Google paid $550 million earlier this week for a stake in JD.com – China’s second largest ecommerce player. The information provided to the media talks of a strategic partnership – working together to develop better retail infrastructure focused on personalized shopping experience across multiple markets. This heralds the start of New Retail coming to Europe and North America.
Many shoppers start their ‘customer’ journey with an online search using Google, which is something that Google need to maintain – this first step is a unique opportunity to influence what the shopper ends up purchasing. There is strong anecdotal evidence that customer journeys are starting more and more with Amazon – with consumers thinking ‘I need something’ and then begin their initial searching Amazon – coupled with slick mobile apps and Alexa helping this. So, in my opinion, this investment by Google makes sense in terms of accelerating being a shop front.
But what about JD.com and their needs? JD.com, alongside Alibaba, are part of the ‘New Retail’ phenomenon that has been established in China and, until now, has been waiting to move into North America and Europe. New Retail utilizes data and technology together to attain a true understanding of customers and respond to their needs generating a highly personalized shopping experience. There are no channels – it integrates online, offline, logistics and data together across a single value chain.
I have written previously about New Retail being something that has the potential to add further pressure on established, traditional retailers who cannot adapt in time. While this adaptation is difficult, I have seen so much procrastination from retail organizations over the years when it comes to making significant business change. What is interesting is that many of the profit warnings, bankruptcies and store closures we have seen in 2018 in both Europe and North America are from organizations where I witnessed this fear to change.
If ever there was an omen that heralded the start of a new actor placing further pressures as part of the so called ‘Retail Apocalypse’ it is the moment Google and JD.com joined forces. For established retailers – old and new – this is yet further evidence of the need to accelerate their focus on Digital Transformation to enable the use of new technologies that will help them streamline, automate and ultimately differentiate their offerings and do something neither Amazon nor Google can do.
To find out how Software AG are helping the world’s most progressive retailers transform and offer a truly personalized and differentiated experience visit www.SoftwareAG.com/retail.