Why big online retailers are setting up shop in the real world

{"text":[[{"start":null,"text":"

"}],[{"start":4.88,"text":"Should shops stick to their own lanes? Amazon dominates the online world of ecommerce but ended up shuttering its till-less Amazon Fresh stores, including all 19 in the UK, five years after opening them. Shein, big in fast-fashion ecommerce, incited a backlash when it set up shop inside Paris’s chic BHV department store."}],[{"start":32.410000000000004,"text":"Not so in China, which arguably wrote the playbook for “online-to-offline”, known as O2O. JD.com, an ecommerce group best known for electronics, added food deliveries to its roster earlier this year. Both it and Alibaba have gone full throttle on omnichannel, with stores where customers can eat, order, pick up or request delivery. "}],[{"start":57.150000000000006,"text":"Specific Chinese characteristics explain some of this. These include the technological leapfrog effect, which took shoppers directly from cash to phone swiping, and ubiquitous super apps. Massive urban populations help too, especially on speedy deliveries. China has 800-odd cities with more than 1mn people against America’s dozen or so. "}],[{"start":82.04,"text":"The most important assets for companies hoping to compete in the real and digital worlds are probably strong stomachs and deep pockets. Doling out subsidies to merchants and consumers is even more costly when retailers have a penchant for trampling on each other’s turf. "}],[{"start":102.57000000000001,"text":"Marketing and other customer acquisition costs have helped push some hybrid retailers into the red in the US. Sneaker retailer Allbirds, which opened stores then closed many of them down, spent more than a third of revenue on marketing in the latest quarter."}],[{"start":null,"text":""}],[{"start":120.10000000000001,"text":"Capital costs take a bite too, regardless of physical stores: spending goes on technology platforms, logistics and warehouses. Even food couriers now have “dark kitchens” and, in the case of China’s Meituan, flash warehouses to expedite delivery of instant groceries to customers."}],[{"start":141.44,"text":"None of that is enough to deter the industry giants. Amazon may have ditched Fresh and, before that, backed away from selling books and highly rated items at its 4-star stores. But for the past four-plus years it has generated more than 8 per cent of net retail sales from bricks-and-mortar stores."}],[{"start":164.53,"text":"It has also struck up partnerships with — among others — supermarket Morrisons in the UK, enabling it to deliver everyday and perishable groceries, a key market that has grown rapidly on the back of same-day deliveries. Amazon has also stuck with Whole Foods, the more upmarket grocer bought in 2017, despite poor performance in the UK."}],[{"start":191.41,"text":"Having a foot in both camps is unavoidable, and sensible: people buying sofas online want to sit on them first; many shoppers want groceries without trekking to the supermarket. It remains to be seen who will best juggle the concrete with the digital, but those like Amazon, big enough to try new things and ditch the duds, start with a big advantage."}],[{"start":223.85999999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1767136586_9374.mp3"}