Last November, Tianhong’s Junshang 3019sp@ce supermarket officially upgraded to a WeChat payment smart retail store. The number of cashiers reduced from 15-20 to only two on that day, most of which were replaced by self-checkout machines.

Now, consumers only need to open the WeChat “scan” function and scan the product QR code price tag, and the products can be automatically added to the shopping cart. Customers can even perform face recognition and complete payment using machines provided.

In April 2018, Tianhong, one of the major retailers in China, cooperated with Tencent to set up a “smart retail lab” to jointly develop products for new retail. But this is not their first cooperation.

In September 2013, Tianhong reached strategic collaboration with Tencent. In the domestic retail industry, Tianhong was the first company to cooperate with Tencent to customize the WeChat service account.

As of now, Tianhong has completed the digital transformation for most consumer scenarios. The number of Tianhong members is over 18 million, of which the digitalization ratio has reached more than 80%, and the number of digital members is nearly 16 million.

According to the logic of traditional retail, to get more customers, you need to open more physical stores, which is not the best way for Tianhong at that time. “Omnichannel” is the solution for Tianhong to expand the customer base and achieve more customer connections, that is, the online and offline integration mode.

The real beginning of the omnichannel business is cooperation with WeChat. In September 2013, Tianhong and Tencent reached a strategic partnership and jointly developed the first custom WeChat service account in China’s retail enterprises, focusing on three aspects which is instant service, selected service and interactive marketing.

This cooperation immediately caused fluctuations in the capital market. Since Tianhong and Tencent announced the collaboration, within ten days, Tianhong share price experienced five single-day 10% increase, showing full attention and recognition from the capital market.

At the consumer level, it took less than two years to go online, and Tianhong’s WeChat service account has more than 2.5 million fans.

When Tianhong is attracting the new fans through WeChat, it also improves offline business by attracting consumers visiting the physical store. For example, less than two years after the launch, through the start of the WeChat service account, member interaction, and promotion, Tianhong WeChat service account has attracted more than 2 billion people to the physical stores.

Tianhong is a retail company that has started O2O and mobile app very early. In the general perception, when offline physical retail enterprises go through digital transformation, then a large number of increments in sales shall come from the online orders, which is the strategy practiced by Alibaba’s Hema.

However, the digitalization of the Tianhong is not the case. Although Tianhong also has an online business, the current order quantity is about 10% of the total. For the future, Tianhong also said that they do not expect a substantial increase in online orders. As Tan Xiaohua said, “The digitalization transformation of our business is to expand our existing powerful physical store, but not starting a new and smaller scale online business.”

Read the complete eBook “Brick & Mortar Retail’s Transformation with WeChat Pay Smart Store” here.

When talking about e-commerce, Chen Zhongwei, general manager of Hengyuanxiang, said: “E-Commerce has indeed subverted our understanding of the entire business model.” He felt that a new era is here, and it came very quickly. 

Heng Yuan Xiang (HYX), a time-honored brand of China, was set up in 1927. HYX has grown itself from a small wool store of less than 80 square meters in Shanghai into a corporate enterprise specialized in knitting, clothing, home textile, and wool.

In 2017, Ali Research Institute released the “China Top 100 E-commerce” and HYX was ranked first.

HYX has initially been a shop selling imported wool in Xingsheng Street, Shanghai. The founder was Shen Laizhou, who was later known as the “King of the Wool”. It is now the largest wool producer in China and the world with the annual wool consumption of over 10,000 tons.

In 2012, Hengyuanxiang began to develop e-commerce. After nearly seven years of development, e-commerce sales have now accounted for about half of Hengyuanxiang’s total sales.

In 2013, HYX e-commerce participated in “Double 11” for the first time, with sales exceeding 80 million. In 2014, “Double 11” sales reached 170 million on the same day; in 2015, “Double 11” Tmall platform sales is more than 280 million…

Tmall played n vital role in the digital transformation of HYX from the beginning. Tmall platform accounts for more than 95% of the HYX e-commerce sales.

A Tmall plan was launched in September 2017 by Tmall for brands such as HYX. Many domestic brands have begun to go global through the “Tmall World” program, and have achieved significant growth in sales.

On the list of “Tmall Overseas Brands with the Largest Number of Regions Covered by Tmall Overseas Transactions in 2017”, Heng Yuanxiang ranked first.

In 2017, Hengyuanxiang began a global strategy, such as producing latex pillows in Thailand, producing wool quilts in Australia, producing coats in the UK, producing silk scarves and stockings in Italy… At the same time, Hengyuanxiang joined Tmall’s plan to achieve “global production”, “global selling”. HYX sold products to 188 countries and regions…

Read the complete article from CIW eBook “The digital transformation of China’slargest wool and textile enterprise” which gives an overview of Hengyuanxiang’s digital transformation and how Tmall played a critical role.