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Global Japan
JUN 26, 2018

Alibaba Spurs New Retail in China: Online Merge Offline

By Faizal Latiff
Shutterstock/ldprod

In 2017, a business trend called New Retail emerged in China as the brainchild of Alibaba founder Jack Ma. New Retail is the digital transformation of old-school retail into a new model called Online Merge Offline (OMO). The rapid rise of smartphone users, frictionless mobile payment systems such as Alipay, advancements in AI, and cheaper and better sensors have all contributed to the rise of OMO.

Hema Supermarket was recently launched by Alibaba. Expected to reach more than 25 domestic outlets in 2018, it is a cashless supermarket that is changing the shopping experience, offering a huge selection of fresh food that shoppers can select and send to the kitchen to be cooked before the end of their trip. Shoppers can also order groceries online for delivery in under 30 minutes, using their smartphones to shop and pay.

In short, Hema Supermarket is like an integrated food court powered by e-commerce.

New Retail is revolutionizing the way we shop and the experience of shopping itself by creating new value for customers. No longer do we need to visit one store for food, another for home goods, yet another for medicines, and finally a restaurant to enjoy a meal. Shoppers can do all that in one place, which has the added benefit of more time with family and friends.

Now you may be wondering: what enabled this to happen in China?

Alibaba and Tencent played a major role in changing China into the largest e-commerce market, further fueling the country’s level of technological innovation. Population density also plays a part in China’s multichannel and omnichannel marketing strategies. 

Once the New Retail concept achieves stability, this business model will likely be exported to mature markets in Asia such as Japan, South Korea, Singapore, Indonesia, and Malaysia. Potentially, it may even reach cities in Australia.

Certainly, the dominance of China in the creation of new customer value promises an exciting future for the transformation of business on a global scale.