The New Retail Startup under “New Retail” age in China

Alibaba literally coins the term “New Retail” in China these days. So what does it exactly mean? It might take a lengthy illustration with diverse focuses depending on what kind of expert you are talking to. But in essence, it is actually trying to portray the “Avant Garde” version of “OmniChannel Solution” or the “ultimate union between online and offline”.

 

If you ever feel Alibaba hanging like a heavy cloud over the future retail market and wonder whether there would be any breathing space for startups. Well, the answer is “still possible”. Recently Alibaba just led the Series A investment in a retail technology startup. Aside from the fact that its co-founders were former high executives from either Alibaba or Oracle (after all startup capital fundraising is often an equation of your network), the company basically builds a Saas platform which helps traditional retailers/brands to have this unified management for CRM, product, pricing and marketing across online and offline. Sounds like the old “O2O” lyrics humming in a new melody, huh? 

 

Another remarkable startup which is offering very similar service raised USD 20 million from investors like Tencent and JD.com lately.

 

 

In fact, if we draw some key elements of the “New Retail” ecosystem in China, we actually detect more and more startups and capitals are tapping into this area. They all aspire to streamline all the front and back end channels, then aggregate the membership, marketing, customer service, product and order management in one Saas platform.

 

 

 

It is said in term of technological breakthrough, these startups are pretty much at the same level and their Saas service fees are usually charging around RMB50,000~100,000 (USD 7575~15151) annually. So the race among them is more or less about client acquisition and retention. Of course for those backed by Alibaba or JD, they usually boast about helping you access to these giants’ proprietary e-commerce data analytics which in the past seemed rather restricted for retailers/brands.

 

Though on the surface, the whole concept sounds attractive. The ideal in many ways never meets reality eye to eye. Traditional retailers and brands tend to have internal silos and channel disconnections for a very long time. Let us just think of two simple examples here:

  • Some brands would have two totally different loyalty programs between the online purchase and offline purchase, and even the promotion campaigns across the two channels can be different.
  • Some brands can operate under a franchise model. Suppose a certain product out of stock in Store A might have plenty of inventory in Store B, but to ask Store A and Store B to share these data might be difficult, if not impossible.

 

So for these new startups, they are well aware that it is going to be a gradual process. They said they will not ask their clients to restructure everything within one day, which would only make clients uncomfortable and stir strong pushback from all the divisions inside their corporate politics. They will try to woo over clients by feeding them one spoon at a time. Overall all the startups are confident that after 3 years, such digital transformation will really take traction. As for Alibaba or JD, these startups act as the perfect missionary to facilitate them break the barrier between online and offline, then bolster their foot in its brick&mortar expansion and eventually fulfill the aggression in so-called “New Retail”.

 

Author: Cecilia Wu