TED@BCG Milan
Angela Wang: How China is changing the future of shopping
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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.
Angela Wang - Retail expert
BCG's Angela Wang works with a broad range of clients in China on strategy formulation, business development and operational excellence. Full bio
BCG's Angela Wang works with a broad range of clients in China on strategy formulation, business development and operational excellence. Full bio
Double-click the English transcript below to play the video.
00:12
This is my nephew,
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Yuan Yuan.
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He's five years old,
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super adorable.
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I asked him the other day,
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"What would you like
for your birthday this year?"
for your birthday this year?"
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He said, "I want to have
a one-way mirror Spider-Man mask."
a one-way mirror Spider-Man mask."
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I had absolutely no idea
what he was talking about,
what he was talking about,
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so I said, "Wow, that's really cool,
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but how are you going to get it?"
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He told me, without a blink of his eyes,
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"I'm going to tell my mom
and make a wish before I go to bed.
and make a wish before I go to bed.
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My mom will go to shake her mobile phone.
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The next morning, the delivery uncle
will give it to me when I wake up."
will give it to me when I wake up."
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I was about to tease him,
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but suddenly I realized
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he was simply telling me the truth,
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the truth of what shopping
looks like for this generation.
looks like for this generation.
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01:03
If you think of it,
for a child like Yuan Yuan,
for a child like Yuan Yuan,
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shopping is a very different idea
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compared to what
my generation had in mind.
my generation had in mind.
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01:12
Shopping is always done on mobile,
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01:14
and payment is all virtual.
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A huge shopping revolution
is happening in China right now.
is happening in China right now.
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Shopping behaviors,
and also technology platforms,
and also technology platforms,
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have evolved differently
than elsewhere in the world.
than elsewhere in the world.
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For instance, e-commerce
in China is soaring.
in China is soaring.
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It's been growing at twice the speed
of the United States
of the United States
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and a lot of the growth
is coming from mobile.
is coming from mobile.
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Every month, 500 million consumers
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are buying on mobile phones,
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and to put that into context,
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that is a total population
of the United States,
of the United States,
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UK and Germany combined.
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But it is not just about
the scale of the e-commerce,
the scale of the e-commerce,
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it is the speed of adoption
and the aggregation of the ecosystems.
and the aggregation of the ecosystems.
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It took China less than five years
to become a country of mobile commerce,
to become a country of mobile commerce,
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and that is largely because
of the two technology platforms,
of the two technology platforms,
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Alibaba and Tencent.
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They own 90 percent of the e-commerce --
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pretty much the whole market --
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85 percent of social media,
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85 percent of internet payment.
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And they also own large volumes
of digital content, video, online movie,
of digital content, video, online movie,
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literature, travel information, gaming.
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When this huge base of mobile shoppers
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meets with aggregated ecosystems,
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chemical reactions happen.
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Today, China is like a huge laboratory
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generating all sorts of experiments.
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You should come to China,
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because here you will get
a glimpse into the future.
a glimpse into the future.
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One of the trends I have seen
concerns the spontaneity of shopping.
concerns the spontaneity of shopping.
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Five years ago, in a fashion study,
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we found that on average,
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a Chinese consumer would be buying
five to eight pairs of shoes.
five to eight pairs of shoes.
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This number tripled
to reach about 25 pairs of shoes a year.
to reach about 25 pairs of shoes a year.
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Who would need so many pairs of shoes?
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So I asked them,
"What are the reasons you buy?"
"What are the reasons you buy?"
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They told me a list of inspirations:
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blogs, celebrity news,
fashion information.
fashion information.
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03:27
But really, for many of them,
there was no particular reason to buy.
there was no particular reason to buy.
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They were just browsing
on their mobile site
on their mobile site
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and then buying whatever they saw.
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We have observed the same level
of spontaneity in everything,
of spontaneity in everything,
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from grocery shopping
to buying insurance products.
to buying insurance products.
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But it is not very difficult
to understand if you think about it.
to understand if you think about it.
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A lot of the Chinese consumers
are still very new
are still very new
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in their middle-class
or upper-middle-class lifestyles,
or upper-middle-class lifestyles,
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with a strong desire
to buy everything new,
to buy everything new,
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new products, new services.
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And with this integrated ecosystem,
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it is so easy for them to buy,
one click after another.
one click after another.
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However, this new shopping behavior
is creating a lot of challenges
is creating a lot of challenges
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for those once-dominant businesses.
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The owner of a fashion company
told me that he's so frustrated
told me that he's so frustrated
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because his customers keep complaining
that his products are not new enough.
that his products are not new enough.
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Well, for a fashion company,
really bad comment.
really bad comment.
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And he already increased the number
of products in each collection.
of products in each collection.
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It doesn't seem to work.
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So I told him there's something
more important than that.
more important than that.
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You've got to give your consumer
exactly what they want
exactly what they want
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when they still want it.
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And he can learn something
from the online apparel players in China.
from the online apparel players in China.
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These companies, they collect
real consumer feedback
real consumer feedback
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from mobile sites, from social media,
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and then their designers
will translate this information
will translate this information
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into product ideas,
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and then send them
to microstudios for production.
to microstudios for production.
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These microstudios are really key
in this overall ecosystem,
in this overall ecosystem,
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because they take small orders,
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30 garments at a time,
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and they can also make
partially customized pieces.
partially customized pieces.
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The fact that all these production designs
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are done locally,
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the whole process, from transporting
to product on shelf or online
to product on shelf or online
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sometimes takes only three to four days.
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That is super fast,
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and that is highly responsive
to what is in and hot on the market.
to what is in and hot on the market.
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And that is giving enormous headaches
to traditional retailers
to traditional retailers
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who are only thinking
about a few collections a year.
about a few collections a year.
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Then there's a consumer's need
for ultraconvenience.
for ultraconvenience.
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A couple of months ago,
I was shopping with a friend in Tokyo.
I was shopping with a friend in Tokyo.
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We were in the store,
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and there were three to four people
standing in front of us
standing in front of us
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at the checkout counter.
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Pretty normal, right?
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But both of us dropped our selection
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and walked away.
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This is how impatient we have become.
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Delivering ultraconvenience
is not just something nice to have.
is not just something nice to have.
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It is crucial to make sure
your consumer actually buys.
your consumer actually buys.
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And in China, we have learned
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that convenience is really the glue
that will make online shopping
that will make online shopping
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a behavior and a habit that sticks.
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It is sometimes more effective
than a loyalty program alone.
than a loyalty program alone.
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Take Hema.
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It's a retail grocery concept
developed by Alibaba.
developed by Alibaba.
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They deliver a full basket of products
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from 4,000 SKUs to your doorstep
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within 30 minutes.
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What is amazing is that they deliver
literally everything:
literally everything:
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fruits, vegetables, of course.
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They also deliver live fish
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and also live Alaska king crab.
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Like my friend once told me,
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"It's really my dream coming true.
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Finally, I can impress my mother-in-law
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when she comes to visit me
for dinner unexpectedly."
for dinner unexpectedly."
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07:00
(Laughter)
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Well, companies
like Amazon and FreshDirect
like Amazon and FreshDirect
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are also experimenting in the same field.
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The fact that Hema
is part of the Alibaba ecosystem
is part of the Alibaba ecosystem
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makes it faster and also
a bit easier to implement.
a bit easier to implement.
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For an online grocery player,
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it is very difficult, very costly,
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to deliver a full basket quickly,
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but for Hema, it's got a mobile app,
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it's got mobile payment,
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and also it's built 20 physical stores
in high-density areas in Shanghai.
in high-density areas in Shanghai.
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These stores are built
to ensure the freshness of the product --
to ensure the freshness of the product --
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they actually have
fish tanks in the store --
fish tanks in the store --
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and also to give locations
that will enable high-speed delivery.
that will enable high-speed delivery.
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I know the question you have on your mind.
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Are they making money?
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Yes, they are making money.
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They are breaking even,
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and what is also amazing
is that the sales revenue per store
is that the sales revenue per store
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is three to four times higher
than the traditional grocery store,
than the traditional grocery store,
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and half of the revenue orders
are coming from mobile.
are coming from mobile.
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This is really proof that a consumer,
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if you give them ultraconvenience
that really works in grocery shopping,
that really works in grocery shopping,
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they're going to switch
their shopping behaviors online,
their shopping behaviors online,
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like, in no time.
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So ultraconvenience and spontaneity,
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that's not the full story.
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The other trend I have seen in China
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is social shopping.
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If you think of social shopping
elsewhere in the world,
elsewhere in the world,
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it is a linear process.
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You pick up something on Facebook,
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watch it, and you switch to Amazon
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or brand.com to complete
the shopping journey.
the shopping journey.
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Clean and simple.
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But in China it is a very different thing.
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On average, a consumer would spend
one hour on their mobile phone shopping.
one hour on their mobile phone shopping.
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That's three times higher
than the United States.
than the United States.
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Where does the stickiness come from?
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What are they actually doing
on this tiny little screen?
on this tiny little screen?
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So let me take you
on a mobile shopping journey
on a mobile shopping journey
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that I usually would be experiencing.
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11pm, yes, that's usually when I shop.
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I was having a chat in a WeChat
chatroom with my friends.
chatroom with my friends.
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One of them took out a pack of snack
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and posted the product link
in that chatroom.
in that chatroom.
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I hate it, because usually
I would just click that link
I would just click that link
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and then land on the product page.
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Lots of information, very colorful,
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mind-blowing.
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Watched it and then
a shop assistant came online
a shop assistant came online
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and asked me, "How can I
help you tonight?"
help you tonight?"
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Of course I bought that pack of snack.
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What is more beautiful is I know
that the next day, around noontime,
that the next day, around noontime,
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that pack of snack
will be delivered to my office.
will be delivered to my office.
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I can eat it and share it
with my colleagues
with my colleagues
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and the cost of delivery,
maximum one dollar.
maximum one dollar.
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Just when I was about to leave
that shopping site,
that shopping site,
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another screen popped up.
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This time it is the livestreaming
of a grassroots celebrity
of a grassroots celebrity
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teaching me how to wear
a new color of lipstick.
a new color of lipstick.
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I watched for 30 seconds --
very easy to understand --
very easy to understand --
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and also there is
a shopping link right next to it,
a shopping link right next to it,
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clicked it, bought it in a few seconds.
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Back to the chatroom.
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The gossiping is still going on.
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Another friend of mine posted the QR code
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of another pack of snack.
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Clicked it, bought it.
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So the whole experience
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is like you're exploring
in an amusement park.
in an amusement park.
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It is chaotic, it is fun
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and it's even a little bit addictive.
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This is what's happening
when you have this integrated ecosystem.
when you have this integrated ecosystem.
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Shopping is embedded in social,
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and social is evolving
into a multidimensional experience.
into a multidimensional experience.
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The integration of ecosystems
reaches a whole new level.
reaches a whole new level.
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So does its dominance
in all aspects of our life.
in all aspects of our life.
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And of course, there are huge
commercial opportunities behind it.
commercial opportunities behind it.
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A Chinese snack company, Three Squirrels,
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built a half-a-billion-dollar business
in just three years
in just three years
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by investing in 300 to 500 shop assistants
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who are going to be online
to provide services 24/7.
to provide services 24/7.
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In the social media environment,
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they are like your neighborhood friends.
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Even when you are not buying stuff,
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they will be happy to just tell you
a few jokes and make you happy.
a few jokes and make you happy.
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In this integrated ecosystem,
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social media can really redefine
the relationship between brand,
the relationship between brand,
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retailer and consumer.
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These are only fragments
of the massive changes
of the massive changes
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I have seen in China.
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In this huge laboratory,
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a lot of experiments
are generated every single day.
are generated every single day.
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The ecosystems are reforming,
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supply chain distribution,
marketing, product innovation,
marketing, product innovation,
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everything.
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Consumers are getting the power
to decide what they want to buy,
to decide what they want to buy,
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when they want to buy it,
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how they want to buy it,
how they want to social.
how they want to social.
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It is now back to business
leaders of the world
leaders of the world
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to really open their eyes,
see what's happening in China,
see what's happening in China,
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think about it and take actions.
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Thank you.
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(Applause)
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Massimo Portincaso: Angela,
what you shared with us
what you shared with us
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is truly impressive and almost incredible,
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but I think many in the audience
had the same question that I had,
had the same question that I had,
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which is:
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Is this kind of impulsive consumption
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both economically and environmentally
sustainable over the longer term?
sustainable over the longer term?
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And what is the total price to be paid
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for such an automized
and ultraconvenient retail experience?
and ultraconvenient retail experience?
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Angela Wang: Yeah.
One thing we have to keep in mind
One thing we have to keep in mind
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is really, we are at the very beginning
of a huge transformation.
of a huge transformation.
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So with this trading up
needs of the consumer,
needs of the consumer,
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together with the evolution
of the ecosystem,
of the ecosystem,
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there are a lot of opportunities
and also challenges.
and also challenges.
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So I've seen some early signs
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that the ecosystems
are shifting their focus
are shifting their focus
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to pay attention
to solve these challenges.
to solve these challenges.
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For example, paying more
consideration to sustainability
consideration to sustainability
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alongside just about speed,
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and also quality over quantity.
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But there are really
no simple answers to these questions.
no simple answers to these questions.
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That is exactly why
I'm here to tell everyone
I'm here to tell everyone
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that we need to watch it, study it,
and play a part in this evolution.
and play a part in this evolution.
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MP: Thank you very much.
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AW: Thank you.
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(Applause)
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ABOUT THE SPEAKER
Angela Wang - Retail expertBCG's Angela Wang works with a broad range of clients in China on strategy formulation, business development and operational excellence.
Why you should listen
Angela Wang is a core member of The Boston Consulting Group’s retail sector in Greater China. Her projects have included helping a leading Chinese regional retailer develop an omnichannel strategy for its grocery and department store businesses and redesign its organization, processes, and KPIs. She worked with a regional Chinese multiformat retailer on a store portfolio strategy and a roadmap for expanding its department, mall and grocery chains. For the same client, she identified ways to achieve operational excellence and developed 5-year financial forecasts by category.
Wang also evaluated opportunities for a Chinese fashion and apparel retailer to grow in multiple categories, and she recommended a strategy to expand its key brands across a network of stores nationally.
Before joining BCG in 2010, Wang was a senior project manager at Monitor. She also interned at JPMorgan Chase.
Angela Wang | Speaker | TED.com