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China tech

China spawns subscriptions for clothes and bikes as sharing evolves

AI and delivery networks foster unique e-commerce services

The MollyBox pet goods service, Hellobike and YCloset all offer customers access to their products with a monthly subscription.

SHANGHAI -- Subscription-based businesses are gaining momentum in China, with the country's extensive delivery networks and artificial-intelligence technology driving a shift toward sharing more things.

Subscriptions are spreading from music and video streaming to tangible consumer goods like clothing, bicycles, cosmetics and flowers.

These services show how the Chinese online shopping market -- the world's largest -- is evolving in unique ways as data collected from the country's vast consumer population is fed back into the digital economy.

The city of Nantong, roughly 120 km north of Shanghai, is home to a massive warehouse for YCloset, a clothing rental service that gives women access to an unlimited rotating wardrobe.

For a flat fee of 499 yuan ($70) a month or 4,888 yuan a year, customers can pick out clothes from the company's smartphone app for delivery to their homes within days. They simply send the clothes back after they are done.

The Alibaba Group Holding-backed startup, also known as Yi23, now boasts more than 20 million registered users. While the company relies on human workers to clean the 600,000 articles of clothing at the Nantong site, the rest of the service -- from storage to shipping -- is almost entirely automated with electronic tags.

Electronically tagged clothes move along automated conveyor belts at YCloset's warehouse in Nantong.

"Our edge comes from embracing AI," CEO Liu Mengyuan said.

YCloset analyzes the popularity of each item, combining it with customers' search and rental histories to make tailored recommendations. Someone who rents a skirt could also receive a suggestion for a matching blouse, for example.

"Thanks to the app, I no longer have to worry about what to wear to work," a 30-something customer said.

Damaged products can be a problem in such services. But many let customers easily file for refunds or replacements through their apps.

Other names in Chinese consumer goods subscriptions include Reflower, which offers monthly plans for floral arrangements, and the MollyBox pet supply service.

Alibaba-backed Hellobike is also making inroads into the subscription space, and it has taken lessons from China's bike-sharing boom.

While users can pay per ride, the company recommends memberships costing 18 yuan a month. Rivals like Ofo and Mobike once took the market by storm with rock-bottom rates, like 0.5 yuan for a 30-minute ride, but they struggled to sustain this momentum.

Ties to the Alibaba empire are a boon as well. Hellobike waives security deposits for users with better reputation scores on the group's Sesame Credit platform, hoping to win over those who hesitate to put down money for using the bikes.

"Customers who have the deposit waived tend to have better habits and are about 30% less likely to damage the bikes," Hellobike Chief Operating Officer Han Mei said.

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