China’s new e-commerce standard: from tap on your cell phone to delivery at your door – in one hour

kuaishubao.jpgBEIJING — Chinese online commerce is setting a new standard in convenience: tap your order on your mobile phone, and your merchandise is delivered to you within 60 minutes.

Sound impossible?

Meet Xu Zhiming, founder and CEO of Kuaishubao, a three-year-old e-commerce company based here in Beijing.

Xu once owned a book store in Guangzhou and rose to become Secretary of China’s association of independent bookstores. Then he decided bricks-and-mortar bookstores were doomed, sold his Guangzhou store, and began selling books on line.

His concept seems simple: Stock warehouses, each serving a 2.5-km zone (Beijing requires seven depots; Shanghai can be served by just four). Create a cell phone app that lets customers click on a map for deliveries. Buy electric scooters so deliveries are not slowed by traffic. Hire drivers – many of them 48- to 60-year-old former workers in China’s state factories who were laid off when the state enterprises went broke. Start selling.

Xu, a graduate of Peking University with a degree in political science, said his inspiration for Kuaishubao was watching the delivery scooters for KFC (home delivery is a big part of their business here). If it works for chicken, he reasoned, why not books? Then he created the name: Kuaishubao – which combines the Chinese words “quick” and “bookbag.”

Right now, Kuaishubao operates in Beijing, Shanghai and five other large cities in China. But that is just the start: he told me he has plans to expand to 300 Chinese cities. Yes, 300. Already, he said, half of all books sold in China are via online orders, and that share is increasing rapidly. Another trend: 2012 was the first year that book sales declined, due to the rise of e-readers.

Xu has also diversified: In addition to books, he sells 600 other items, selected, he said, because they are the most popular items at convenience stores. So instead of a virtual bookstore, Kuaishubao is now, as Xu put it, “a virtual 7-11” (yet another brand known here). He said he will never be a department store or, to cite another brand name well known in China, a Walmart.

He also has experimented with a new delivery option: “movable receiving goods.” Instead of delivering to your home or office, Kuaishubao will deliver to wherever you will be. Just click on where you will be in an hour – the mall, or in the park – and the driver will direct his electric scooter to meet you, wherever your cell phone is. Right now this “delivery to the future” is less than 20% of his business, according to Xu, but he expects it to grow to 50%.

Still more convenience: Customer service used to be via a toll-free telephone call. Now it is entirely by Weibo – China’s version of Twitter. Kuaishubao shoppers can post a complaint via tweet, and Xu promises a response within five minutes.

Xu’s company is in a crowded and growing business in China, and it is not surprising to learn that young people in particular have embraced online commerce. In a student survey published earlier this month at Shantou University, one-third said they shopped on line every week. The most popular items among students were clothing and books (that is also true of adults, according to Xu, who said clothing is the #1 category), followed by food, cosmetics, electronic goods and tickets.

Of students who shop on line, 76% said their motivation was lower price, and 62% said it was the convenience (they could give more than one answer). This has had a devastating effect on local merchants: the regular bus from campus to downtown used to be full of students, according to Shantou faculty members, but now it is rarely used.

And Kuaishubao is expanding its product line to explore new opportunities. When I asked Xu what is next, he said he plans to sell “anything standardized.” Such as? Sports apparel. “It is all standard,” he said. Give your size and color preference and everything else is already standard. (And apparel is already the number one category in Chinese e-commerce!)

Already heavily into packaged food, Xu said he wants to start selling produce, but first he needs to have it in standardized packages of vegetables and fruit. Another promising area is drugs: Are you ill and can’t get to the pharmacy? Just tap your cell phone, and get your delivery in an hour. So far, Kuaishubao only delivers over-the-counter drugs. So far. (What’s a pharmacy?)

Beyond that, Xu wants to explore opportunities providing services, such as running errands. One example: Maybe you are working late and you need your laundry picked up. Or, even more intriguing, Kuaishubao can pay your bills.

“Let’s say you forgot your wallet at home,” he explained. (But of course you did not forget your cell phone!) So with a few taps, his company will come to wherever you are to pay your restaurant bill.

But if you can use Kuaishubao to pay your restaurant bill – or anything else – why would you need a credit card? After all, people in Africa send money and pay bills with their cell phones – no credit cards. The mobile phone company holds the money. For that matter, Africans using their mobile phones don’t need banks. No wonder Xu was smiling.

Asked whether another possibility was a private-public partnership – that is, the government using Kuaishubao to deliver supplies in an emergency, such as fires or earthquakes – Xu said he had not had any contact with any government body. But he said such a partnership was certainly possible.

Xu seems to be constantly watching for opportunities to add to his product line. You can go to his web site to see a constantly changing display of nine fast-selling items, from chocolate candy to furby toys. According to Xu, one new item flying off the shelves is face masks, to help people cope with Beijing’s notorious air pollution. Another is condoms, although having to wait for an hour may be a disadvantage. Of course you can always have it delivered to where you will be in an hour.