Photo: JD.com
Will JD.com’s robotic shops shake up retailing in the West?
The Chinese e-commerce giant JD.com has opened two robotic stores in the Netherlands with plans to add two more. The debut of the stores, which merge online ordering with in-store pickup, marks the company’s first foray into Europe.
The stores operating under the ochama banner, said to be a combination of “omnichannel” and “amazing”, will enable consumers to order both food and non-food items through a shopping app.
The stores include an automated warehouse where customers can watch robotic arms and automated ground vehicles work together to pick, sort and transfer ordered merchandise. Shoppers scan a code on their mobile app and can then watch as their orders are brought to them via a conveyor belt in the store’s showroom.
“With rich experience in retail and cutting-edge logistics technologies that the company has accumulated over the years, we aspire to create an unprecedented shopping format for customers in Europe with better price and service,” Pass Lei, general manager of ochama, JD Worldwide, said in a statement.
Mark den Butter, chief operating officer for ochama, said that making full use of the logistics and supply chain technologies will enable it to cut prices by an additional 10 percent.
Customers can currently pick up their orders from the shops in Leiden and Rotterdam. Two others are planned for Amsterdam and Utrecht. There is also an option for home delivery for those who prefer to avoid a trip to the store.
The concentration of the population in The Netherlands makes it an ideal launching point for the ochama concept in Europe. The retailer said 92 percent of those living in the country reside in cities with polycentric neighborhoods.
“Dutch people are passionate for innovation and a green environment, and ochama’s shopping format is designed to contribute to both aspects,” said Mr. den Butter. “There will be no queue and fewer traffic jams to do the chores as they can go for convenience, benefits and everything in one stop at ochama.”
Discussion Questions
DISCUSSION QUESTIONS: What interests you most about the ochama concept being launched by JD.com in The Netherlands? Do you think the population density and other attributes that make the Dutch market attractive to JD.com can be found in areas around the U.S. as well?
Poll
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David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
The entire concept is interesting and has potential, but it’s not the kind of shopping experience every shopper will value. Population density is certainly a factor in where this concept may work especially well, but I could see it working in many other areas as well. It will be interesting to see how this concept evolves. But one thing is clear, the drive for automation seems to be accelerating.
This is like the UK’s Argos model but fully automated – which is a smart move. However, like the Argos concept, it can be a soulless shopping experience which lends itself to more “essential” and “convenience” products that people don’t need to experience before buying. There is definitely potential here, especially in how automation is being used, but this isn’t the predominant future for retail.
You’ve nailed it. Shoppers looking for corn flakes or canned soup might be attracted, but foodies who gain inspiration from looking at meat and produce will be put off. It’s a novelty only.
The ochama concept is like a vending machine on steroids. With labor costs and shortages becoming one of the biggest challenges for retailers, we will see more processes automated by robotics. Offering customers the option to shop in the showroom and order products for take home, after they are picked by the robots, or order for home delivery lets customers decide how they want to shop. Great concept.
I was intrigued until it was suggested this is good for the environment. In a world of trade offs, we should know by now that promises of “reduced traffic jams” aren’t reliable. In the U.S. my expectation is that these stores would have a short lived excitement. Their novelty would interest families – as does the donut making reveal at Krispy Kreme – but it wouldn’t be enough for long term success.
I concur with my colleagues. This is too much cool and not enough soul. For limited audiences — and that may not be enough of an audience to make the seemingly large capital investment worthwhile. This is another wait-and-see and I am skeptical.
So — dark stores, essentially. Order online, pick up or have delivered. Isn’t Chipotle (among many others) doing this now? It’s a long overdue test that many U.S. retailers have been slow to employ, but one that’s a scaled eventuality. In a recent survey we did, “dark” stores (pickup and delivery only) like ochama scored very high with consumers so frankly, not sure why someone (Amazon?) isn’t rolling them out.
Making robotics the star of the retail experience distinguishes ochama and creates a buzz as JD.com expands into new markets.
Yet the concept even feels robotic in spirit, as it is cool, detached and transactional. Rivals that double down on human warmth and empathy (while using tech for efficiency) are more likely to build loyal relationships with shoppers.
Also, with 7,000 items at the moment, ochama needs to broaden its assortment to match its positioning as a one-stop shop.
The ochama concept could target compact U.S. cities with high populations of time-starved shoppers seeking smooth BOPIS.
I remember this from the 1970s. Here in Minneapolis, it was a chain of warehouses called LaBelles. You would look through the catalogs and displays up front, pencil in your order, hand it to the clerk, and it would be picked and packed for you to take to your car in about 20 minutes. Substitute robots for humans and your iPhone for a slip of paper. Boring as heck. I bet every major city had something like this, and every last one of them went out of business. If you’re going to make ME come to YOU, it had better be interesting, because I can get stuff done at home while I wait for my Amazon order.
Let’s face it this is retail theater, not retail efficiency. Now, there’s nothing wrong with retail performance art, but the basic concept here goes back to Clarence Saunder’s 1949 innovation, the “Keedoozle” (Key Does It All) store – a conveyor fed automat for groceries. Novelty is great, but it’s hard to scale.
The Dutch consumer seems perfectly suited to this retail concept – this is a great market to expand the ochama model to. I don’t think this will work within all cultures, but knowing that it meets the desires of Dutch shoppers makes The Netherlands the perfect place to start. I’d hope for slight tweaks to the model as it penetrates other markets with differing consumer shopping behaviors.
This model is a pure efficiency play and will see limited but successful adoption in the West as part of a store portfolio. It’s ideal for a no-hassle order and pickup experience without a checkout queue. J.D.com is changing the P&L and store financial model with ochama. Conducting proper research on demographics and shopper density is crucial to identifying the right markets and store locations.
There’s a time and place for this type of technology provided there’s enough capital and a large enough market of time-strapped shoppers to support it. I can see demand increase as average technological skills continue to increase over time, but it’s great for consumption, not so much for discovery.
Automation allows for predictability, and it’s a lot of fun to watch robot arms pick and pack your orders. Besides that, because shopping is a social activity, the ochama store concept can provide a unique and entertaining experience for JD.com customers. Fun activities, on the other hand, are exciting because they are uncommon in our daily lives. Similarly, not all customers will want to see the picking and packing of their online orders. Most of the time, they just want to get in, pick up their order, and get out as soon as possible. This is why I believe the ochama concept is not the next-gen of retailing.
For Ochama stores, the US market will be just as appealing as the Dutch market. The desire of Americans to see innovation in action, as well as demographics, will both benefit JD. com’s ochama stores.