Hema and 7Fresh Inspire New Possibilities For Brand Experience

"Commerce as we know it is changing in front of our eyes. 'E-commerce' is rapidly evolving into 'New Retail.' The boundary between offline and online commerce disappears as we focus on fulfilling the personalized needs of each customer."

- Jack Ma, CEO of Alibaba

Digital technology has increasingly integrated into physical spaces, and brands have played a leading role in this trend. Thus far, they have primarily turned to digital integration to show off product features. However, now Hema and 7Fresh are taking a different approach, exemplifying their respective brands’ mastery over sourcing and personalized suggestions, providing inspiration for brands to promote their back-end capabilities and provide a stronger user journey. Other brands can also take advantage of new digital integration methods by auditing the histories of their products and their consumers.

Digital integration with physical spaces has often increased conversion or generated buzz around a specific feature—ranging from the texture of a handbag, to a lipstick’s shade—by augmenting the physical spaces around them. For example, in the new Sephora flagship, customers can try on different shades of eye shadow via an AR mirror without physically applying the shade. The ease of switching shades digitally means that the user can spend less time to find a suitable color for themselves, thereby increasing conversion. Beyond that, as a new technology, the smart mirror draws attention to itself and has become an oft-mentioned topic online.

Photo source: wsj.net

More recently, however, two new retail concepts have utilized digital integration to promote less obvious, back-end capabilities, and they set an example for other companies to build their brand and enhance the customer experience.

Note: back-end capabilities will be defined as, for the purposes of this article, capabilities that support a purchased product. They are not directly perceived and payed for and only inferred. For example, a bowl of spaghetti is a product, and the back-end capabilities that support it are the sourcing of pasta, tomatoes and garlic from around the world.

Alibaba’s Hema and JD’s 7Fresh—each one is the respective ecommerce brand’s foray into supermarkets—embody mastery over logistics, sourcing, algorithmic suggestions and personalization, where, once, this mastery was experienced only online or behind-the-scenes.

Before its supermarket new retail concept, Alibaba already operated its ubiquitous ecommerce websites, whose advantage largely arose from logistics. Even more recently, Alibaba has been rejuvenating mom-and-pop stores around China with its Ling Shou Tong program, digitizing the inventory management and providing consumer analytics and logistics to its partners. This resulted in more efficient supply chains and better targeting of local market needs. However, consumers may not have noticed the extent of the improvement because most of the gains in efficiency occurred on the back-end of the business, out of sight.

But Alibaba’s Hema puts these capabilities on full display. It allows users to access extensive product information through QR code scan from the Hema app. From delivery date to inspection records, back-end processes become transparent, fortifying Alibaba’s position as a leader in logistics and sourcing. It’s no coincidence that consumers come to Hema for their strong selection of fresh food. This is a category where sourcing is arguably the defining feature, one where transparency becomes a selling point, especially for consumers that increasingly value healthy food. Logistics, as integrated into the physical realm, therefore betters the consumer journey. Furthermore, Alibaba reinforces their brand as tech-smart and customer-centric.

Photo source: alizila.com

At JD’s 7Fresh, a robot shopping cart will soon follow users around the room via electronic bracelet. Besides providing this hand-freeing convenience, the robot will make personalized recommendations based on the customer’s shopping history and lead them to the right aisle. This serves as a physical manifestation of the “recommended products” feature on JD’s website. In other words, data-driven consumer intelligence is gaining presence in physical space, and both the consumers and the brand are better off for it.

Photo source: huffingtonpost.com

For both supermarkets, technology bridged the gap between digital and physical to attach a piece of history (i.e. data) to physical objects. At Hema, QR codes revealed the history of each batch of food. For 7Fresh, e-bracelets anchored customers’ purchase histories to their wrists. These anchored histories both enhance the consumer experience and build brand value. The customer experience is enhanced by giving the shopper more precision in what they purchase. Brands are fortified by promoting their back-end capabilities on display in high-traffic locations—they become known as both digitally savvy, logistically sound and customer-focused.  

The opportunity to promote and display back-end processes is most apparent for ecommerce platforms, whose advantage originated in logistics and big data, advantages that never had a physical front to begin with.

However, the same opportunity applies to any company whose competitive advantage comes from back-end processes. For example, an ethical fashion company: applying the same principles and technology as Hema, it could emphasize the brand’s non-exploitive sourcing by linking clothing pieces to videos of each one’s production. Imagine using the same 7Fresh principles and technology in high-end restaurants with tailored selections; they could provide personalized suggestions from the menu based on customer data. This would become a differentiator within the sea of restaurants that have already digitized their ordering and payment processes.

Brands can begin to take advantage of these technologies and methods by evaluating the histories of both their products and their consumers.

• Does the history of the product (their sourcing methods, the speed of delivery) provide any value? Will the customer be able to make a better purchase decision with this history present?
• Does an understanding of the history of the consumer (their purchasing history, their browsing history) provide guidance on how to tailor their journey? Can we suggest a product that they do not know about yet?

If the answer is yes, brands can consider integrating digital to anchor these histories in physical spaces—if not through a talking robot shopping cart like 7Fresh, then through a simple text message. Doing so will both enhance the user journey and bolster the brand as digitally savvy, customer-centric and back-end capable.