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← How China is changing the future of shopping

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Showing Revision 7 created 12/15/2017 by Brian Greene.

  1. This is my nephew,
  2. Yuan Yuan.
  3. He's five years old,
  4. super adorable.
  5. I asked him the other day,
  6. "What would you like
    for your birthday this year?"
  7. He said, "I want to have
    a one-way mirror Spider-Man mask."
  8. I had absolutely no idea
    what he was talking about,
  9. so I said, "Wow, that's really cool,
  10. but how are you going to get it?"
  11. He told me, without a blink of his eyes,
  12. "I'm going to tell my mom
    and make a wish before I go to bed.
  13. My mom will go to shake her mobile phone.
  14. The next morning, the delivery uncle
    will give it to me when I wake up."
  15. I was about to tease him,
  16. but suddenly I realized
  17. he was simply telling me the truth,
  18. the truth of what shopping
    looks like for this generation.
  19. If you think of it,
    for a child like Yuan Yuan,

  20. shopping is a very different idea
  21. compared to what
    my generation had in mind.
  22. Shopping is always done on mobile,
  23. and payment is all virtual.
  24. A huge shopping revolution
    is happening in China right now.

  25. Shopping behaviors,
    and also technology platforms,
  26. have evolved differently
    than elsewhere in the world.
  27. For instance, e-commerce
    in China is soaring.
  28. It's been growing at twice the speed
    of the United States
  29. and a lot of the growth
    is coming from mobile.
  30. Every month, 500 million consumers
  31. are buying on mobile phones,
  32. and to put that into context,
  33. that is a total population
    of the United States,
  34. UK and Germany combined.
  35. But it is not just about
    the scale of the e-commerce,
  36. it is the speed of adoption
    and the aggregation of the ecosystems.
  37. It took China less than five years
    to become a country of mobile commerce,
  38. and that is largely because
    of the two technology platforms,
  39. Alibaba and Tencent.
  40. They own 90 percent of the e-commerce --
  41. pretty much the whole market --
  42. 85 percent of social media,
  43. 85 percent of internet payment.
  44. And they also own large volumes
    of digital content, video, online movie,
  45. literature, travel information, gaming.
  46. When this huge base of mobile shoppers
  47. meets with aggregated ecosystems,
  48. chemical reactions happen.
  49. Today, China is like a huge laboratory
  50. generating all sorts of experiments.
  51. You should come to China,
  52. because here you will get
    a glimpse into the future.
  53. One of the trends I have seen
    concerns the spontaneity of shopping.

  54. Five years ago, in a fashion study,
  55. we found that on average,
  56. a Chinese consumer would be buying
    five to eight pairs of shoes.
  57. This number tripled
    to reach about 25 pairs of shoes a year.
  58. Who would need so many pairs of shoes?
  59. So I asked them,
    "What are the reasons you buy?"
  60. They told me a list of inspirations:
  61. blogs, celebrity news,
    fashion information.
  62. But really, for many of them,
    there was no particular reason to buy.
  63. They were just browsing
    on their mobile site
  64. and then buying whatever they saw.
  65. We have observed the same level
    of spontaneity in everything,
  66. from grocery shopping
    to buying insurance products.
  67. But it is not very difficult
    to understand if you think about it.
  68. A lot of the Chinese consumers
    are still very new
  69. in their middle-class
    or upper-middle-class lifestyles,
  70. with a strong desire
    to buy everything new,
  71. new products, new services.
  72. And with this integrated ecosystem,
  73. it is so easy for them to buy,
    one click after another.
  74. However, this new shopping behavior
    is creating a lot of challenges
  75. for those once-dominant businesses.
  76. The owner of a fashion company
    told me that he's so frustrated
  77. because his customers keep complaining
    that his products are not new enough.
  78. Well, for a fashion company,
    really bad comment.
  79. And he already increased the number
    of products in each collection.
  80. It doesn't seem to work.
  81. So I told him there's something
    more important than that.
  82. You've got to give your consumer
    exactly what they want
  83. when they still want it.
  84. And he can learn something
    from the online apparel players in China.
  85. These companies, they collect
    real consumer feedback
  86. from mobile sites, from social media,
  87. and then their designers
    will translate this information
  88. into product ideas,
  89. and then send them
    to microstudios for production.
  90. These microstudios are really key
    in this overall ecosystem,
  91. because they take small orders,
  92. 30 garments at a time,
  93. and they can also make
    partially customized pieces.
  94. The fact that all these production designs
  95. are done locally,
  96. the whole process, from transporting
    to product on shelf or online
  97. sometimes takes only three to four days.
  98. That is super fast,
  99. and that is highly responsive
    to what is in and hot on the market.
  100. And that is giving enormous headaches
    to traditional retailers
  101. who are only thinking
    about a few collections a year.
  102. Then there's a consumer's need
    for ultraconvenience.

  103. A couple of months ago,
    I was shopping with a friend in Tokyo.
  104. We were in the store,
  105. and there were three to four people
    standing in front of us
  106. at the checkout counter.
  107. Pretty normal, right?
  108. But both of us dropped our selection
  109. and walked away.
  110. This is how impatient we have become.
  111. Delivering ultraconvenience
    is not just something nice to have.
  112. It is crucial to make sure
    your consumer actually buys.
  113. And in China, we have learned
  114. that convenience is really the glue
    that will make online shopping
  115. a behavior and a habit that sticks.
  116. It is sometimes more effective
    than a loyalty program alone.
  117. Take Hema.
  118. It's a retail grocery concept
    developed by Alibaba.
  119. They deliver a full basket of products
  120. from 4,000 SKUs to your doorstep
  121. within 30 minutes.
  122. What is amazing is that they deliver
    literally everything:
  123. fruits, vegetables, of course.
  124. They also deliver live fish
  125. and also live Alaska king crab.
  126. Like my friend once told me,
  127. "It's really my dream coming true.
  128. Finally, I can impress my mother-in-law
  129. when she comes to visit me
    for dinner unexpectedly."
  130. (Laughter)

  131. Well, companies
    like Amazon and FreshDirect

  132. are also experimenting in the same field.
  133. The fact that Hema
    is part of the Alibaba ecosystem
  134. makes it faster and also
    a bit easier to implement.
  135. For an online grocery player,
  136. it is very difficult, very costly,
  137. to deliver a full basket quickly,
  138. but for Hema, it's got a mobile app,
  139. it's got mobile payment,
  140. and also it's built 20 physical stores
    in high-density areas in Shanghai.
  141. These stores are built
    to ensure the freshness of the product --
  142. they actually have
    fish tanks in the store --
  143. and also to give locations
    that will enable high-speed delivery.
  144. I know the question you have on your mind.
  145. Are they making money?
  146. Yes, they are making money.
  147. They are breaking even,
  148. and what is also amazing
    is that the sales revenue per store
  149. is three to four times higher
    than the traditional grocery store,
  150. and half of the revenue orders
    are coming from mobile.
  151. This is really proof that a consumer,
  152. if you give them ultraconvenience
    that really works in grocery shopping,
  153. they're going to switch
    their shopping behaviors online,
  154. like, in no time.
  155. So ultraconvenience and spontaneity,

  156. that's not the full story.
  157. The other trend I have seen in China
  158. is social shopping.
  159. If you think of social shopping
    elsewhere in the world,
  160. it is a linear process.
  161. You pick up something on Facebook,
  162. watch it, and you switch to Amazon
  163. or brand.com to complete
    the shopping journey.
  164. Clean and simple.
  165. But in China it is a very different thing.
  166. On average, a consumer would spend
    one hour on their mobile phone shopping.
  167. That's three times higher
    than the United States.
  168. Where does the stickiness come from?
  169. What are they actually doing
    on this tiny little screen?
  170. So let me take you
    on a mobile shopping journey
  171. that I usually would be experiencing.
  172. 11pm, yes, that's usually when I shop.

  173. I was having a chat in a WeChat
    chatroom with my friends.
  174. One of them took out a pack of snack
  175. and posted the product link
    in that chatroom.
  176. I hate it, because usually
    I would just click that link
  177. and then land on the product page.
  178. Lots of information, very colorful,
  179. mind-blowing.
  180. Watched it and then
    a shop assistant came online
  181. and asked me, "How can I
    help you tonight?"
  182. Of course I bought that pack of snack.
  183. What is more beautiful is I know
    that the next day, around noontime,
  184. that pack of snack
    will be delivered to my office.
  185. I can eat it and share it
    with my colleagues
  186. and the cost of delivery,
    maximum one dollar.
  187. Just when I was about to leave
    that shopping site,

  188. another screen popped up.
  189. This time it is the livestreaming
    of a grassroots celebrity
  190. teaching me how to wear
    a new color of lipstick.
  191. I watched for 30 seconds --
    very easy to understand --
  192. and also there is
    a shopping link right next to it,
  193. clicked it, bought it in a few seconds.
  194. Back to the chatroom.

  195. The gossiping is still going on.
  196. Another friend of mine posted the QR code
  197. of another pack of snack.
  198. Clicked it, bought it.
  199. So the whole experience
  200. is like you're exploring
    in an amusement park.
  201. It is chaotic, it is fun
  202. and it's even a little bit addictive.
  203. This is what's happening
    when you have this integrated ecosystem.
  204. Shopping is embedded in social,
  205. and social is evolving
    into a multidimensional experience.
  206. The integration of ecosystems
    reaches a whole new level.
  207. So does its dominance
    in all aspects of our life.
  208. And of course, there are huge
    commercial opportunities behind it.

  209. A Chinese snack company, Three Squirrels,
  210. built a half-a-billion-dollar business
    in just three years
  211. by investing in 300 to 500 shop assistants
  212. who are going to be online
    to provide services 24/7.
  213. In the social media environment,
  214. they are like your neighborhood friends.
  215. Even when you are not buying stuff,
  216. they will be happy to just tell you
    a few jokes and make you happy.
  217. In this integrated ecosystem,
  218. social media can really redefine
    the relationship between brand,
  219. retailer and consumer.
  220. These are only fragments
    of the massive changes

  221. I have seen in China.
  222. In this huge laboratory,
  223. a lot of experiments
    are generated every single day.
  224. The ecosystems are reforming,
  225. supply chain distribution,
    marketing, product innovation,
  226. everything.
  227. Consumers are getting the power
    to decide what they want to buy,
  228. when they want to buy it,
  229. how they want to buy it,
    how they want to social.
  230. It is now back to business
    leaders of the world
  231. to really open their eyes,
    see what's happening in China,
  232. think about it and take actions.
  233. Thank you.

  234. (Applause)

  235. Massimo Portincaso: Angela,
    what you shared with us

  236. is truly impressive and almost incredible,
  237. but I think many in the audience
    had the same question that I had,
  238. which is:
  239. Is this kind of impulsive consumption
  240. both economically and environmentally
    sustainable over the longer term?
  241. And what is the total price to be paid
  242. for such an automized
    and ultraconvenient retail experience?
  243. Angela Wang: Yeah.
    One thing we have to keep in mind

  244. is really, we are at the very beginning
    of a huge transformation.
  245. So with this trading up
    needs of the consumer,
  246. together with the evolution
    of the ecosystem,
  247. there are a lot of opportunities
    and also challenges.
  248. So I've seen some early signs
  249. that the ecosystems
    are shifting their focus
  250. to pay attention
    to solve these challenges.
  251. For example, paying more
    consideration to sustainability
  252. alongside just about speed,
  253. and also quality over quantity.
  254. But there are really
    no simple answers to these questions.
  255. That is exactly why
    I'm here to tell everyone
  256. that we need to watch it, study it,
    and play a part in this evolution.
  257. MP: Thank you very much.

  258. AW: Thank you.

  259. (Applause)