Omnichannel in China with digital price tags
Everyone knows Amazon, Ebay and Zalando. Most of them go shopping regularly at Rewe, Lidl, Globus or Real, while we use all kinds of apps with our smartphones every day. But how can this be combined? The answer is Omnichannel.
- What are the Chinese doing?
- Online to Offline (O2O)
- Example HeMa Fresh Store
- Example 1919 Liquor Store
- My opinion
Why inner cities are dying out
Who can remember the little corner shop on the corner? Quickly bought chewing gum or something to drink.
The convenience store in my neighborhood that I knew was closed. It was displaced at a time when everyone preferred to shop downtown.
Department stores in a small town
How beautiful it was when the next department store around the corner beckoned.
In the cellar there was porcelain and crockery, on the ground floor stationery and school backpacks.
The first floor was the clothing area for adults and the second floor was the paradise for the little ones with toys and clothes.
Unfortunately, all the department stores in my town have filed for bankruptcy.
Fewer and fewer shops
With 25,000 inhabitants, we are not one of the largest cities. But a full pedestrian zone with many shops, in such a small city, has its own charm.
Nevertheless, I have the feeling that few businesses have been able to hold their own in the tough market. Unfortunately, most of them change tenants every year.
There can only be one in the end
The trend is for the little one to give way to the big one. That the big one will be placed on the city limits and the customers will make a pilgrimage to him.
In the end, the customer is too convenient and orders a lot of things online.
After all, 65% of German online shoppers are already researching in 2011 and making their purchase decision before buying offline or online.
If small businesses survive, this may be because they are usually family-run businesses that own the entire building and therefore there is no lease.
On the other hand, our society is getting older and older and our older Anti-Amazon fellow citizens support our inner city. Sooner or later, the young of today, the old of tomorrow. But by then they will be used to Google and its partners.
What are the Chinese doing?
There are good reasons why I take China, of all countries, as an example. On my first visit to Beijing, I had limited views, nourished by the media and a general lack of interest.
China was rarely mentioned in school. Anyone who has ever been to China, and especially experienced one of the many large metropolises, knows that China turns over at the speed of light.
The example is of course slightly exaggerated, but it should show that the Chinese are now leading the way in some areas.
Explanation of Crosschannel
Comes originally from the media sector. This enables television stations, for example, to record higher advertising revenues. Products can be marketed not only via TV spots, but also via the broadcaster's website.
Marketing campaigns that use cross-channel solutions market the products through various channels.
For example, a product can be offered via telephone and e-mail. The supermarket in the neighbourhood can offer its goods locally and on the Internet. At least two channels are always used.
Definition of Multichannel
This approach pursues the idea that the customer can make a purchase decision anywhere. On the go on his smartphone, while surfing the web, at home on the Internet or while shopping.
The simplest example would be a supermarket that sells its goods locally and via an online shop. This means that the products are not only marketed through different channels, but are also consistently sold through several channels.
Definition of Omnichannel
This is a further development of the multichannel strategy. The result of omnichannel marketing should be a networking of all channels.
Let's take a bank as an example. Nowadays you can make your transfer at the next branch. You can make a bank transfer at home via online banking and then transfer the money via your smartphone app.
Is it Omnichannel yet? Only when you make your bank transfer online, check your account balance on your app on the road and print out your account statements the next day at your branch. This is Omnichannel. The crucial point here is that the channels must be networked with each other.
Explanation of terms Online to Offline (O2O)
Also known as online to offline. This is a concept in which the end customer is animated to shop in a real store via the Internet. Electronic price labelling plays a major role in this area.
In another article I will go into this point again in detail.
Example HeMa Fresh Store
HeMa belongs to the Alibaba Group. The B2B platform Alibaba.com, founded in 1999, primarily serves companies.
Here companies can find potential suppliers for larger purchase quantities. In 2016 the Alibaba Group opened the first HeMa Fresh Store.
Specialising in food, with a store size of 4500 m², the company relies on an Omnichannel strategy.
Successful Omnichannel Strategy
HeMa receives up to 4000 orders daily via its online portal. HeMa commits itself to its customers, no matter if you buy online or offline (in the shop), that within a radius of 5 km the goods are delivered within 30 minutes.
At the cash desk, payment is made exclusively by APP, with Alipay.
Showroom, warehouse and restaurant
In this constellation, the shop area has several functions. On the one hand, customers can view the goods as usual.
At the same time, orders can be placed or normal purchases can be made here. The shop area is also the storage area.
On request, customers can have tasty menus created in the in-house restaurant after shopping, with their purchased ingredients.
Overall, it is clear how differently and ingeniously the Chinese system works. This system has already been adopted in Germany to some extent.
Due to the success and popularity of this shop model, a large sum was reinvested, which led to the opening of ten new stores in Shanghai.
HeMa offers 3000 articles from 103 countries. 80% dry goods and 20% fresh goods, whereby in the near future the fresh goods will be increased to 30%, which, as already mentioned, will be prepared directly on site by chefs in the in-house restaurant. The shopping experience gets a completely new face.
The biggest challenge with online/offline orders is the delivery time. According to HeMa, 10 employees work in two shifts as pickers.
There is an in-house delivery service and the usual forwarding and parcel services. A total of 200 employees work on the delivery of the goods. Every internal process has been scrutinised and optimised.
Digital price tags
One of the key factors in the optimization is the ESL system from our manufacturer Hanshow Technology. HeMa has decided to use the Hanshow ESL solution in all branches.
By switching to ESL, the pricing process became easier than ever. The prices in the online and offline store are always synchronized in real time.
The advantages are significantly reduced personnel costs, fewer erroneous prices, increased efficiency in managing prices and an optimized overview of any stock as it is displayed directly.
What improvements are planned for next year?
In the future, HeMa will be able to localize individual products using barcode scanners. A flashing LED will provide another visual aid.
Since the picker no longer has to search for the products, a few minutes per order are saved.
How can HeMa deliver so fast?
A conveyor belt system in the background collects the goods in cool bags.
Thus HeMa needs only 10 minutes after the order is received. This is the secret of fast delivery.
How HeMa influences the Omnichannel trade with digital price tags
HeMa's influence has had a lasting impact on the already strong Chinese omnichannel trade.
Retail experts believe that digital price tags will be the standard for all Omnichannel retailers in the future. The automated price labeling process, warehouse management and other related solutions are crucial.
Example 1919 Liquor Store
It is difficult for a traditional company to advertise online for customers. 1919 Liquor Store in turn has integrated a successful omnichannel model. The combined flow of online and offline data makes this success possible.
By July 2016, 733 stores belonged to the 1919 chain. In 300 different cities, spread over 31 states. The 1919 Liquor Store supply chain enables the 733 stores to be delivered within 19 minutes.
1919 Liquor Store is thus China's largest spirits Omnichannel chain. Third largest chain in itself, after Tmall and Jingdong in China.
World class service
1919's service includes reasonable prices, very good quality, wide selection and fast delivery. These are the main reasons why the chain is expanding so fast.
The prices can be guaranteed because 1919 negotiates directly with the wineries and can therefore offer the products at attractive prices.
In order to guarantee the high quality, it is necessary to work directly with the wineries. Specially trained employees decide which varieties are offered.
A QR Code on each bottle provides detailed information about its origin.
1919, with its 17 years of experience, can rely on a large number of suppliers.
A rich assortment of 7000 articles is offered.
Logistically, online orders are always sent to the nearest branch to carry out the delivery. The individual stores act as the nearest warehouse in this system.
Unique franchise model
Omnichannel solutions play a crucial role in saving operational costs and ensuring fast delivery.
For this reason, 1919 must expand rapidly. To maintain better control over service and quality, a new franchise model was introduced.
The Franchise Model
The investor brings the necessary sum for the opening of the plant. 1919 takes over the complete control of the branch.
This model allows a constant management at a high level, uniform processes and service, which means that a high level of quality can be implemented consistently in all branches.
How can Omnichannel be used?
In November 2015, 1919 became the largest online platform for spirits by acquiring a competitor.
The complete Omnichannel process was realized with smart solutions. A shipping department pays attention to the processes and works constantly to keep costs low.
Digital price tags at the 1919 Liquor Store
In May 2015, 1919 signed with our partner Hanshow that the complete chain should be equipped with ESL.
It was also agreed that a Big Data platform would be jointly developed to generate a better service through the analysis of the data.
Improvement through the Hanshow ESL solution
Synchronize online and offline pricing, improve management of products on the shelves and increase the effectiveness of staff in localizing products.
QR Codes on each ESL provide detailed information. More time is left for customer care.
The analysis of the data will be indispensable in the future. This service will reduce unnecessary marketing expenses and point the way forward.
While the inner cities are dying out here, the Chinese market offers us interesting approaches such as combining online and offline. Reality must be faced. Nowadays an online presence is essential for survival.
HeMa and 1919 are successful examples of Omnichannel solutions. The ESL solution plays a central role in both scenarios. The future will show when the German market will react nationwide.
Do you have questions, suggestions or a completely different opinion? Just leave a comment.
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