Danai Pathomvanich
Sep 8, 2015
Asia’s two-decades of warp-speed growth has been high-lighted by leapfrogging transformative technologies, especially in China.
Recently I had the pleasure of reading McKinsey’s interview with Doug Gurr, Amazon’s recently appointed China president who is leading the company’s efforts in that fast-growing hyper-competitive market.
“The technology in China is phenomenal. You can see multiple ways in which the country is leapfrogging.”
Retail infrastructure
Gurr, a Cambridge mathematics graduate who also holds a PhD in theoretical computing from the University of Edinburgh said many Chinese consumers are going directly to a purely online world because the country doesn’t have much of an established physical retail infrastructure.
“They don’t go to a physical store at all—they simply look online and then purchase.”
When his 5,500 employees talk with Chinese women between the ages of 20 and 25, many of them say they have never been to a store.
“Sure, I buy fresh food at stores—but for anything other than that, why would I ever go to a store?”
Mobile shopping experience
China’s online retail business growth has also meant leapfrogging directly from traditional shopping experiences to advanced mobile delivery systems.
“The pace of innovation and the quality of the mobile experience in China in many ways far outstrips what you see in the West; it’s gone down a divergent path.”
These efficient mobile applications have also allowed China’s banking industry to leapfrog directly from cash to pure mobile e-banking.
Geolocation
China’s massive growth has also resulted in the lack of adequate mapping for its many new cities.
Moreover many rural areas have no street addresses, but China has solved these logistics problems with geolocation.
Gurr said many bicycle rickshaws have better point-to-point geolocation and better GPS-enabled devices than anywhere else in the world.
“It’s amazing and exciting—there’s a blend of rough, old-fashioned ways of doing things coupled with technology that is way ahead in terms of the use of data informatics.”
Future of big-box retailers
A major megatrend in the next five to ten years will be e-commerce moving from a primarily national to an international business.
The answer will come from resolving the retailers’ ultimate role.
The retailer, he said must connect a product anywhere in the world to a customer anywhere in the world— with as little friction and as quickly and cheaply as possible.
At the same time, Gurr said physical retail stores will not disappear because they are a fantastic way to discover new products.
“.... it’s also time consuming and expensive compared with a truly optimized, truly evolved digital-discovery experience.”
E-commerce as an international business
Amazon’s primary focus, Gurr said is cross-border e-commerce.
To ensure its customers a comfortable navigation through China’s e-commerce landscape, Amazon has launched a number of services that will hopefully enable convenient and easy shopping.
Its Amazon Global Store provides translation, listing, regulatory compliance, local-language customer support, local marketing and global logistics, so that brands can launch in China with no more effort than selling in their own local markets.
“In just six months we’ve been able to launch over three million unique products for our brands, with no cost or effort on their part—literally with the click of a button.”
Robotics, automation and technology
Robotics, automation and technology will have huge transformative retail industry roles.
Retail organizations, Gurr said are basically decision-making machines that make hundreds of millions, even billions, of decisions every day. They must decide key operational issues such as pricing, inventory and optimum product placements.
“if you compare a machine-based process with a pretty refined state-of-the-art manual process, technology wins every single time—and not by a slim margin.”
All successful business of the future, he said will have a firm grasp of data informatics.
“.... in any business sector, the performance gap between an organization that invests in data informatics and one that doesn’t will be huge.”
