Subway-riders in Seoul can go grocery shopping on their way to and from their trains. Strap-hangers walk by images of grocery store shelves, use their mobile phones to pick products off the shelves, and have them delivered to their homes. It's part of an innovative experiment in mobile marketing by international retailer Tesco.
Tesco is a relative newcomer to South Korea. It started there in 1999 as HomePlus, in a joint venture with Samsung, and now has about 400 stores employing 25,000 staff. It's second in the marketplace, with fewer stores than leader E-Mart.
To win new customers, Tesco invaded the busiest place in Seoul: the Seonreung subway station. Tesco posted life-sized pictures of store racks. When consumers walk past the images, it's like passing through an aisle of a supermarket. Beneath each product, there is a QR code that customers can scan using the HomePlus app. Shoppers have a choice of five hundred items, including milk, fruit, pet food, and stationery; the merchant only made available the most popular SKUs. Delivery is same day, if ordering is complete by 1 p.m.
The virtual store was a marketing success. It helped Tesco grow to No. 1 in the online market. The number of registered users grew by 76 percent. Online sales tripled in three months.
The life-sized pictures of shelves were eye-catching, but not necessary. The app can be entirely self-contained, making online ordering possible from everywhere.
Still, the shelves provide advantages. They're a good way to get shoppers used to mobile buying. Also, they spur sales, because seeing is remembering, and shoppers seeing an item on the shelf are more likely to remember they need it at home.
But the foremost benefit of the virtual store is the "wow" factor that led to publicity for the campaign. Tesco's video (below) got more than 2 million views on YouTube; media outlets including Wired and The Wall Street Journal covered the story; and the Android app was downloaded by more than a half-million users.
US and European marketers looking to replicate the success need to be careful. South Korea is different. It's among the most hardworking nations; long hours at the workplace leave little time for grocery shopping. Smartphone penetration is higher than any other country in Asia/Pacific, even Japan. One in every six South Koreans uses a smartphone. Samsung and LG are both based there and have flooded the market with Android phones. These factors led to the campaign being well received.
What do you think? Are virtual shops the wave of the future? Can this business model succeed outside South Korea?
— Talha Khalid has been practicing and teaching technology, management, and supply chains for more than a decade.
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Great link. When I read about Tesco and South Korea's experiment Prague came to my mind. I lived in Prague for three years and Tesco is very strong there, and very well located. It's easy to imagine that Tesco in Prague will do the same it did in South Korea.
This last paragraph from the article is interesting and should be a wake up call for New York service providers:
"While there's no lack of interest from marketers, just how viable subway shopping is in the U.S. remains a major question, given infrastructure issues. New York City, for example, is only just beginning to flirt with cell service in subways, with AT&T and T-Mobile subscribers on select routes beginning to receive service as of this month."
Virtual stores in the subway could be of great help in a busy city like New York. However, the infrastructure issues are once again the main problem. It's a pity.
Although I went to the Horn and Hardart toward the end of its life and it had become just a cafeteria. The old machines were still there, but they were only for tourists. As I recall, you had to buy special slugs just to use them.
@Mitch but food cultures do change. In early 20th Century New York, automats used to be popular for quick, cheap food, but according According to http://en.wikipedia.org/wiki/Automat, "At one time there were 40 Horn & Hardart automats in New York City alone. The last one closed in 1991." Perhaps they can be brought back with orders placed and paid fir with mobile devices.
Casually, you hit an important point.
Why it's so rare to see CMOs with BIG brands and small egos, with more love for their customers than for their brands, with their feet on the ground, who have as good listening skills as they have promotional skills, who don't exaggerate while describing their products, who are not full of themselves and their beloved brands ... Why?
@Mitch: No brand can be everything to everyone. I am not surprised to see that Pret maintained it's way. It takes years to develop excellence in operations. A few more years to get reputed for that. If a significant chunk of market is still delighted to be served that way, that's enough of a reason to continue operations that way.
Thanks for the link. Good article. Marketers and brands using or planning to use QR codes should read that article.
I would like to highlight the following paragraph from the link, which I believe pictures very well that there is a need to educate the consumers in the use of QR codes but even more than that marketers and brands should learn first how to use QR codes creatively.
Are QR codes effective or useful in advertising?
"QR code usage now Most of the QR codes found in current advertising are an absolute waste of time. I personally tested over 200 random QR codes I saw in advertising for this article, and it was a wake-up call to how absolutely uncreative agencies and brands have become. And I say "agencies and brands" because it's really not the QR codes fault: A QR code is a tool, nothing more, and it is a poor marketer who blames the tool. The vast majority of those I scanned landed me on a webpage that was the same URL as in the ad itself. That is about as useful as telling someone your name while wearing a name tag. "
> QR codes make everyone's life easier. Who doesn't like that? > No wonder they are a new darling.
While Tech-savvy marketeers like to believe that, there are experiments that prove otherwise. There have been campaigns that also counter this assumption, campaigns where customers after taking the hassle of scanning, said duh! More here.
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