Using phones to shop for everything has already become a way of life for most Chinese.
Every morning before 10:00am, a swarm of electric bikes descends on an open square in Beijing’s Zhongguancun District. The riders, mostly men, park their bikes and mill about, forming a sea of over a hundred people in matching yellow and black jackets. One-by-one others buzz in to join them. With their brightly colored uniforms they are unmistakably bee-like, the rearview mirrors on their bikes pointing out like antennas. When 10:00am hits, they stand in rows, arms-length apart, and chant in unison. They pledge to follow the stipulations issued by Meituan Company, Zhongguancun District. Then they turn and offer each other a few bows before riding off to begin their day.
The riders work for Meituan, a restaurant delivery company on the front line of China’s online to offline revolution—a new era in which real-world goods and services, from meals to toilet paper, to car washes to rides on private jets, can be ordered via mobile app.
Americans, of course, are not unfamiliar with this. There’s Grubhub for meals, Amazon Prime Pantry for groceries, and Task Rabbit for chores. But the percentage of Americans who regularly use them remains tiny compared to China. City dwellers in the U.S. might order a meal on occasion, or take an Uber, but buying groceries, clothes, make-up, services, and regular meals via app is still primarily the realm of the very well off or the very busy. Most people still walk into stores to buy these things.
This isn’t the case in China. Ask almost anyone in a big city like Beijing about their purchases, and they will tell you they order items on their phone at least once a week. Regular meals at the office come from restaurant delivery apps like Meituan, Baidu Waimai, and Ele.me. Books, electronics, gifts, and clothing are ordered from Taobao and JD.com (sites similar to Amazon). Even ordering groceries is commonplace. Wei Lin, a college student in Beijing, says that she orders from her local grocery store every week. “The supermarket is a little far from our school. Toilet paper, oil, water, are all very heavy, so I use the app to buy heavy things. It’s very convenient.”
“We are already used to it,” says Will, another college student in Beijing who prefers to use his English name. He says that many of his female classmates no longer go out shopping, but enjoy browsing internet shopping sites as a hobby. “Now there is TMall Supermarket and JD Supermarket. You can buy fresh foods like fruits and vegetables online. If you order in the morning, you’ll get them in the afternoon. You don’t need to go to the supermarket. On my campus there are mostly young people [but] if you go to the grocery store on campus, most of the people buying vegetables and fruits are retired people in their sixties. People in their fifties, forties, or thirties—they won’t go to the grocery store to buy these things. They will buy them online.”
“I use [shopping] apps almost everyday,” says Lu Xuan, a teaching assistant in Beijing. “Two or three days a week I order from Meituan or Ele.me. Every time I go out to eat, I will use my phone to pay the bill. Everyone does this, very few people pay [with cash]. For regular purchases, it depends what it is. Things I often use, like a USB drive, or tissues, or small things that, I will buy them on Jingdong.”
Even the spaces outside Beijing restaurants and shopping centers, once crammed with rows of manual bikes, are now packed with branded electric scooters, poised to deliver every type of Beijing cuisine to eager customers.
The variety of apps that people use also far exceeds those in the US. There is a car-washing app through which customers can enter their car’s location and someone will show up to wash it; a bike-sharing app through which one can unlock any designated yellow bike by scanning a QR code; a cell-phone screen repair app, and a medication-delivery app—all commonly used in Beijing. For business elites, there is even a company called Global Wings, which allows users to catch a ride on shared business jets at a fraction of the cost of chartering a private flight.
Why is China so far ahead?
Ironically, one advantage China has is how late it came into the game.
According to Zhao Zhuo, a PR representative for Ele.me, one of the big three restaurant delivery apps, “The service industry [in China] is still not developed enough—it still cannot adequately meet people’s needs. Let alone in less populated areas where the service industry is comparatively worse, even in bigger cities like Beijing, satisfying people’s lunch-time needs is still difficult.”
Because China’s retail infrastructure was never as developed as in the US, the shift to conducting commerce entirely online is comparatively easy.
One area where this can be seen is mobile banking. While credit cards never took off in China (very few people use them), it is now possible to pay for virtually everything—from bills, to cab rides, to food sold by small street vendors—with mobile payment apps.
It can also be seen in terms of geolocation. A strong system of addresses was never established in China, and a lot of places simply don’t have street numbers. Geolocation has solved this problem. As Doug Gurr, president of Amazon China said in an interview with McKinsey and Company, “You wouldn’t have thought you’d see bicycle rickshaws with better point-to-point geolocation and better GPS-enabled devices than you see 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.”
There is also the matter of traffic. While a lot of people in American cities have cars, many Chinese city residents don’t drive. Even if they do, traffic is often so hectic that it’s not worth using a car for short trips. China’s huge population also means that every public shopping area is packed with crowds. Sometimes it’s easier to just stay home.
“Rents in Beijing are very expensive,” said Zhao Zhuo, “if one wants to open a restaurant, they have to find a good location so they can get more customers. But for a good location, you will also pay high rent. In expensive areas like business districts, we often say that the more expensive a restaurant is, the worse it tastes, because most of their investment is in paying rent and in labor costs. They don’t invest in the food or buying good ingredients. But with Ele.me, [people at work] can order food from further away, where rents are cheaper.”
What does the online to offline revolution mean for people’s lifestyles?
In January, Ele.me posted on their WeChat (a mobile messaging app similar to WhatsApp) an article entitled, “Customer who consumed 984 delivery orders in one year, actually a thin, beautiful woman… …?” According to the article, Ele.me found a customer who had used their service 984 times in the previous year, and reported that instead of being an overweight shut-in, she was actually young, busy, and beautiful.
The fact that Ele.me felt the need to make such claims however, shows there is some public concern about a new generation of shut-ins. When asked if they ever miss the good old days of shopping—the experience of getting out of the house or having more opportunities to interact with people—the majority of app users seem to say no. Zheng Weiwei, a mechanical engineer said, “I think, because the pace of life in cities is faster than before, with the time you save you can play games or go out and have fun. You don’t have to take that time to go shopping. You can do other things.”
Zhan Penghui, an office worker in Beijing, disagrees however. “I think the apps are convenient for us, but somehow I don’t like modern society,” she said. “I miss a time when I could have a real relationship with somebody else.” She said she misses going to stores and having interactions with sales people. “Because I prefer contact with people face to face. It’s more sincere.”
Fortunately, frequent app users don’t seem to have turned into complete hermits. No one told me they shop online exclusively. Many said they still go to malls as a leisure activity. “Sometimes shopping with friends is an enjoyable, fun way to spend time together,” said Lu Xuan.
Zhao Zhuo from Ele.me said that they are meeting people’s needs for convenience, but that people also have a need for brick and mortar stores. “Like right now we are meeting in Starbucks to talk,” he told me as we sat in a Beijing Starbucks. “Because we have a need for the environment.”
An Investment Bubble?
Aside from potentially isolating people, there are more concrete dangers associated with the online to offline economy. One is that though many apps have the backing of huge investors, fierce competition is causing them to slash their prices at an unsustainable rate. Many speculate that the industry is a bubble waiting to burst. Bopai, which offered car washing and maintenance services, went bankrupt last month after offering huge discounts. According to Zhao Zhuo, “Right now we are not concerned with whether or not we are making a profit, because the competition in the market is very intense.” He argues that short-term discounts can be seen as a necessary investment in order to attract new customers. But, he also maintains that Ele.me’s discounts are steadily being reduced.
Though the current industry players may not be around in the next few years, demand for such services is clearly not going away. The landscape may change, but online to offline apps are here to stay. They have already redefined shopping in China.