cool,
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but how are you going to get it?"
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He told me, without a blink of his eyes,
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"I'm going to tell my mom and make a wish before I go to bed.
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My mom will go to shake her mobile phone.
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The next morning, the delivery uncle will give it to me when I wake up."
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I was about to tease him,
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but suddenly I realized
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he was simply telling me the truth,
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the truth of what shopping looks like for this generation.
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If you think of it, for a child like Yuan Yuan,
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shopping is a very different idea
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compared to what my generation had in mind.
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Shopping is always done on mobile,
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and payment is all virtual.
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A huge shopping revolution is happening in China right now.
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Shopping behaviors, and also technology platforms,
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have evolved differently than elsewhere in the world.
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For instance, e-commerce in China is soaring.
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It's been growing at twice the speed of the United States
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and a lot of the growth is coming from mobile.
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Every month, 500 million consumers
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are buying on mobile phones,
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and to put that into context,
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that is a total population of the United States,
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UK and Germany combined.
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But it is not just about the scale of the e-commerce,
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it is the speed of adoption and the aggregation of the ecosystems.
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It took China less than five years to become a country of mobile commerce,
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and that is largely because of the two technology platforms,
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Alibaba and Tencent.
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They own 90 percent of the e-commerce --
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pretty much the whole market --
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85 percent of social media,
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85 percent of internet payment.
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And they also own large volumes of digital content, video, online movie,
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literature, travel information, gaming.
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When this huge base of mobile shoppers
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meets with aggregated ecosystems,
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chemical reactions happen.
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Today, China is like a huge laboratory
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generating all sorts of experiments.
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You should come to China,
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because here you will get a glimpse into the future.
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One of the trends I have seen concerns the spontaneity of shopping.
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Five years ago, in a fashion study,
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we found that on average,
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a Chinese consumer would be buying five to eight pairs of shoes.
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This number tripled to reach about 25 pairs of shoes a year.
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Who would need so many pairs of shoes?
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So I asked them, "What are the reasons you buy?"
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They told me a list of inspirations:
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blogs, celebrity news, fashion information.
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But really, for many of them, there was no particular reason to buy.
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They were just browsing on their mobile site
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and then buying whatever they saw.
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We have observed the same level of spontaneity in everything,
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from grocery shopping to buying insurance products.
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But it is not very difficult to understand if you think about it.
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A lot of the Chinese consumers are still very new
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in their middle-class or upper-middle-class lifestyles,
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with a strong desire to buy everything new,
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new products, new services.
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And with this integrated ecosystem,
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it is so easy for them to buy, one click after another.
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However, this new shopping behavior is creating a lot of challenges
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for those once-dominant businesses.
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The owner of a fashion company told me that he's so frustrated
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because his customers keep complaining that his products are not new enough.
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Well, for a fashion company, really bad comment.
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And he already increased the number of products in each collection.
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It doesn't seem to work.
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So I told him there's something more important than that.
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You've got to give your consumer exactly what they want
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when they still want it.
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And he can learn something from the online apparel players in China.
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These companies, they collect real consumer feedback
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from mobile sites, from social media,
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and then their designers will translate this information
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into product ideas,
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and then send them to microstudios for production.
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These microstudios are really key in this overall ecosystem,
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because they take small orders,
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30 garments at a time,
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and they can also make partially customized pieces.
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The fact that all these production designs
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are done locally,
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the whole process, from transporting to product on shelf or online
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sometimes takes only three to four days.
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That is super fast,
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and that is highly responsive to what is in and hot on the market.
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And that is giving enormous headaches to traditional retailers
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who are only thinking about a few collections a year.
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Then there's a consumer's need for ultraconvenience.
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A couple of months ago, I was shopping with a friend in Tokyo.
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We were in the store,
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and there were three to four people standing in front of us
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at the checkout counter.
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Pretty normal, right?
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But both of us dropped our selection
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and walked away.
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This is how impatient we have become.
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Delivering ultraconvenience is not just something nice to have.
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It is crucial to make sure your consumer actually buys.
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And in China, we have learned
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that convenience is really the glue that will make online shopping
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a behavior and a habit that sticks.
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It is sometimes more effective than a loyalty program alone.
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Take Hema.
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It's a retail grocery concept developed by Alibaba.
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They deliver a full basket of products
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from 4,000 SKUs to your doorstep
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within 30 minutes.
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What is amazing is that they deliver literally everything:
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fruits, vegetables, of course.
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They also deliver live fish
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and also live Alaska king crab.
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Like my friend once told me,
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"It's really my dream coming true.
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Finally, I can impress my mother-in-law
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when she comes to visit me for dinner unexpectedly."
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(Laughter)
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Well, companies like Amazon and FreshDirect
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are also experimenting in the same field.
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The fact that Hema is part of the Alibaba ecosystem
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makes it faster and also a bit easier to implement.
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For an online grocery player,
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it is very difficult, very costly,
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to deliver a full basket quickly,
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but for Hema, it's got a mobile app,
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it's got mobile payment,
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and also it's built 20 physical stores in high-density areas in Shanghai.
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These stores are built to ensure the freshness of the product --
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they actually have fish tanks in the store --
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and also to give locations that will enable high-speed delivery.
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I know the question you have on your mind.
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Are they making money?
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Yes, they are making money.
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They are breaking even,
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and what is also amazing is that the sales revenue per store
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is three to four times higher than the traditional grocery store,
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and half of the revenue orders are coming from mobile.
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This is really proof that a consumer,
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if you give them ultraconvenience that really works in grocery shopping,
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they're going to switch their shopping behaviors online,
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like, in no time.
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So ultraconvenience and spontaneity,
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that's not the full story.
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The other trend I have seen in China
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is social shopping.
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If you think of social shopping elsewhere in the world,
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it is a linear process.
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You pick up something on Facebook,
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watch it, and you switch to Amazon
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or brand.com to complete the shopping journey.
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Clean and simple.
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But in China it is a very different thing.
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On average, a consumer would spend one hour on their mobile phone shopping.
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That's three times higher than the United States.
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Where does the stickiness come from?
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What are they actually doing on this tiny little screen?
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So let me take you on a mobile shopping journey
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that I usually would be experiencing.
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11pm, yes, that's usually when I shop.
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I was having a chat in a WeChat chatroom with my friends.
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One of them took out a pack of snack
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and posted the product link in that chatroom.
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I hate it, because usually I would just click that link
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and then land on the product page.
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Lots of information, very colorful,
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mind-blowing.
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Watched it and then a shop assistant came online
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and asked me, "How can I help you tonight?"
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Of course I bought that pack of snack.
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What is more beautiful is I know that the next day, around noontime,
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that pack of snack will be delivered to my office.
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I can eat it and share it with my colleagues
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and the cost of delivery, maximum one dollar.
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Just when I was about to leave that shopping site,
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another screen popped up.
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This time it is the livestreaming of a grassroots celebrity
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teaching me how to wear a new color of lipstick.
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I watched for 30 seconds -- very easy to understand --
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and also there is a shopping link right next to it,
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clicked it, bought it in a few seconds.
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Back to the chatroom.
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The gossiping is still going on.
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Another friend of mine posted the QR code
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of another pack of snack.
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Clicked it, bought it.
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So the whole experience
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is like you're exploring in an amusement park.
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It is chaotic, it is fun
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and it's even a little bit addictive.
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This is what's happening when you have this integrated ecosystem.
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Shopping is embedded in social,
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and social is evolving into a multidimensional experience.
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The integration of ecosystems reaches a whole new level.
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So does its dominance in all aspects of our life.
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And of course, there are huge commercial opportunities behind it.
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A Chinese snack company, Three Squirrels,
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built a half-a-billion-dollar business in just three years
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by investing in 300 to 500 shop assistants
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who are going to be online to provide services 24/7.
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In the social media environment,
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they are like your neighborhood friends.
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Even when you are not buying stuff,
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they will be happy to just tell you a few jokes and make you happy.
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In this integrated ecosystem,
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social media can really redefine the relationship between brand,
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retailer and consumer.
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These are only fragments of the massive changes
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I have seen in China.
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In this huge laboratory,
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a lot of experiments are generated every single day.
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The ecosystems are reforming,
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supply chain distribution, marketing, product innovation,
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everything.
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Consumers are getting the power to decide what they want to buy,
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when they want to buy it,
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how they want to buy it, how they want to social.
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It is now back to business leaders of the world
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to really open their eyes, see what's happening in China,
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think about it and take actions.
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Thank you.
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(Applause)
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Massimo Portincaso: Angela, what you shared with us
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is truly impressive and almost incredible,
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but I think many in the audience had the same question that I had,
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which is:
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Is this kind of impulsive consumption
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both economically and environmentally sustainable over the longer term?
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And what is the total price to be paid
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for such an automized and ultraconvenient retail experience?
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Angela Wang: Yeah. One thing we have to keep in mind
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is really, we are at the very beginning of a huge transformation.
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So with this trading up needs of the consumer,
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together with the evolution of the ecosystem,
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there are a lot of opportunities and also challenges.
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So I've seen some early signs
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that the ecosystems are shifting their focus
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to pay attention to solve these challenges.
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For example, paying more consideration to sustainability
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alongside just about speed,
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and also quality over quantity.
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But there are really no simple answers to these questions.
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That is exactly why I'm here to tell everyone
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that we need to watch it, study it, and play a part in this evolution.
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MP: Thank you very much.
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AW: Thank you.
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(Applause)
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