Matthew Crabbe
Matthew is Mintel Trends Regional Director, Asia-Pacific. He and his team provide insights and analysis on the latest market developments and consumer trends across the region.

China has a habit of leap-frogging technologies. In the late twentieth century, China decided adding more phone lines was a waste of time when putting up mobile transmitter masts could connect more people faster and cheaper, hence China has become one of the most mobile-connected nations on earth. Online retail has gone from next-to-nought to overtake the US in just over a decade. And now mobile online retail is meshing with the physical store experience in ways as yet barely dreamt of in most other countries.

For example, Walmart majority-owned grocery e-tailer Yihaodian in 2012 trialled a virtual supermarket at Shanghai subway stations, where consumers could scan pictures of products printed onto hoardings on subway walls onto their smartphone to buy online. Later that year Yihaodian trialled virtual stores in vacant city areas, employing augmented reality (AR) technology to literally bring online stores onto the streets. The concept was called “Unlimited Yihaodian (无限1号店)”, but this neat idea failed to catch on because people would need to actively go to wherever the virtual store was set up.

The convenience of mobile online access is that it can be accessed anywhere, anytime. More effective innovations have been those that capture people’s attention wherever they happen to be. Apps that alert people to money off products as they pass certain outlets, such as offers of cheap beer if they go into the bar they happen to be passing if they scan their smartphone. Consumers get a cheap, unexpected treat, while the retailer/service provider gets the sale, the potential to up-sell and the customer’s shopping data downloaded.

Because so many people in China have mobile phones (96% of those surveyed for Mintel’s Digital Trends China 2014 report had a mobile phone, 94% a smartphone), most are accustomed to using mobile internet access. Scanning a QR code with a smartphone comes more naturally, and is seen as quicker and more efficient, than typing in a website address. According to mobile coupon company Imageco, 113.6 million QR codes were scanned in China during October 2013, an increase of over 38% from the previous month. QR codes are key to using the price comparison app Wochacha, which has 140 million users.

Gifting is a particularly interesting opportunity for QR code use. A good recent example of how this can be applied is new start-up company Giftpass, which works as a service account within Tencent’s WeChat messaging app. Subscribers can search for gift products, pay using mobile online payment systems, and “send” the gift in a message to the recipient. The recipient clicks an “unwrap gift” button to view a gift card, which includes a QR code and an address (and map) for the store where they can collect their gift. When they get to the store, the retailer can scan the gift card QR code using a special Giftpass app for retailers to complete the transaction.

Many people now put QR codes on their business cards, or identify themselves on social media with QR codes. The use of these codes is likely to see continued application and innovation, and will be something else that both online and bricks-and-mortar retailers will need to adapt to and utilise in their online retail business development. An example of that potential came recently in the news that Alibaba is teaming up with PepsiCo and Tsingtao beer to use QR codes this summer on drinks cans to provide product information and the chance to win a prize. The “Mashang Tao” online retail app feature will also offer product pack scan coupon downloads and after-sales customer service direct links.

China’s online retail market has become a laboratory where new and innovative applications of online technology are being tried and tested on a population now used to constant and rapid change, and open to new ideas and gadgets. In many ways, mobile online shopping in China is leading the world. Yet it still lacks the full commitment of retailers, brands and advertisers that it deserves, and so the potential for those making such a commitment now to integration with the mobile shopping movement, and achieving a first-mover advantage, is very great indeed.