How China is changing the future of shopping

China is a huge laboratory of innovation, says retail expert Angela Wang, and in this lab, everything takes place on people's phones. Five hundred million Chinese consumers -- the equivalent of the combined populations of the US, UK and Germany -- regularly make purchases via mobile platforms, even in brick-and-mortar stores. What will this transformation mean for the future of shopping? Learn more about the new business-as-usual, where everything is ultra-convenient, ultra-flexible and ultra-social.

This is my nephew,

Yuan Yuan.

He's five years old,

super adorable.

I asked him the other day,

"What would you like
for your birthday this year?"

He said, "I want to have
a one-way mirror Spider-Man mask."

I had absolutely no idea
what he was talking about,

so I said, "Wow, that's really cool,

but how are you going to get it?"

He told me, without a blink of his eyes,

"I'm going to tell my mom
and make a wish before I go to bed.

My mom will go to shake her mobile phone.

The next morning, the delivery uncle
will give it to me when I wake up."

I was about to tease him,

but suddenly I realized

he was simply telling me the truth,

the truth of what shopping
looks like for this generation.

If you think of it,
for a child like Yuan Yuan,

shopping is a very different idea

compared to what
my generation had in mind.

Shopping is always done on mobile,

and payment is all virtual.

A huge shopping revolution
is happening in China right now.

Shopping behaviors,
and also technology platforms,

have evolved differently
than elsewhere in the world.

For instance, e-commerce
in China is soaring.

It's been growing at twice the speed
of the United States

and a lot of the growth
is coming from mobile.

Every month, 500 million consumers

are buying on mobile phones,

and to put that into context,

that is a total population
of the United States,

UK and Germany combined.

But it is not just about
the scale of the e-commerce,

it is the speed of adoption
and the aggregation of the ecosystems.

It took China less than five years
to become a country of mobile commerce,

and that is largely because
of the two technology platforms,

Alibaba and Tencent.

They own 90 percent of the e-commerce --

pretty much the whole market --

85 percent of social media,

85 percent of internet payment.

And they also own large volumes
of digital content, video, online movie,

literature, travel information, gaming.

When this huge base of mobile shoppers

meets with aggregated ecosystems,

chemical reactions happen.

Today, China is like a huge laboratory

generating all sorts of experiments.

You should come to China,

because here you will get
a glimpse into the future.

One of the trends I have seen
concerns the spontaneity of shopping.

Five years ago, in a fashion study,

we found that on average,

a Chinese consumer would be buying
five to eight pairs of shoes.

This number tripled
to reach about 25 pairs of shoes a year.

Who would need so many pairs of shoes?

So I asked them,
"What are the reasons you buy?"

They told me a list of inspirations:

blogs, celebrity news,
fashion information.

But really, for many of them,
there was no particular reason to buy.

They were just browsing
on their mobile site

and then buying whatever they saw.

We have observed the same level
of spontaneity in everything,

from grocery shopping
to buying insurance products.

But it is not very difficult
to understand if you think about it.

A lot of the Chinese consumers
are still very new

in their middle-class
or upper-middle-class lifestyles,

with a strong desire
to buy everything new,

new products, new services.

And with this integrated ecosystem,

it is so easy for them to buy,
one click after another.

However, this new shopping behavior
is creating a lot of challenges

for those once-dominant businesses.

The owner of a fashion company
told me that he's so frustrated

because his customers keep complaining
that his products are not new enough.

Well, for a fashion company,
really bad comment.

And he already increased the number
of products in each collection.

It doesn't seem to work.

So I told him there's something
more important than that.

You've got to give your consumer
exactly what they want

when they still want it.

And he can learn something
from the online apparel players in China.

These companies, they collect
real consumer feedback

from mobile sites, from social media,

and then their designers
will translate this information

into product ideas,

and then send them
to microstudios for production.

These microstudios are really key
in this overall ecosystem,

because they take small orders,

30 garments at a time,

and they can also make
partially customized pieces.

The fact that all these production designs

are done locally,

the whole process, from transporting
to product on shelf or online

sometimes takes only three to four days.

That is super fast,

and that is highly responsive
to what is in and hot on the market.

And that is giving enormous headaches
to traditional retailers

who are only thinking
about a few collections a year.

Then there's a consumer's need
for ultraconvenience.

A couple of months ago,
I was shopping with a friend in Tokyo.

We were in the store,

and there were three to four people
standing in front of us

at the checkout counter.

Pretty normal, right?

But both of us dropped our selection

and walked away.

This is how impatient we have become.

Delivering ultraconvenience
is not just something nice to have.

It is crucial to make sure
your consumer actually buys.

And in China, we have learned

that convenience is really the glue
that will make online shopping

a behavior and a habit that sticks.

It is sometimes more effective
than a loyalty program alone.

Take Hema.

It's a retail grocery concept
developed by Alibaba.

They deliver a full basket of products

from 4,000 SKUs to your doorstep

within 30 minutes.

What is amazing is that they deliver
literally everything:

fruits, vegetables, of course.

They also deliver live fish

and also live Alaska king crab.

Like my friend once told me,

"It's really my dream coming true.

Finally, I can impress my mother-in-law

when she comes to visit me
for dinner unexpectedly."

(Laughter)

Well, companies
like Amazon and FreshDirect

are also experimenting in the same field.

The fact that Hema
is part of the Alibaba ecosystem

makes it faster and also
a bit easier to implement.

For an online grocery player,

it is very difficult, very costly,

to deliver a full basket quickly,

but for Hema, it's got a mobile app,

it's got mobile payment,

and also it's built 20 physical stores
in high-density areas in Shanghai.

These stores are built
to ensure the freshness of the product --

they actually have
fish tanks in the store --

and also to give locations
that will enable high-speed delivery.

I know the question you have on your mind.

Are they making money?

Yes, they are making money.

They are breaking even,

and what is also amazing
is that the sales revenue per store

is three to four times higher
than the traditional grocery store,

and half of the revenue orders
are coming from mobile.

This is really proof that a consumer,

if you give them ultraconvenience
that really works in grocery shopping,

they're going to switch
their shopping behaviors online,

like, in no time.

So ultraconvenience and spontaneity,

that's not the full story.

The other trend I have seen in China

is social shopping.

If you think of social shopping
elsewhere in the world,

it is a linear process.

You pick up something on Facebook,

watch it, and you switch to Amazon

or brand.com to complete
the shopping journey.

Clean and simple.

But in China it is a very different thing.

On average, a consumer would spend
one hour on their mobile phone shopping.

That's three times higher
than the United States.

Where does the stickiness come from?

What are they actually doing
on this tiny little screen?

So let me take you
on a mobile shopping journey

that I usually would be experiencing.

11pm, yes, that's usually when I shop.

I was having a chat in a WeChat
chatroom with my friends.

One of them took out a pack of snack

and posted the product link
in that chatroom.

I hate it, because usually
I would just click that link

and then land on the product page.

Lots of information, very colorful,

mind-blowing.

Watched it and then
a shop assistant came online

and asked me, "How can I
help you tonight?"

Of course I bought that pack of snack.

What is more beautiful is I know
that the next day, around noontime,

that pack of snack
will be delivered to my office.

I can eat it and share it
with my colleagues

and the cost of delivery,
maximum one dollar.

Just when I was about to leave
that shopping site,

another screen popped up.

This time it is the livestreaming
of a grassroots celebrity

teaching me how to wear
a new color of lipstick.

I watched for 30 seconds --
very easy to understand --

and also there is
a shopping link right next to it,

clicked it, bought it in a few seconds.

Back to the chatroom.

The gossiping is still going on.

Another friend of mine posted the QR code

of another pack of snack.

Clicked it, bought it.

So the whole experience

is like you're exploring
in an amusement park.

It is chaotic, it is fun

and it's even a little bit addictive.

This is what's happening
when you have this integrated ecosystem.

Shopping is embedded in social,

and social is evolving
into a multidimensional experience.

The integration of ecosystems
reaches a whole new level.

So does its dominance
in all aspects of our life.

And of course, there are huge
commercial opportunities behind it.

A Chinese snack company, Three Squirrels,

built a half-a-billion-dollar business
in just three years

by investing in 300 to 500 shop assistants

who are going to be online
to provide services 24/7.

In the social media environment,

they are like your neighborhood friends.

Even when you are not buying stuff,

they will be happy to just tell you
a few jokes and make you happy.

In this integrated ecosystem,

social media can really redefine
the relationship between brand,

retailer and consumer.

These are only fragments
of the massive changes

I have seen in China.

In this huge laboratory,

a lot of experiments
are generated every single day.

The ecosystems are reforming,

supply chain distribution,
marketing, product innovation,

everything.

Consumers are getting the power
to decide what they want to buy,

when they want to buy it,

how they want to buy it,
how they want to social.

It is now back to business
leaders of the world

to really open their eyes,
see what's happening in China,

think about it and take actions.

Thank you.

(Applause)

Massimo Portincaso: Angela,
what you shared with us

is truly impressive and almost incredible,

but I think many in the audience
had the same question that I had,

which is:

Is this kind of impulsive consumption

both economically and environmentally
sustainable over the longer term?

And what is the total price to be paid

for such an automized
and ultraconvenient retail experience?

Angela Wang: Yeah.
One thing we have to keep in mind

is really, we are at the very beginning
of a huge transformation.

So with this trading up
needs of the consumer,

together with the evolution
of the ecosystem,

there are a lot of opportunities
and also challenges.

So I've seen some early signs

that the ecosystems
are shifting their focus

to pay attention
to solve these challenges.

For example, paying more
consideration to sustainability

alongside just about speed,

and also quality over quantity.

But there are really
no simple answers to these questions.

That is exactly why
I'm here to tell everyone

that we need to watch it, study it,
and play a part in this evolution.

MP: Thank you very much.

AW: Thank you.

(Applause)