Online-to-offline trend a sign of omnichannel fashion retailing’s growth in China and US
‘New retail’ strategy of moving from purely online sales to having bricks-and-mortar stores embraced by the likes of Xiaohongshu and Tmall in China, and Everlane in United States
It can sometimes be difficult to imagine bricks-and-mortar stores still have a future in China, so all-encompassing has e-commerce become in the country. But many new-generation online fashion and beauty start-ups have discovered that the next logical growth step is to take their online marketplace, well, offline.
E-commerce giant Alibaba has been setting the pace for a new kind of retailing in China, one in which big data, consumer insights, digital discovery, and logistics create an efficient, elevated experience for the shopper in the physical space.
A 2017 report by Boston Consulting Group and Alibaba says: “In this new world, the distinction between online and offline commerce disappears, and the way the consumer thinks and behaves across all channels determines the way the merchant runs its business.”
The highest-profile case for this omnichannel model both in China and the United States has been the supermarket – Amazon’s takeover of Whole Foods, for example, provides shoppers with more convenient access to the products they use on a regular basis by allowing them to order ahead of their grocery store trip, and by stocking brands based on consumer demand.
In the past year, smaller digital retailers have begun embracing the benefits of bricks and mortar, especially in the US. There, numerous fashion and beauty brands launched online have opened showrooms to enhance the customer experience. Everlane, a San Francisco-based clothing retailer, opened two stores on the country’s east and west coasts that feature a curated selection of clothing, shoes and accessories.
Consumer engagement and transparency are priorities in the store: placards and installations that have information about each of the factories the brand works with are dotted around the shop.
Everlane’s founder and CEO, Michael Preysman, told fashion-focused website Racked during the opening of its New York branch: “We’ve realised that customers really want to come by and spend time with our staff and ambassadors here, and also just get to know the product and the stories behind it.”
He said it’s important to just have a few carefully selected offline locations to “help bring an expression of the brand to life”.
Athleisure brand Outdoor Voices, menswear start-up Bonobos, and, of course, eyewear company Warby Parker have all followed the online-to-offline model.
E-commerce companies in China, from smaller start-ups to cross-border giants, are also embracing this trend, and for similar reasons. In June, cross-border commerce app Little Red Book, or Xiaohongshu, decided to take some of its most well-reviewed products and brands to its community offline for the first time by opening a store in Shanghai.
Xiaohongshu launched its app in 2013 as a service for travelling Chinese consumers to research products before shopping abroad; it now sells crossover products spanning beauty, health and fashion to its more than 100 million users.
On the app, users can upload short videos, photos, and long posts about their experiences with their purchases. Xiaohongshu catered to this community in its bricks-and-mortar shop by creating social spaces for hanging out and installing digital screens that feature product reviews.
Customers can still experience the conveniences of the digital world while interacting with tangible objects – an augmented reality make-up tool, for example, lets shoppers test out their favourite beauty products.
Kaola, operated by Chinese internet technology firm NetEase, opened its first bricks-and-mortar store in the eastern city of Hangzhou earlier this year. It carries almost its full range of beauty, luxury, electronics, and baby products. Shoppers can interact with the products before buying them, and consult a digital pricing screen that is coordinated with Kaola’s online offering so that they do not miss out on any online-only deals.
Alibaba’s foray into offline business has moved beyond the grocery store as well. In 2014, it invested US$629 million in Chinese department store Intime, Four years later, its cross-border luxury e-commerce platform Tmall Global opened an offline shop at Intime’s Hangzhou outlet that stocks products from more than 70 countries, with the selection based on the buying patterns of consumers within five kilometres of the store.
Tmall has also opened a service centre in the mall where customers can get access to professional luxury handbag cleaning, mobile phone repair, and jewellery and watch cleaning and repair.
“We want to solve some of the core problems shoppers encounter, such as the services they need being too scattered or [operations] lacking in transparency,” said Liu Yandi, the head of Tmall’s shopping experience division. “We want to provide them with a platform that is trustworthy, standardised and worry-free.”
Intime itself has been reaping the benefits of Alibaba’s investment, launching its own mobile app that customers can use to scan clothing tags to learn more about products in the store without having to take the extra steps to research them online.
Customers’ orders are processed through the app so that it can ship items from the closest delivery centre to where they live and optimise efficiency; because everything is synced in the system, orders from warehouses within 10 kilometres of the delivery address can be shipped in two hours. (Alibaba owns the Post).
There are signs that China’s other major e-commerce operators will adopt this model.
JD.com opened an unstaffed convenience store this spring. Luxury e-commerce platform Secoo created “offline experience centres” for its customers to help drive its website in a more lifestyle-oriented direction.
In March, Secoo went a step further in its “new retail” strategy, launching a pop-up cocktail bar to debut its new premium cocktail line.
Secoo CEO Eric Chan is intent on embracing the online-to-offline trend, saying that it gives customers “a more intimate luxury experience that will further distinguish our services from traditional retail spaces as well as other major online and bricks-and-mortar rivals”.