HOW CHINA IS REVOLUTIONIZING THE CONSUMER EXPERIENCE

Last month I travelled into the future.

I had the opportunity to spend one week in Shanghai and was blown away by the advanced technology, digitalization and shopping revolution. Not only is China the world's largest eCom market (500 mio active users monthly), the speed of development is also not comparable to any other place in the world. With digitalized vending machines, QR coded shops, and metro screen commercials at the speed of the train passing through - I felt like grandparents being shown an iPhone for the first time. It's visible everywhere that the Chinese population is faced with digitalization every day. What the average visiting eye might not see though is the vast online shopping landscape, so let me share what I learned.

ONLINE SHOPPING

In Europe and the US we are all aware of Amazon being the most advanced online shopping experience in the market. Their constant innovation in convenience, speed, delivery and payment options, as well as product availability and price transparency make them a tough competitor for other eCommerce businesses. Now imagine that Amazon owns up to 90% of the market - and imagine the impact this has on the overall online business landscape. In China this is a fact - since the 2 major players (Alibaba & Tencent) together make up to over 90% of the entire online business. These giant players are dominating the entire landscape and leading the innovation on a much higher pace than Amazon. While in Europe we proudly announce new services such as same day delivery - the Shanghai market is used to delivery within 2 hours.

Angela Wang summarized the Chinese market in an interesting Ted Talk from 2017.

PAYMENT

While Europe is going onto a trend of card only, in Shanghai all types of plastic cards are already completely out of fashion. It's either cash (mostly for tourists like me) or paying through integrated payment providers like AliPay (owned by Alibaba), WeChatPay (owned by Tencent) or a 3rd big player: Baidu. Together they represent more than 75% of the payment landscape in the market. Whether it's shopping in a luxurious mall or paying a run-down street taxi - every size of business operates with these payment methods. It's fast, convenient, safe and hassle-free - one click and you're done. The only thing you need to bring with you is your phone.

SOCIAL MEDIA

We have all heard that our well-known social media platforms (Facebook, Instagram and WhatsApp) are blocked in China. This does not mean that social media and chat channels do not exist. Instead, the digital landscape in China allows for a much simpler solution for social media consumers - a fully integrated platform that allows users to chat, post pictures and comment in both smaller or wider chat communities, as well as regular 1-1 conversations. If your friend shares a product you like, you can immediately click and purchase it - within one click - using the integrated payment landscape. Not surprisingly, these social media channels are also owned by Alibaba & Tencent - together these giants comprise to at least 95% of the social media market. Not to forget: China's pendant to Youtube as well as overall search engines are also owned by these companies, with Baidu being the by far strongest player.

THE POWER OF THE GIANTS

So what makes the online landscape so different to Europe or the US? The key differentiator is that everything is owned by these three giants - Alibaba, Tencent and Baidu. Each of them owns the entire consumer journey - from social connection, to shopping experience, to product placement, to checkout and payment procedure. They know what the consumers like, how they think, what they spend money on, if the pay on time, how much they owe, where they are and where they were. They own the entire consumer data and at the same time have the power to influence it, at whatever step of the journey needed.

On the one side one can argue that this is all very convenient. Shopping is made so easy! The Chinese market is an example of developing into the direction of full consumer convenience. Faster, easier, integrated. Where convenience is no longer a differentiator - it's a habit and people start taking it for granted.

On the other hand we can argue at what cost we accept convenience. It is almost impossible not to use any of the services of Alibaba or Tencent, which in one way or the other forces the consumer to use a system where everything he says and does is tracked.

If you have ever watched Black Mirror, the episode "Nosedive" explores the dangers of integrating a class system with social media. The results are frightening.

I recommend anyone connected to the retail and eCom industry to take a trip to Shanghai. Not only will you take away best practice, but you will also get a glimpse into the future.