NEXT16: Stephanie Rieger on how China is digitally leapfrogging the West
If you want to see our digital future, look to China and Africa. There, they are rapidly prototyping the future of commerce.
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Chine has 41 cities with more than 2m – and they’re growing rapidly. The middle class in China is growing at a rate of 80,000 a day. There’s a tendency to believe that the internet is a great way for reaching the underserved in rural areas – but the same is true for the millions in the cities. In China online shopping is shopping, and mobile is the dominant or only source of internet for many.
90% of online retail is through online marketplaces. They’re a virtual equivalent of physical marketplaces – a space where buyers and sellers come together. Alibaba is the biggest – with Tmall for established brands. There’s a significant entry fee for brands, and then Alibaba charges commission. It’s a big traffic, mobile-fuelled marketplace. It is part of everyday life in China. It’s a logical alternative to building physical stores to service all those cities. Then there’s Taobao, which is consumer to consumer, selling both products and services.
These sites aren’t equivalent of western sites, they’re a mix and match selection of their features. They enable people to buy good that would never be available in their region otherwise. They have created millions of jobs – there’s a phrase “a Taobao village” which is a village with a sizeable population making their living in the Taobao ecosystem.
Jumia is the biggest online shopping mall in Africa. There’s the same physical constraints – there’s a bigger affluent population than there is physical retail this service them. A significant part of their customer only access it through chat apps. This pattern repeats all around the world.
Social Media as platform
How do people find stuff? One solution is “online shopping neighbourhoods”. Imagine a version of Pinterest mixed with a travel aggregator. Consumers start making collections of things they like. All of the product that they’ve collected link to sites that sell them. And the site earns a cut of every click. In 2012 they were driving 5m to 6m clicks per day. Sites in China have monetisation from day one.
These services feed into a virtuous circle of mobile and social media adoption. China loves social media. And most of the sites aren’t just sites, they’re platforms. Take WeChat, which is essentially mobile only, and has 700m users, with an average revenue of $7 to $8 per user. It has an API, a payment system and a wallet. You can live your life through it. Brands can build their one areas within WeChat that feel like sites, and which enable commerce.
“Light apps” are an emerging experience on mobile, built of rich html, that lead into WeChat It’s a robust platform you can do a lot with.
Virtual wallets are important because in many of these emerging economies people are “un-banked”, without bank accounts or credit cards. Another solution is cash on delivery. That’s gone from much of the West, but is still common in the markets. AliPay – Alibaba’s payment platform – has turned into big payment system.
Mobile is the glue
Mobile allows all these ecosystems to work. QR codes are integral to them – and personalised QR codes of people or businesses are part of life there. Pretty much all apps have a QR reader built into them. in effect, the QR codes are ways of transforming virtual experience stories physical ones, in China at least.
There’s a lot of leapfrogging, where tech is jumping the desktop, finance and physical retail to a digital-only environment. It’s a giant rapid prototype of our future. We have a whole bunch of legacy systems holding us back – many of these economies don’t.
That allows you to try stuff that sound a bit crazy. LaModa in Russia offers a delivery service, which waits at the door while you try it on, offer fashion advice, take things back and accept payment. It’s now popular in China and Africa.
What we see as a new way of doing the old – like mobile payments – is in much of the world, the only and obvious way of doing it.