The increasingly digital Chinese consumer is enjoying the mobile comforts of home as they travel abroad and buy through Alipay, a popular app that offers cashless payments and more.
The app is something of a Swiss Army knife, extending payments, credit, social networking, coupons, even Uber, to Chinese shoppers in the U.S.
Given the relatively recent rise of the consumer class in China and lower per-capita retail square footage, shoppers from the country offer something of a window into how payments and commerce could develop in the U.S.
Souheil Badran, who is president of Alipay in North America, is focused on connecting merchants and Chinese shoppers abroad through the app, which is highlighting its functionality with its Cashless Cities campaign in China that begins Tuesday and runs through Aug. 8.
Here, Badran talks with WWD about Alipay, how the cashless society impacts shoppers and merchants and more.
WWD: What’s Alipay’s mission in the U.S.?
Souheil Badran: To enable the Chinese consumer who’s coming to the U.S. to experience the same services and the same capabilities that they do in China today. We think of it as more of a lifestyle app.
WWD: How many Chinese consumers come to the U.S. and how much do they spend?
S.B.: On a yearly basis, that number is up to four million Chinese consumers coming to the U.S. You have about 400,000 who will make it to Las Vegas this year. With the increase of the Chinese middle class and the Chinese consumer making a little more money, they’re starting to extend their trips.
WWD: How much of an activity is shopping once they arrive?
S.B.: With hotels, for example, it’s usually prepaid. When they’re here, they’re here to eat, shop — and what we’re finding more and more is that they’re focused on experiences. Instead of coming in and just going on tour buses, they’re taking helicopters in Vegas, going to car races.
When it comes to shopping, they are going after not just the high-end brands, but going to small merchants — we call it the long tail. They’re finding things they do not necessarily find in China.
WWD: So small retailers still have a reason for being?
S.B.: Yes, absolutely. That’s why, through our partnership with [e-commerce firm] First Data, it wasn’t just focused on the large retailers, it was focused on the smaller retailers.
With Alipay, it’s more of a digital lifestyle enabler, it’s more than just payments. Through our discovery platform we provide our merchants with the ability to upload coupons or opportunities…it’s really interactive. The interaction isn’t just, “let me find the retailer,” it’s really for retailers to target Chinese consumers.
WWD: What is the Cashless Cities campaign?
S.B.: We partnered with five cities in China. We already have merchants in those cities, but what we’re tying to show the consumers is [by using Alipay], you’re getting more benefits. You have the ability to drive your spend in a mobile way that we can track and then offer you better things down the road.
WWD: China has leapfrogged ahead of the U.S. in terms of digital adoption. What is there to learn from the Chinese experience with cashless payments?
S.B.: It’s more than cashless payments, it’s more of the digital lifestyle. Today, if I go into a high-end luxury store and I see a purse that I’d like to buy for my wife — it’s $2,000, yet in my app I only have $1,500. We can extend credit on the fly to that consumer. Obviously, retailers love it.
We’re offering that as part of your credit or we can even pull it from your money market fund. Think of it as a checking account you can borrow from to complete that purchase. That’s why retailers like it.
WWD: Do you plan on offering Alipay in the U.S.?
S.B.: There’s no plan to offer U.S. consumers the app. For us to be coming to the U.S. and try to push our own wallet, as you can imagine, it’s a very intense game. We’d rather sit back and focus on being partners with many of those [existing U.S.-based digital] wallets to get our consumers here to market.
WWD: How long would it take for the U.S. market to go completely cashless?
S.B.: I don’t think we ever get rid of cash. I don’t think that’s our intent. Our intent is to drive consumers to use mobile even more because both the consumer and the merchants will see the benefit of that, there’s more interaction.
WWD: What is Alipay learning about the consumer?
S.B.: We have a very dedicated team of scientists that are really focused on that. And if you look at traditional marketing in the past, where you really segment people based on income or zip code — because of the amount of data we have today, we have the ability to really break that down.
The shotgun approach of the past has really gone by the wayside. We’re laser-focused on putting something in front of you that’s not going to be noise, but something that’s going to be actionable.
WWD: How does consumer behavior change when you take cash out of the equation?
S.B.: They usually buy more because they’re using the discovery platform. If they go into the store, we see a very high conversion rate. We think about enabling them pre-trip, during [the shopping] trip and post trip.
What we do post trip is, if you bought from a specific brand, we know you’ve done that, you’ve gone to New York and gone to Rebecca Minkoff, we’ll make sure you see similar ads to drive you back into the store again.
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