China lets a million influencers bloom
The internet boom reached China late, but the country’s consumers have adapted to life online more rapidly and thoroughly than those anywhere else. E-commerce sales soared past $1 trillion last year, the highest anywhere in the world. Here groceries can be delivered to your home within the hour, and street vendors prefer mobile payment over cash. China has fewer malls and stores than the US, but even these have seen sales slump as consumers prefer to venture outside for experiences, not shopping. In a sign of ecommerce’s dominance over brick-and-mortar retail, internet giant Alibaba Group Holding Ltd, which runs the biggest e-commerce platform in the world, last year paid about $6 billion to take control of China’s top supermarket chain and one of its biggest department-store franchises. Its goal is to have control over more data on customers, whether they’re shopping in stores or online.
China’s influencers are light-years ahead of Kylie Jenner and her ilk. Thousands of them have capitalised on their online popularity to establish clothing and beauty lines, and some even sell bigger-ticket items such as cars directly to fans. They do this through a multitude of livestreaming apps that reach an audience of 398 million. Among those with the largest followings are Little Red Book, an e-commerce/social media site that claims 100 million users, and Meipai, a video-sharing platform, an offshoot of selfie app Meitu, which has 152 million users. Spurred by the success of these players, Alibaba’s giant Taobao marketplace added livestreaming for merchants in early 2016.
One of the most popular influencers, model Zhang Dayi, sold 20 million yuan ($2.9 million) in apparel in a two-hour livestream in 2016. Unlike many American influencers, who get paid for endorsing existing brands, Zhang and many of her peers own businesses that design and sell products created around their personalities and lifestyles.
Spurred by consumers who crave novelty and adapt quickly to new technology, Alibaba, Tencent Holdings Ltd., and a host of other startups are rolling out technologies that may still be in beta model—or that could face pushback in markets where privacy is more jealously guarded. One restaurant in Hangzhou has been trialing a system called Smile to Pay powered by Ant Financial Services Group, Alibaba’s mobile payment unit. Yum China Holdings Inc, which operates about 7,000 KFC and Pizza Hut restaurants in China, has launched a franchise called KPRO aimed at younger, higher-income consumers. KPRO serves more healthful fare, including fresh salads and panini. Diners place their order at a digital kiosk that scans their face with a 3D camera, collecting biometric data it matches with information on Ant’s servers. Users key in their mobile number for added security. The company credits the lightning-fast system with thinning lines during peak hours.
Alibaba has equipped a store in Hangzhou that sells the Korean brand Innisfree’s beauty products with “magic” mirrors that use augmented-reality technology so a shopper can virtually try on different shades of lipstick or eye shadow. The customer waves an attached wand over her face; the mirror displays recommended products based on readings of her skin moisture, pigmentation, and wrinkling. If a customer picks up a bottle of moisturiser from one of the smart shelves, product information automatically appears on an adjacent screen.
Car shopping in Guangzhou, China’s third-largest city, became a bit less painful in March. Instead of having to go from dealership to dealership to kick the tyres on models, a prospective buyer can schedule a test drive by going online. She can pick up the vehicle at a Ferris-wheel-like vending machine built by Alibaba. The structure holds 30 automobiles in a stack —including BMW, Ford, and Volvo. The fee for a three-day test drive is only a couple of hundred yuan (less than $50), but the security deposit can go up to the thousands. Alibaba says “dozens” more of the machines are planned in cities across China.
A decade-long government crackdown has closed the bazaars in Beijing and Shanghai that used to peddle counterfeit bags, watches, and shoes. But demand for copycats persists, as evidenced by the popularity of a shopping app called Yanxuan, which means “strict selection” in Mandarin. The app connects to a marketplace that displays a broad range of items from bedsheets to backpacks that are supposedly sourced directly from the same local factories that produce goods for Muji, Nine West, and other international brands. A pair of sandals manufactured by “a supplier to Birkenstock” is priced at about 60 yuan ($8.70), while the same style sells for about $100 on the German brand’s website.
The site, which launched in 2016 and is the property of NetEase Inc., has come under fire from foreign brands. In a statement to Bloomberg, the American Apparel & Footwear Association said, “any claim that products are ‘made by the same manufacturer’ as another major brand is a tell-tale sign of a possible bad actor.” NetEase spokesperson Zhu Yanying says, “the reason we specify which major brands the sellers supply is to let our customers know that the products on sale are from very outstanding manufacturers.”
Instead of having to go from dealership to dealership to kick the tyres on models, a prospective buyer can schedule a test drive by going online