HOW CHINA DOES OMNICHANNEL

By PYMNTS @pymnts

What's Next In Payments®

6:15 AM EDT April 8th, 2015

Whether it’s a conversation in the U.S. or China, whether it’s about commerce online or via bricks-and-mortar — for retailers and e-tailors, it’s about developing strategies that demonstrate to its core consumer base that its strategy is all about the “customer experience.”

Major U.S. retailers like Best Buy, Macy’s and Target have reported that they’ve seen significant results from implementing omnichannel solutions like shop online, pick up in store. Target has taken that a step further and gone after a “bricks-and-mobile strategy” by driving in-store shopping, but with a mobile touch. 

And in China, the commerce scene is even broader and comes with even more consumer options. 

With a much more massive consumer base to tap into, there’s a new hybrid breed of physical-store/eCommerce that’s sprouting up in neighborhoods across China’s largest cities. At a time where all eyes are on the eCommerce growth of China’s largest marketplaces, there’s a subset of eCommerce companies that aim to produce the ultimate brick-and-commerce strategy by putting the online shopping experience right into the storefronts of local neighborhood shops. 

And as it turns out – shop online and pick up in store happens, well, in store.

The unique retail strategy involves having touchscreen kiosks installed in local stores that allows customers to choose their products while browsing and then picking those items up the next day. In sort of the anti-Amazon or anti-Alibaba strategy, these little kiosks seem to have an edge since they’ve already got a spot in a physical retailer environment that lets consumers pick out physical products. For many consumers, there’s still an appeal for that type of convenience that allows the shoppers to sift through a specific group of items without being bogged down by massive eCommerce marketplace offerings. 

Since most local shops are small storefronts, they are space constrained – and therefore, can’t really have a huge influx of inventory. That, in turn, limits their customer base – a customer base that may turn to an online marketplace to fulfill their commerce needs.

Enter kiosks in stores. Turns out that they play a pretty major role in keeping the local shops afloat. One Beijing-based eCommerce company, Vinux.com, recently launched into the neighborhood store scene by adding three into the metro region of Chongqing — a Southwest Chinese city with 29 million people. 

Reducing inventory also means reducing costs for the retailer and the customer.

“We don’t keep inventory in our stores, so that our prices can be 10 percent less than that in other grocery stores,” Cao Xueshu, Vinux’s director, said in an interview. 

While China is bustling with eCommerce shoppers, theirs is a population still looking to their neighborhood shops to provide their commerce experience. Vinux kiosks give them a virtual shop without having to login online. This could be particularly helpful in some regions of China that have spotty, or slow Internet connections that sends more consumers reaching toward mobile than computer connections.

The kiosks also give the shops a chance to provide their core customer base with the convenience of shopping in store, and picking up later. Much like in the U.S. with stores looking to add order-online, pick-up-in-store options, China’s eCommerce companies have started a trend in neighborhoods to connect eCommerce and bricks-and-mortar as a new and innovative way to appeal to China’s fast-moving massive population of 1.4 billion. Vinux, for example, said it has plans to add its kiosks into thousands of stores.

While the growth of the Chinese eCommerce market is expected to triple in 2015, hitting an estimated 350 million shoppers that translates to roughly 2.6 trillion yuan (roughly $419 billion USD). It’s no wonder every eCommerce company wants a piece of the Chinese commerce market, and it’s no secret why companies like Alibaba are looking to grow their presence on and off mainland China. Sure, 350 million online shoppers is a big chunk of the commerce pie, but in China there’s still a large portion of shoppers for the bricks-and-mortar stores to capture. That’s where companies like Vinux.com and Yhd.com (Walmart’s Chinese eCommerce site) are trying to recreate the customer experience by merging eCommerce and bricks-and-mortar through local neighborhood shops. 

Walmart’s Chinese eCommerce affiliate, for example, has a major online presence but it also has physical neighborhood storefronts in Shanghai, which the company relies on to show their consumer base the goods they offer so they can then go online and shop for them. This “experience store,” as the company refers to it as, also allows consumers to shop online and pick up later at a designated store. Once the stores opened in 2014, the company reported that their sales from residents in the area doubled — which gave them the incentive to potentially opening more in 2015. 

“We are planning to open more offline stores in such cities as Beijing, Tianjin, Shenzhen and Guangzhou in this year,” Chairman Yu Gang told Internet Retailer at the beginning of 2015. 

Clearly, the bricks-and-mortar shops haven’t lost their edge in the bustling shopping economy in China. And it appears for many local neighborhoods, the bricks-and-click strategies that may appeal to the broadest consumer base are those that provide their customer base with the option to shop online, shop in store, or shop online while shopping in the physical store through an eCommerce kiosk. 

How’s that for omnichannel?