Think and act local

The history of retail has been a story worth telling in the annals of human evolution. The earliest concept of a “marketplace” was seen as far back as 800 BC in Ancient Greece. Those were the earliest retail “channels” being established. Merchants and craftsmen gathered in open-air, tented marketplaces in the city, often called Agora (pronounced Ah-go-RAH). From there to here, the Omni-Channel world we are in, it’s been quite a journey. Today, plain Jane e-commerce models are giving way to social shopping and “online markeplaces” — and these digital models are re-defining the very concept of retail, consumer engagement and marketing. While a lot of the digitisation of retail and commerce is happening across the developed world (like the US) and emerging economies (like India, Indonesia), in China it is happening at an alarming pace and in “ways” that are different and progressive. This throws up some interesting parallels between China and India, and looking at the Chinese retail scenario closely, might give us hidden clues on what the future holds for other markets as well, including our own. According to a McKinsey study, eCommerce in China accounted for roughly $630 billion in sales in 2015. That number has grown $752 billion in sales in 2016. And the number of international brands that operate “online stores” on Alibaba-owned TMALL has grown to 14,500 in 2016, up from 5,400 last year — a staggering 169 per cent growth! For many top apparel retail brands in China today, anywhere between 40 per cent to  80 per cent of their online sales come from TMALL, while the rest come from Taobao (also owned by Alibaba), JD.com, and others — all of which are e-commerce Marketplaces. So, clearly, strongly established marketplaces is not only a differentiator, but in many ways also a driver of growth for retail in China. Also, social media as an influencer and enabler of transactions has gained substantial ground over the last couple of years. WeChat, owned by Tencent, has not only become the messaging medium of choice, but is the “life” app that people go to for everything — right from conversations with friends and family, to booking a cab, to making restaurant reservations, ordering laundry, making payments and now social shopping. In China today, these two powerhouses, Alibaba and Tencent, are leading the charge on innovation towards driving “conversation” around retail, and “retail” around conversations. These dual trends of “Marketplaces” and rise of social shopping, throws up some key challenges for consumer engagement and marketing in the Chinese retail scene: First, the medium to communicate is no longer email and SMS. Increasingly, brands in China are moving conversations with consumers onto WeChat. From loyalty points, to invite-only events, coupons and rewards, everything is moving to WeChat. And a lot of these conversations in private chat groups, can be easily linked to transactions, and sales, often within WeChat itself. Contrast that with India, where most of the loyalty or CRM-related communication still happens over email, SMS (and sometimes direct marketing, or phone, in case of luxury brands). Of course, this is because no other messaging or social platform has opened up their hallways for brands to engage with consumers, the way WeChat has in China. (WhatsApp and Facebook Messenger have made announcements over the past year, hinting on plans in similar directions.) Second, the sheer volumes that brands sell via online marketplaces in China means that they are heavily dependent on these marketplaces to open up communication channels, which are often not so open, since contact information is always withheld with the marketplaces. Hence, a key challenge for retailers is: How can we deliver the same post-sale experience, customer service, or loyalty rewards to a consumer as I would if she bought the same product from our offline stores? The answer to these questions obviously varies a lot between how dominant marketplaces like Flipkart, Amazon, and Alibaba operate in individual countries. However, from a retail marketing-and-loyalty lens, one thing is clear: The rules of engagement in the omni-channel world are being re-written, and for every global retail brand, the approach is governed largely by the markets that they operate in — and the approaches for the Chinese and India markets also vary significantly. In fact, if anything the Indian e-commerce and digital ecosystem have some distance to go, in order to catch-up with the mature Chinese models. However, the solution has to be indigenous to Indian culture sensibilities and market dynamics. The paradigm of “think global, act local” is changing to “think local, act local.”
(The writer is general manager, China & North Asia, Capillary Technologies)