How Can Dmall do Better?
Discussion on New Retail
Marketing Mode Based on 4Cs Theory
Aihua Zhang Chen Liang
Beijing University of Posts and Beijing University of Posts and
Telecommunications Telecommunications
10 Xitucheng Road, Haidian District, 10 Xitucheng Road, Haidian District,
Beijing, 100876, P. R. China Beijing, 100876, P. R. China
(+86) 13501262266 (+86) 18001057706
13501262266@139.com liangchen_bupt@163.com
ABSTRACT
“Dmall” is an O2O new retail platform who is deeply integrated
with Chinese local large-scale supermarkets “Wu Mart”, covering
a wide range of products. In China, new retail companies
represented by “Dmall + Wu Mart” have achieved impressive
success. This paper aimed at discussing the mode of new retail
marketing based on business practices and theoretical foundations.
The research paradigm is mainly as: based on the 4Cs theory of
marketing, rebuilding the relationship between people, goods and
scenes from aspects of customer, convenience, communication
and cost of new retail. The role of new technologies like big data
and IoT is also considered. Then it discusses how new retail like
“Dmall” can do better according to the new retail marketing mode
after looking inside the problems. The research brings new ideas
to the development and academic research of new retail businesses
represented by “Dmall”.
CCS Concepts
• Applied computing→Operations research→Marketing
Keywords
new retail; Dmall; marketing strategy; new technologies
1. INTRODUCTION
In 1950, Mr. Sam Walton launched the first retail revolution: town
chain revolution. Wal-Mart linked global offline stores and
completed the revolution through global private satellite network.
In 1990, Mr. Jeff Bezos launched the second retail revolution: e-
commerce. Amazon connected the world's merchandise and
completed the revolution through the PC Internet [1]. In 2016, the
CEO of Alibaba Group, Jack Ma firstly proposed the idea of “new
retail” in China, which is believed to be the third retail revolution.
Jack Ma proposed that new retail is a combination of Internet,
offline store, and logistics, and pointed out that "Pure e-commerce
mode will end soon. In the future decades, online and offline retail
will combine together and it is a time of new retail.”
With the advent of new technologies like big data and mobile
payment, new retail industry boomed. Amazon announced buyout
of Whole Foods in 2017, and implemented price reduction
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DOI: https://doi.org/10.1145/3194188.3194190
46
Junwan Yin
Beijing University of Posts and
Telecommunications
10 Xitucheng Road, Haidian District,
Beijing, 100876, P. R. China
(+86) 18811389692
1564821623@qq.com
strategy by offering discounts on the "well-known expensive"
supermarket to its online members. Amazon Echo was firstly sold
offline while Whole Foods was firstly sold online on Amazon
Fresh, indicating that Amazon has completed a revolutionary O2O
integration. Coincidentally, “JingDong” and “Wal-Mart” group
announced in 2016 that they reached cooperation in the areas of
electricity supply and O2O etc., and achieved success in
enhancing consumers experience by taking a series of new
services jointly developed by the two parties. Cases show that
retailers around the world are engaging in business reforming
which brings customers to the world of "new retail."
Chinese new retail is constantly developing and gradually
becomes the main force of global new retail team. Founded in
April 2015, "Dmall" is an O2O integrated Omni-channel retail
platform that covers a wide range of everyday consumer products
such as fresh food. It is deeply integrated with the local large-scale
supermarket "Wu mart". They sell and provide fast delivery of
well-known cheap and good quality products. As the
representative of new retail, "Dmall & Wu mart" made brilliant
achievement again on “Double 12 Festival” in China by a timely
delivery rate of 99.42% and O2O correctly distribution rate of
99.38%, which recorded the record of retail platform. In addition
to Alibaba and JingDong, the "Dmall & Wu mart" consortium has
become the biggest dark horse of “new retail”.
New retail is more consumer-centered comparing with traditional
retail. As in the early stages of development, new retail teams like
Dmall encounter problems though they achieved extraordinary
results in the last two years. Surveys show that customers’
complaint on queuing and other processes of shopping has
increased. According to Nielsen's analysis of Chinese consumers,
consumer characteristics and behavior in China have changed
significantly, retailers now should try to offer extraordinary
customer experiences. Retailers only get an average of 32% on
portability, which is a key concern of busy consumers; and only
17% of retailers provide personalized names, product content, and
marketing information through at least one digital channel.
Technology application is needed to make further progress.
The fact tells that for new retail marketing the product-oriented
ways are no longer so appropriate. The future marketing should
focus on consumers. Therefore, new retail companies should shift
their marketing focus from product-oriented to consumer- oriented
marketing with adequately consideration of new technology. The
study discusses how retailers rebuild the most critical part of the
retail business: relationship between customer, goods and
marketing context based on the consumer- oriented 4Cs theory
considering the effect of new technologies like big data processing
to make better changes.
2. THEORETICAL BACKGROUND
2.1 New Retail
While the concept of "New Retail" is just formally proposed, like
many other practical business ideas, "new retail" also has its own
theoretical evolution. The most influential ones are “Wheel of
retailing hypothesis” (McNair, 1958) and “Retail life-cycle
hypotheses” (Davidson, 1976) [2]. “Wheel of retailing hypothesis”
points out that new retailers tend to enter the market with "low
cost, price and low margins strategy” to be competitive. However,
they may need to improve their quality and service, and take “high
strategy” thus may be attacked by new innovators who adopt low
tactics. “Retail life-cycle hypotheses” applied the product life
cycle theory to explain the evolution of retail. It claims that retail
format would undergo four periods: development, growth,
maturity and decline. The theory explains the track of retail
formats development. However, it did not explain the motivation
of the life cycle hypothesis and why there are life-cycle problems.
To make up for the lack of above hypotheses, the new wheel of
retailing theory was put forward, which tells that development of
the retail industry is driven by technological innovation[3]. Only
technological innovation can break the existing portfolio and make
a balance between service level and retail price relationship at a
higher level. And the evolutionary model of retail business
proposed to better analysis and forecast the evolution trend of
China's retail format [4].
After decades of development, retail has entered a new era. Jack
Ma, CEO of Alibaba, pointed out in 2016 that “This is the time of
new retail. New retail is a data-driven, consumer-centric form that
shifts from selling products to serving consumers. O2O
practitioners should work together to make serve consumers [5].
SunWeimin, vice chairman of Suning Group proposed that the
realization of new retail needs new procurement, smart sales, new
services, new channels and new format". The success of "Taobao"
and "Suning Tesco" is an excellent proof of the above ideas.
New retail is not a conceptual "subversion of tradition retail" but
an involution with the help of technology. Although there’s not yet
a theoretical definition of "new retail", it can be defined referring
to theoretical foundations and business practices as: A consumer-
centric mode of retail relying on advanced technologies such as
big data and artificial intelligence to upgrade the process of
production, circulation and sales of retail ecosystem.
The ever-growing demand of society and the shortcomings of
traditional retail industry are the main reasons for the emergence
“new retail”. Three crucial elements of retail: customers, goods
and context have been updated with the rapid progress of
technology [5]. Consumers are “digital” as they can be easily
identified, served and interconnected. Goods supply becomes
intelligent as portfolio products are in accordance with consumers’
demand. Context of consumption becomes ubiquitous: online and
offline, anywhere and anytime, making retail as a service. As a
result, new retail mode is believed to restructure the relationship
between the three elements. And sophisticated marketing model
and system are needed to guide the operation of new retail
development in China as it is in the nascent stage.
2.2 Market Theory of 4Cs
The biggest difference between new retail and traditional retail is
the prominence of the consumer-oriented nature. Thus the
consumer-centric 4Cs theory is more consistent with analysis of
new retail. The Marketing Theory of 4Cs was introduced by
famous marketing professor Lauterborn in 1990 [6].
47
From the perspective of consumers, it redefined the theory on the
basis of 4P theory, emphasizing that the new marketing theory
should be consumer-oriented. The traditional marketing theory
emphasizes "4P", namely, product, price, place and promotion,
and believes the flexible marketing will bring raise in sales.
However, "4P" theory became inapplicable as the social
consumption has undergone great changes, and needs for
individualized services are increasingly growing. Thus, consumer-
oriented "4C" theory was proposed. It resets the four basic
elements of marketing, which is customer, cost, convenience, and
communication. It emphasizes the importance of customer
satisfaction, cost reduction, and customer convenience, and a
consumer-centered communication.
(1). Customer is the core of marketing. Enterprises should firstly
understand and research its customers, provide products according
to the needs of customers, that is, provide more than just products
and services, but more customer value.
(2). Cost is what consumers are willing to pay, not just the cost of
production. Ideal pricing should consider the psychological price
of consumers first before trying to make a profit. The cost of a
customer includes not only monetary expenditures, but also the
time, effort as well as the risk of buying.
(3). Maximizing convenience of customer should be taken into
account for retailers as they are experiencing severe competition.
They should enhance pre-sale, sale and after-sales service in
whole process like location choosing, product designing.
(4). Effective communication can help maintain the customers.
Enterprises should establish a new type of business-customer
relationship based on common interests through active and
effective two-way communication with customers.
2.3 Vital Technologies in New Retail
Technological innovation is fundamental drivers of the ever-
changing retail landscape. Among numerous new technologies,
big data processing; cloud computing; Internet of Things; artificial
intelligence and mobile payment etc. are believed to play a key
supporting role in the new retail industry.
2.3.1 Big Data Processing
According to Alexa, the average daily PV of JD.com reached 126
million and the amount of data generated daily up to 50TB in 2017.
The huge amount of data that new retail generates requires
systematic processing.
Big data processing techniques include: big data collection,
preprocessing, storage, analysis, application and so on. It unlocks
the potential value of new retail by "predicting the future" by
analyzing the past and present traits of people and things [7]. Its
main application lies in: actual environment simulation, customer
segments, supply chain and products and services.
2.3.2 Cloud Computing
Ever since the idea of "cloud computing" firstly put forward by
Salesforce, it has been chased by IT companies around the world.
Cloud computing technology includes four key components:
hardware, cloud operating system, cloud platform software and
cloud application software. It takes advantage of the transmission
capabilities of high-speed Internet to move data from the personal
computer or enterprise server to the cloud [8]. Applications of
cloud computing in new retail include cloud computing, business,
economy etc. It helps to improve service efficiency, reduce costs,
and increase data security and convenience.
2.3.3 Artificial Intelligence
Recent years had witnessed an increase in companies deploying
artificial intelligence technology in marketing like smart supply
chain, smart customer service and unmanned stores.
The smart supply chain is guided by consumer demand, focuses on
“customers, goods and context” and provides solutions to
scenarios such as dynamic pricing based on artificial intelligence
algorithms. Smart customer service involves a number of artificial
intelligence technologies such as deep learning to improve user
satisfaction. Unmanned stores eliminate the traditional cashier
checkout process by using technologies such as computer vision.
2.3.4 Internet of Things
The Internet of Things (IoT) is the last point of closure for new
retail industry. IoT helps to digitize product information at a very
low cost. The core of IoT technology is RFID / NFC and various
sensor technologies, supplemented by two-dimensional code etc.
[9]. IoT system can improve inventory accuracy in the retail
industry. For example, the item-level RFID has been proved to
reduce the out-of-stock situations by about 80% of retailer.
2.3.5 Mobile Payment
With the innovation of mobile payment, the frequency of cash
used is gradually declining, and "mobility" has become a general
trend of retail payment. Technologies like NFC, Hands Free
Payments and Fingerprint recognition make it possible for retail
companies to be "more convenient" in payment methods.
Consumers only need to say some words or use their fingerprints
to complete the payment.
3. NEW RETAIL MAKETING MODEL
BASED ON 4Cs THEORY
3.1 New Retail Marketing Analysis Model
Based on the above business practices and theoretical foundations,
this paper presents a new model of new retail marketing system. In
the analyses model (Figure 1), based on the consumer-centric 4Cs
theory of marketing, it aimed at clarifying the characters of
customer, goods and trading context and rebuilding the
relationship between them, with consideration and analyze of the
role and potential effect of new technologies.
Figure 1. New retail marketing model based on 4Cs theory
3.2 The Role of Technology
Technologies play a key supporting role in the new retail industry.
They enable new retail to further optimize themselves. Digitized
technologies inosculate and realize deep integration of virtual
reality and reality. Customers, goods, and context in new retail get
the maximum extension in physical space and time than traditional
retail. Consumers are not restricted by region, time, storefront;
goods are not limited by content form, type and quantity; and
consumer experience and product delivery will not be restricted by
physical context any more.
48
3.3 Customer in New Retail
Online businesses have advantages in data acquisition and analysis
while offline businesses are more efficient in logistics. One vital
goal of new retail is to increase the efficiency and integration of
online and offline retail, it means selling the appropriate goods to
the customers.
Think about “What’s the characteristic of each of my customer?”
To figure out this, user portrait and customer segmentation based
on data analysis are needed. Technology like big data processing
can dramatically enhance user experience by offering personalized
service based on a large amount of data. For example, what kind
of apartment they live in (address data); do they have pets
(shopping data); are they sensitive to discount (promotion data),
what have they searched for (interest data) etc. Data analyzing
helps retail companies to make a clear portrait of each customer
and then segment customers into different groups.
3.4 Goods in New Retail
From the perspective of trading object, all goods will become
tradable in the future. Any stuff and service will be given value,
regardless of whether it is tangible or tenacious. Thus it is time to
think about “What are the suitable goods for my customers that is
both of high quality and innovative?”
In tradition situation, goods production and supply are empirical
work. Companies make product portfolio according to the
experience, make production according to the scheduled plan, and
apply a pushing-type supplying.
In new retail, customers’ need is the main concern of companies
when they produce goods and make supply plan. The product
portfolio is on-demand, and the manufacturing is intelligent.
Moreover, the supply chain is optimal as IoT technologies are
applied to monitor market dynamics and spending habits,
determine supply chain operations strategy, and strengthen the
logistics management.
3.5 Context in New Retail
As trading space is greatly extended, it will be possible for retail to
trade in any context in the near future. Any corner of the world is
likely to become a trading context. As for new retail, “What
tangible and specific context will inspire customers to purchase
and use the products?” is the problem to be settled.
A specific context should fit to customer’s feeling at a specific
moment. Offline context like Department store, Hypermarket,
convenience store are combined with online context like e-
commerce, live webcast or other recreational activities anytime
and anywhere (Figure 2). Technology like cloud computing help
upgrade software and hardware systems, transforming all in-house
systems into cloud models for different context to simplify the
processes and figure out potential consumer groups. Moreover, the
flourish of intelligent devices, such as VR and mobile terminals
also enrich the way for consumers to reach the products.
Figure 2. Context in new retail
 4. HOW CAN DMALL DO BETTER?-AN
APPLICATION OF THE MODEL
4.1 Problem Faced with Dmall
Dmall started its business as O2O raw food delivering, and
promptly reached cooperation with a number of supermarkets
across China. After realizing the lack of being a purchasing
agency, Dmall quickly develop a new strategy as an O2O platform,
and shrank its business from 20 cities to 4 and focus its energies
on Beijing. Based on in-depth investigation of Dmall and
interviews with users, due to changes in consumer demand and the
low threshold and rapid development of retail industry, new retail
companies like Dmall counter with many problems and need to
further upgrade their marketing model.
Firstly, the offline retail technology needs to be further improved
to make customer segmentation and user portraits and provide
better personalized service. Meanwhile, the online and offline
retail process need to be further integrated. Make use of new
technologies for real-time information sharing, to reduce O2O
delays and information asymmetry. Last but not least, they need to
better control the costs and offer more user value. Whether it is to
develop new formats or new technologies, a steady stream of
financial support is needed, which means controlling the cost. For
the above listed and potential problems, based on the 4Cs theory
of marketing, put forward advice on rebuild the relationship
between customers, goods, context to better meet the challenges of
the new retail.
01
4.2 New Mode of Marketing—rebuild the
Dera Thorfiani relationship between customer, goods, context
4.2.1 Knowing the Customer
02 Currently most of the new retailers offer the same online store
display interface and offline shopping process for all users. But
Dera Thorfiani hundreds of millions of consumers are living in different
environments with different personality traits and hobbies. The
large differences of urbanization in China, the diversification of
income groups, and the multi-level distribution of age further
determine the complicated features of China's future consumption.
With the continuous development of new technologies, it is
possible for Dmall and other retailer to re-recognize customers and
implement marketing strategy according to different contexts.
To provide online-offline integrated shopping experience, it needs
to build a variety of colorful contexts. The first step is getting deep
insight into the customers: by integrating information from all
channels, firstly recognize general identification of consumer and
form a vague outline of the group. Secondly, pay attention to the
unique parts, distinguish the commonality and themes of data,
recognize a clear outline of the group (such as gender, age,
purchase history). Finally, form a clear portrait hologram of every
group or even every customer based on the integrating information
to identify the characteristics of existing users and potential users
(Figure 3).
Big data technology enables new retailers to achieve accurate
interest matching and behavior prediction through the whole scene
information analysis. Data unlocks the entire link of consumer
awareness, interest, purchase, loyalty, and feedback sharing. Also,
data visualization technologies make the whole process
concerning customer traceable and optimizable.
With the application of big data application, a clear user portrait
can be further used to set up of different shopping context,
49
corresponding with the brand strategy, brand communication,
brand management all-roundly.
Figure 3. Customer portrait hologram
4.2.2 Controlling the Cost
In traditional retail, shopping is a complex process with a high
cost of money and time. New retail achieves integration of online
and offline, thus customers have no need to worry about the
problem of information asymmetry. New retail should enable
consumers to speak out the psychological price, form a two-way
evaluation mechanism to enhance the quality and efficiency of
supply and demand match with lower costs.
On the one hand, Dmall can offer personalized, small batch
product customization based on consumer demand. Provide a
more cost-effective product portfolio that is standardized based on
the user portrait. Adjust the trial according to consumers’ feedback
in product testing session. At the same time based on the service
attributes of goods, the implementation of directional discount to
make seamless integration of different contexts, to provide on-call
personalized service and flexible delivery, thus increase added
value.
On the other hand, starting from the transformation of basic
services, reduce the average cost of the retail industry by
enhancing marketing efficiency. Technology plays a vital role in
reducing new retail costs. As for logistics, the alliance of self-
operated and third-party logistics is much more effective. IoT
helps to reduce the out-of-stock situations by sharing and
integration of tangible and intangible resources, and supply chain
logistics process integration like warehousing operations, unified
materials procurement, centralized transportation of materials can
reduce waste of cost. Cloud computing can simplify the business
services, and enable them to focused more on the major business,
thus greatly reducing the cost of enterprise IT maintenance. In
short, transaction costs such as comparing, decision making and
rights-keeping cost in the new retail model will get lower and
lower. The zero-marginalization of transaction costs will gradually
emerge with advancement of new technologies.
4.2.3 Make the Customers Feel More Convenient
Speaking of convenience, new retailers should also pay attention
to simplification of the process. Keep up with the rhythm of
modern customer life, and solve the problems of spending too
much time selecting commodities, making orders and paying.
Based on the customer's portrait, further apply appropriate
functions to different groups promote. Cloud computing
technology helps enterprises to carry out daily business activities
conveniently and quickly. Employees and consumers can use
various types of smart devices to conduct business activities such
as querying and paying for goods at anytime and anywhere
through network devices.
At present, despite the many forms of payment, it is far from the
ultimate payment method. In the era of consumer-centric, online
and offline experience consumption will be more and more
frequent, payment mode needs to be redesigned according to
consumers’ features to enhance convenience. Most of the payment
process is complicated and the interface is not so user-friendly at
this stage. It is advised to increase the support of application
developers, and launched a unified technical standard covering
interface specification, acceptance terminal, application security
standard and test specification with the support of mobile
technologies as soon as possible.
Based on effective correlation analysis of consumer, account and
transaction data, a three-dimensional consumer behavior chart can
be formed. The analysis result is then applied to retail payment
products and service innovations, including holistic design of
processes, functions, structures, and user interfaces. By using the
advanced technology of the AI and the supporting network
platform, various types of consumer groups can obtain satisfied
retail payment services in terms of their own risk appetite and
transaction habit, making it is possible for consumers to pay by
only saying "I'd like to pay with it".
4.2.4 Have Two-way Communication with Customers
Pure offline or online mode is difficult to gain a foothold. For new
retail, in addition to selling goods, it can also sell a series of other
products on the whole chain. The online brands are good at
maintaining the vitality while offline retail can easily get a large
number of loyal fans, enhancing O2O two-way communication
with customers make new retail more competitive. In the future,
new retail is inseparable from the communities that include two-
way communication with consumer about shopping experiences,
feedback, referrals, and interactive personalities. For example,
"MIUI" community of XiaoMi, and "Fruit fans" of Apple
Company has achieved mutual promotion of sales and brand.
Furthermore, application of Customer Relationship Management
empowers new retailer to be "consumer-centric", to insight into
customers’ need and to provide personalized marketing and
service capabilities. Customer communication emphasizes the
participation and interaction of customers in the whole process,
and in the process of participating in the interaction, the
transmission of information and emotional contact is realized.
Through the two-way communication and meticulous operation of
customer managing platform, it helps to improve the conversion,
re-purchase rate and then the overall Unique Visitor (UV) value.
Under the new economic normal, consumers' consumption
channels and consumption scenes are gradually fragmented, and
there is more room for social retail development in the future.
New retail across channels will have to comply with this trend and
take the road to community development before they can gain a
competitive edge and win the tradition retail.
5. DISCUSSION
New retail is consumer- oriented pattern which is more concerned
about consumer. Based on the 4Cs theory, this paper proposed a
model to analyze the new retail marketing represented by Dmall,
to reconstruct the relationship between customer, goods and
marketing context. First, knowing the customer, consumer insight
and realization of different personalities is necessary. As for cost,
added value of customers and marketing efficiency need to be
enhanced. From the perspective of convenience, upgradation of
payment and process is vital. Finally, new retail enterprises should
have two-way communication with customers. These strategies
are also instructive for other new retail business exploration with
the supporting role of numerous new technologies.
New retail era has just begun and will face with more challenges
in the future. China is the main force of new global retail with a
large population and high consumer interest in learning; the
market will greatly promote the development of new things and
will make a huge effect. It is due to the characteristics of the
50
Chinese market that after the exploration and iteration of new
models landing overseas, not only the cost of iteration will reduce
but also powerful forces will emerge. Successful cases of Amazon,
Alibaba and Dmall continue to emerge, indicating the arrival of
the new retail. For decade of E-commerce and technologies’ rapid
development in China, China's retail development has ceased to
rely solely on the entity construction and develop step by step.
Looking to the broad future for technology development, the
world will be further digitized in the future; content will continue
to evolve from 2D to 3D or even high-dimensional. This will
make the global retail development driven by the new retail in
China more imaginative. As for the trading subjects, anyone can
become a retailer. Retail is no longer the prerogative of a company,
and tends to be democratizing. As for trading objects, all goods
will become tradable. Everything and service will be given value,
regardless of whether it is tangible or tenacious. As for space, any
context will be able to achieve retail sales, trading space will be
greatly extended to any corner of the world or even outer space;
also monetary patterns will present a diverse trend. It is not hard to
imagine that with the deepening of digitalization and technological
progress, the transaction will move towards automation and
intelligence. The global economic pattern will eventually be
rewritten by a new consumer -oriented economy, and new retail
will become an important link.
6. ACKNOWLEDGMENTS
This work was supported by the grant from the National Social
Science Foundation of China (No. 17AGL026).
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Annotations

How can dmall do better? Discussion on new retail marketing

mode based on 4Cs theory
Zhang, Aihua; Liang, Chen; Yin, Junwan

01 Dera Thorfiani Page 4

28/10/2020 0:45

02 Dera Thorfiani Page 4

26/3/2021 23:12