Redefining Retail: What Does 5G Mean for Chinese Merchants?

By Roc Harry


Digital transformation and the store of the future are only achievable with the support of advanced data networks. 5G, with its impending rollout, will become a game-changer in supporting the next generation of retail services and in-store innovations. Faster and more reliable than anything that has come before, 5G networks will enable people to communicate, consume entertainment, and shop at unprecedented speeds.


It is predicted that 5G will contribute US$900 billion to Asia’s economy over the next 15 years, with 24 Asia-Pacific markets expected to launch 5G services by 2025 (GSMA). In June 2019, China’s Ministry of Industry and Information Technology issued several commercial licenses for 5G (CGTN). Four major telecom carriers – China Telecom, China Mobile, China Unicom, and China Broadcasting Network received the first batch.


With one of the highest mobile phone penetration rates globally, China is set to become the world’s largest 5G market by 2025, with 460 million users, according to a forecast by the Global System for Mobile Communications Association (GSMA). The four telecom carriers have already built more than 250,000 5G base stations across China, and the number is expected to reach 600,000 by the end of 2020, covering all prefecture-level cities (RCR Wireless). This investment allows China to lead in the early adoption of 5G – it is estimated that China will account for 70% of all global 5G connections in 2020.


Since the establishment of the Xiong’an New Area near Beijing, China Mobile has been dedicated to building a new smart territory. It has led initiatives in the digitization process of Xiong’an that will promote new industry technologies and innovations. China Mobile has completed 5G testing and launched gigabyte broadband and narrowband-internet of things (NB-IoT), showing its ambition to reshape the area into a fully digitalized, ‘future city’ in China.


Retail and ecommerce players in China with overseas growth ambitions should be paying close attention to the arrival of 5G in other markets. The high-speed connectivity it offers will transform the way people shop. It both signals the next significant retail evolution and presents new challenges and opportunities for brands.


5G will supercharge retail innovations not fully implementable in the past


The technology will support a variety of retail innovations that were not fully implementable in the past, from use cases for Augmented Reality (AR) and Virtual Reality (VR) to scaling existing adoptions of Artificial Intelligence (AI) and the Internet of Things (IoT). 


Imagine being able to experience the best elements of brick-and-mortar shopping without ever setting foot in a store. You would not be merely scrolling through a website but actually looking at the shelves of a fashion retailer or supermarket via AR on your mobile phone, as well as exploring new offerings, hunting for discounts and deals, and even using a virtual fitting room to ‘try on’ outfits – all from the comfort of your home sofa.


The possibilities introduced by 5G are not limited to digital retail. 5G is also set to rapidly enhance and accelerate omnichannel commerce, blurring the lines between the physical and digital. Brick-and-mortar stores can connect to shoppers via their mobile devices–you might walk into a shop and receive personalized SMS communications with a special deal just for you, based on your browsing history. Through facial recognition tools, retailers can soon track the in-store products you spend the longest time looking at, then send you a digital offer to encourage an online purchase after you leave the store.


Frictionless payments key to getting sales conversions over the line in the 5G era


As retailers consider how to innovate in the era of 5G, it will be paramount to provide the right payment experience–one that feels fast and frictionless, to match the overall 5G shopping journey. It means exploring the possibilities of innovative payment systems, such as social payments, invisible payments, and facial recognition authentication. 


When expanding into other markets, Chinese merchants must understand local consumers’ preferences to offer the most tailor-made and customized mix of payment methods. Asia, for example, is home to eight of the world’s top 10 markets for mobile payments, so offering Alipay, WeChat Pay or other popular local options can be vital to driving conversions, especially as the decreased network latency from 5G makes these seamless one-click payments even easier to use (PwC).


As 5G is currently only available in a limited number of modern cities around the world, Chinese merchants must become fully aware of their target markets’ cadence for evolving their network infrastructure and determine which are most compatible with 5G-enabled offerings. 


Ecommerce in Asia is growing at speed, and the impending arrival of 5G is set to turbocharge this innovative landscape. Retailers must now start assessing what opportunities 5G can unlock for their businesses–whether that is new VR and AR shopping experiences, tailored omni-channel offerings, or enabling quick and seamless payment choices.


All this will become the norm in the foreseeable future.


About the Author


Roc is the Head of Global Enterprise Ecommerce – Merchant Solutions at FIS. He brings more than 12 years of global payments, fintech, and finance experience to his current role and has demonstrated global success in designing and initiating innovative, strategic, and effective business solutions that increase revenues for large, complex services businesses.


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