Trends from Asia: A smarter way to shop?

Date : 15 April 2013

What conditions make Asian markets so receptive to the online/offline model? Looking at how this trend has progressed, we focus on some key examples to sketch the shape that online/offline developments might take in the future.

QR code walls – media stunt or innovative solution for busy shoppers?

In 2011 Tesco launched the world’s first virtual store – a QR code shopping wall in a subway station in Seoul, South Korea. Grabbing global attention, the same technique has since been replicated by retailers across the world. However, unlike other markets, in South Korea this method of shopping has moved beyond the trial phase: in 2012 Tesco installed QR codes at twenty bus stop locations to capture a young and busy shopper demographic on their daily commute to work or study.

Why is Asia a receptive market?

The trends driving the success of online/offline initiatives in countries such as Japan and South Korea are not unique to the Asian region. Rather it is a particular recipe which accounts for such a receptive and forward-thinking market.

  • Dense urban populations; on a practical level this means offline campaigns have high impact as they are seen by a lot of people. It also means shoppers are likely to be seeking convenience therefore open to quick and easy shopping solutions
  • Smartphone penetration. This enables retailers and suppliers to interact with shoppers between the traditional and e-commerce environment. It creates a portal to connect with them beyond the shopping experience, with the opportunity to do so in a personalised way
  • Linked to this is a strong propensity to engage with social networks. The availability of faster, mobile-accessible internet has made social networks easier to access which in turn facilitates the rapid spread of information
  • Finally, shopping as a form of entertainment has a firm appeal in the region, which can be unlocked effectively through gamification

The rise of m-commerce

Mobile capability serves a dual purpose; it is a new channel for sales and it enables a seamless, omni-channel shopping experience. M-commerce is growing quickly, but at present it accounts for a small proportion of total online transactions. Alipay, China’s largest online payment platform, reported $193m mobile sales of a total $3bn on Singles Day (similar to Black Friday in the US) in 2012 – around 6.4%. However, this relatively small group of mobile shoppers represents a massive opportunity for the future. In China, mobile is the cheaper and easier way to browse the internet, so for new users it is increasingly the first and primary point of entry. Mobile will be a natural way for these users to access online shopping, too. Providing a positive first impression, including mobile compatibility, will be essential to establishing trust and loyalty and building a platform for future growth.

Smartphones - smoothing the transition between in-store and out-of-store experience

In Asia smartphone technology is being employed as a flexible, practical tool to target shopper needs and tap in to behavioural trends.

Delivering flexible promotions: South Korean convenience retailer GS25’s app allows shoppers to store multi-buy promotions in a virtual fridge. This simple concept brings a new dimension to personalised promotion and means mechanics such as buy-one-get-one-free have resonance with a wider audience.

The function is well tailored for small stores in busy areas, with a demographic that might include a high number of single person households, people short on storage space or seeking to reduce waste. Shoppers can redeem their second item on a future trip, driving repeat visits to the store, or share it with a friend, widening the network of shoppers.

Merging the best of online and offline: Last year the leading Chinese online grocery company Yihaodian opened 1,000 virtual stores in central locations across the country. Unlike previous ‘virtual stores’ in which shoppers scanned QR codes with a reader in their phone, Yihaodian used augmented reality technology to deliver its stores. This meant there was no physical presence at all - only shoppers who had downloaded the Yihaodian application could locate, experience and shop in the stores. By taking away the two most arduous elements of grocery shopping – queuing and carrying – but maintaining the action of walking round a traditionally laid out store only visible through a smartphone, Yihaodian simultaneously provided the most familiar and unique digital shopping experience to date.

Shopping as entertainment: The iButterfly app has been used across Asia by a variety of companies to entertain shoppers, as well as deliver rewards. Using augmented reality, virtual butterflies act as paperless coupons which shoppers catch with their phones, directing them to the site for further product information and social media interaction. A great example of this was The Body Shop in Singapore, which created a virtual aviary, filling stores with iButterflies with promotions to redeem at the till.

Exploring new modes of communication: One to watch out for in the future is the ChatPerf application, currently under development in Japan. Users download the app and purchase a perfume bottle attachment for their mobile. Blasts of scent can then be sent using the chat functions on social media sites. Aromatic installations have been used by both brands and retailers in store and in various public locations, but this extends the reach into the home. Technical issues and cost provide barriers to widespread usage of this technology at the moment. However, it has the potential to be a powerful extra dimension when the great number of visual and audio messages can leave the shopper overwhelmed.

Mobile: A versatile solution

These examples have two common traits: they operate within shoppers’ existing behavioural patterns and they address a particular need or inclination. Such initiatives can be a starting point for a retailer or supplier who does not yet have the capability to sell through the digital channel, or a step towards omni-channel operations for those who are further developed. In either case, a distinctive, exciting and tailored approach is vital in raising awareness in the vibrant social media and application market.

Want to know more?

Take a look at our 'China's e-commerce explosion & what it means for grocery' Special Analysis where we investigate where online grocery shopping fits into this picture, and how grocery retailers are navigating the fast-changing market dynamics.

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