A glimpse of the future of offline shopping

JD.ID – the Indonesian affiliate of Chinese e-commerce giant JD.COM – has soft launched its first unmanned convenience store in Indonesia, and probably the first of such by anyone in the country.

Having walked past it many times (it is located on the 3rd floor at PIK Avenue Mall in North Jakarta), we thought of just dropping by.

According to JD.ID, technologies including AI, RFID and face recognition are used in this state-of-the-art store. Of course, at the moment there are staff there to explain to the bewildered customers.

Let’s check what is inside!

How to get in?

Jd.id x mart turnstile check in

To enter this flap turnstile (to check in) – The customer needs to install JD.ID’s mobile app and have their account signed-in.

On the app, you can find “JD.ID X” button, and you need to register your identify by taking a picture of yourself and input your credit card number.  You will get a QR code to enter the store.

 

Image above shows “JD.ID X” menu in mobile apps.

 

Image shows Confirmation for using credit card as automatic payment without PIN

(in Bahasa Indonesia)

A IDR10,000 (US$0.7) charge will be made to the credit card to verify it is valid before the QR code is issued. The charge will be refunded.  

When you go through the turnstile with the QR code, your face will be scanned and matched against the photo you took on the app. This face recognition technology is also used to track shopper’s activities in store and for payment process.

This unmanned, cashless, cashierless store sells an assortment of beauty products, fast moving consumer goods, fashion apparel (with fitting rooms available). It tries to give a delightful consumer experience.

Currently it does not seem to have many branded items, compared to JD.ID app. Another difference is that the store does not offer crazy discounts as the app/site did when they first launched.

Well displayed fashion apparel and other items –  each product is sticked with a RFID Tag which will be automatically scanned at checkout terminal for payment process.

 

This RFID Tag will track which items customers have picked up while leaving the store.  Furthermore, they leverage it for real time data collection to support product displays, optimize inventory even track customer movements to understand their shopping behaviour.

How to Check out – Payment?

To check out – payment process, you only need to bring your groceries and stand near the check out terminal. The system will recognize your face and track your groceries by RFID scanning. The payment is then deducted from your credit card and you will receive an email receipt. It’s actually pretty fast.

Since it is still in soft launch period, after checking out through payment terminal, groceries still needed to be checked by a staff member to ensure it works correctly. In fact, there seems to be still some technical issue with their RFID, because of which some goods not well detected during the payment process; hence, RFID Tag will be marked and cut as shown below.

Though the current space is quite small and can feel a bit stuffy with limited choices, all of the above can give customers a glimpse of what the future of offline shopping might look like.

Challenges

After this experience, I feel that they might face some challenges as of now:

Social – adapting to local consumer behaviour. We all know that changing consumer behaviour is never easy. It might take a while for the local consumers to fully embrace this shopping model. Do you want to bear the burden and costs educating the market, bearing in mind others (competitors of JD.ID) might simply copy once you have done it?

In addition, JD.ID X Mart still needs to improve its payment Method. Credit card penetration is really low in Indonesia, and to reach out to more consumers other options need to be made available. Maybe JD’s consumer finance business will move in as well?

Technical issue – RFID. since it will service totally 100% real unmanned retail store, and thus payment process must be under strict supervision, JD.ID X – Mart still needs to improve tech-related capability to prevent errors. This might also work in conjunction with the process.

Products & Promotions – is one of important key to success in retail industry as well. Since it has only 3 major category of product: beauty, FMCG, fashion apparel; diversity of products needs to be improved more. And promotions could not be entirely absent – this has been used by offline stores all the time. Suggestion: Indonesian people do really love Discounts, Big Sale and things like that.

At the moment, labour cost in Indonesia is still quite low, making cost savings of unmanned facilities not that attractive. Nonetheless, by pushing the boundaries, the future will become closer and closer to us.

How long will offline and online converge? Well, in China the growth of online is slowing down, making offline a more imperative growth engine for big ecommerce players. Indonesia will probably still take quite a few years to reach the same level.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.