The Future of Retail Passes Through China.

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Know the four main factors that explain this phenomenon.

By: Eduardo Terra

I have just returned from my third trip through China and I am going again this year. The reason for so many hours on the plane is that, in fact, things are changing from that country.

China impresses us a lot, bringing many provocations including to the United States, Europe and Brazil. Check out the four factors that explain why trends and the future of consumer and retail distribution are there.

Mobile payment
In retail, payment is on the one hand, cost to the retailer, and on the other, friction and difficulty for the consumer. In this scenario, China skipped steps using the QR Code for payment with applications, ceasing to be a trend to become reality. There is no more cash and plastic is no longer used.

The payment of the large mass of consumers has been made through the use of applications, such as two in particular, WeChat and Alipay. This brought a much superior shopping experience for consumers who no longer use a wallet and who are always using their cell phones to see promotions, to pay and to interact. And for companies, there are two things: a reduction in the cost of payment itself and a CRM relationship platform with consumers using these applications.

  1. Use of data

The massive use of data brings business intelligence. The expansion of retail in China has a level of accuracy that has never been seen before – they know exactly the region where a new store will open, its sales potential, how many people live there and how they can be accessed.

Thus, the assertiveness in opening a new store and other factors such as price, assortment and promotion, is something new and unprecedented. The data is used not only for expansion, but for all strategic definition and business intelligence.

Ecosystems
So-called ecosystems, such as Alibaba, JD, Tencent and Baidu are major platforms for services and consumption in China, and have brought provocations to Amazon itself. This business model exists in Brazil for cases such as Mercado Livre, Magazine Luiza, Via Varejo and Carrefour.

The large Chinese ecosystem, Alibaba, has structural layers of technology, marketing, logistics and payment that support business platforms. They have a value proposition even for small retailers, which offers a digitalization outfit for a small market. Some actions are the improvement of physical stores and professionalizes those who use Alibaba’s management system. When it comes to using this system, they “stick” this small retail store in their Market Place, and start selling all over China, using their stock and the delivery capacity of the store itself.

They are value propositions that involve payment, Market Place and data usage. With nearly 30,000 data engineers, Alibaba, like other Chinese ecosystems, has retail ahead of other times.

  1. New Retail

New Retail is the fourth and last reason why the future of retail goes through China. This concept brings a new definition of what a physical store is, like Hema (Alibaba) and 7-Fresh (JD). They are stores absolutely integrated with e-commerce, where it is possible to buy online and withdraw in the store, or even buy in the store and receive at home, with assortment, mobile payment, data integration and prices absolutely linked. We call this concept total omnichannel, as there is no longer a separation between what is online and what is a store, bringing experience, intelligence and productivity to the future of physical stores.