One consumer trend in Asia has got to be virtual reality. Consumers want to see everything and experience everything and pay for everything … now. Well, perhaps hold the paying part. Because when you’re deep in the virtual world of shoes and staking out the best pair of Christian Louboutins, nothing shatters the experience more than having to pull off those VR googles to — you guessed it — pay. But now, thanks to Alibaba, the shopper can just nod and move on to the Gucci handbags.
But first, virtual reality is also serving the retailer by helping to build more appealing physical retail layouts.
Virtual reality is disrupting retail with the force of a wrecking ball in all parts of the world. In Chicago, InContext Solutions, an international VR provider, is working with retailers and manufacturers to create new in-store concepts for “optimal shopper experiences.”
Software developed by the company helps manufacturers create multiple new shelf layouts and brings the concept to market with the ShopperMX mobile app. Intel said that VR has high potential to disrupt retail and manufacturing industries and connect to the Internet of Things. But hold on, because there is a bigger disruptor at work in China.
Alibaba’s Ever-Dominant Presence
Alibaba is a persistent influence in the Chinese retail and eCommerce sectors. The company’s latest statements include a warning by Alibaba CEO Daniel Zhang that Chinese eCommerce companies could face “tremendous challenges” because Alibaba is transforming China’s retail industry, which is worth an estimated $4.5 trillion.
In a letter to shareholders, Zhang said the company hopes to “upgrade” traditional retailers through improvements to distribution, service and product manufacturing. “The most important opportunity on the horizon is not growing online sales in isolation but rather helping traditional retailers upgrade into a brand-new retail model,” he wrote. “The consumer retail industry as a whole is experiencing radical disruption driven by digital transformation. Data has already become the new ‘natural resource’ that is as vital as oil and electricity. Cloud computing is the new ‘engine’ powering commercial operations.”
And he wasn’t kidding.
In China, shoppers are getting a glimpse into the world of virtual reality, as the finance arm of Alibaba Group, on Wednesday (Oct. 12), demonstrated a payment service called VR Pay that allows virtual reality shoppers to pay for products with merely a nod of the head.
This new technology comes after Alibaba introduced a facial recognition technology for the Alipay mobile payments service advertised as “pay with a selfie.”
According to Lin Feng, manager of Ant Financial’s incubator, F Lab, which developed the VR payment service: “It is very boring to have to take off your goggles for payment. With this, you will never need to take out your phone.” Perhaps “sobering” is the word he was looking for.
The user’s identity is verified using account logins on VR Pay or connected devices using voice print technology, which Lin said is the most convenient method in a VR setting compared with other biometric recognition technologies. Passwords are still needed for authentication, but they can be entered with head movements, by touching or by staring at a virtual display for a couple of seconds. VR Pay is expected to launch by the end of 2016.
Ant Financial Services Group operates China’s largest online payments service, Alipay, and has over 450 million daily users. According to the company, this new payment technology makes VR “a tool rather than just a toy” because it connects VR goggle makers and app developers to the Alipay payments platform. Virtual online marketplaces will offer the experience of shopping in a real store using a VR helmet or glasses, and VR Pay will provide seamless payments.
It’s just all too easy to spend your money these days.
The trends in the Chinese market show continued rapid growth in eCommerce, and China retains the top spot as the global leader. Chinese retail websites sold almost $590 billion worth of goods in 2015, an increase of one-third on the previous year.
Alibaba saw $485 billion worth of goods purchased on its online marketplaces in fiscal 2016, an increase of 27 percent from 2015, according to Internet Retailer.
Hong Kong’s Retail Going Sky High
And if wearing a VR headset and strolling through the VR mall from a living room La-Z-Boy is not sufficient escapism from the stresses and strains of real life, Asian retail fans can soon visit the Hong Kong Skycity airport project, hailed to be as futuristic and tech-bedecked as a scene from Tom Cruise’s “Minority Report.”
An overview of the Skycity development was unveiled at The Future of Shopping Malls business conference and exhibition in Hong Kong on Monday (Oct. 17). Skycity will make Hong Kong airport resemble an airport “city” and will comprise 25 hectares of entertainment, hotels, restaurants, offices and retail outlets, according to Retail News Asia.
“Our vision is to create a destination that goes far beyond the traditional notion of a shopping mall … Skycity aims to capture broad opportunities in tourism and business, while also providing a dynamic lifestyle and family entertainment hub for Hong Kong residents and visitors alike,” said AA chairman Jack So Chak-kwong.
Hong Kong International Airport serves 70 million international passengers annually. Passenger traffic is expected to increase to 100 million by 2030 as new runways are built. It is also strategically located near roads linking Hong Kong with the Pearl River Delta region.
The airport city is being developed in phases. The first phase will see the construction of retail, dining and entertainment features, which are scheduled to open in 2021, and a 450 to 750-room hotel will be completed in 2020.
Talking of “Minority Report,” proximity technology, such as the use of beacons, is being introduced by Ubudu Asia. Over 50 percent of marketers from various industries have been using proximity technology, and according to Unacast, it is because it engages consumers and better serves their needs. Proximity technology is set to replace traditional marketing, according to Inside Retail Asia.
Shopping is as much an experience as it is an opportunity to buy goods, and marketers are aware of the significance of both context and content in marketing. “Content is king, while context is queen … but proximity (or contextual) technology is more than just sending promotional messages; it’s about offering value-added services to customers in physical venues,” said Victor Bogey, CEO of Ubudu Asia.
Physical displays encourage consumer engagement and can extend the time a customer is exposed to a brand. Visual displays can be connected to mobile to show digital content, such as videos, games and promotions. For example, JCDecaux helps clients engage with travelers in Singapore and Hong Kong airports. Consumers are told to shake their phone using WeChat when near a JCDecaux media, which is beacon-enabled. The technology sends digital promotions or discounts to the traveler’s mobile device, which they can then use in airport duty-free stores.
Physical retailers like proximity technology because they have access to data that they can use to better meet the needs of the consumer. In France, a leading supermarket is using Ubudu technology to send a greeting to customers as they enter the store and then send the customer promotional information as they shop inside the store. Shoppers can summon a store representative using the app, and the customer’s loyalty card will appear when the customer goes to the cashier.
Retailers can understand traffic flows and optimize their product shelving strategy and staffing. The technology is different to Wi-Fi or camera tracking because individual paths can be mapped and visits over time by the same customer can be recorded.
Traffic analytics companies are partnering with proximity technology providers, such as Ubudu Asia, to gain insights from customers’ behavior depending on the time, day and customer profile. With this data, they can change their retail mix, staff management and pricing strategy. Ubudu Asia’s solution stands out because it can be used in areas where there is limited internet connectivity. The uBeacon Mesh software has already been successful in large-scale deployments, such as The Louvre Museum, McDonald’s and Carrefour.
From High-Tech Beacons And Sci-Fi Malls, It’s Back To Pedestrianism … And Alibaba
Malaysia’s largest postal company, Pos Malaysia, wants to provide direct logistics services to Chinese eCommerce giant Alibaba Group Holding, according to Inside Retail Asia. Pos Malaysia wants to eliminate third parties from deliveries, according to CEO Mohd Shukrie Mohd Salleh.
Parcel deliveries saw a jump of 40 percent from online shipping in Q1, and earnings for the year are expected to be higher. Pos Malaysia began in the early 1800s with mail deliveries by bicycle. It is the top performer among global courier stocks and has a market value of $500 million. It has beaten United Parcel Service and FedEx with a return of nearly 50 percent.
Alibaba has not discounted working with Pos Malaysia, saying that its affiliate, Cainiao Smart Logistics Network, “works collaboratively with logistics participants to enhance customer experience and operation efficiency,” but “it is natural we talk to industry participants.”
So, to conclude, VR combined with beacon-enabled technology is bringing “Minority Report” to Asia, while Alibaba has a firm hand on the direction of retail and its logistics. And although the technology is likely to rapidly change, Alibaba’s grip is not.