Digital price tags, smart shelving, interactive mirrors and app-based transactions are all part of Alibaba's plan to revolutionise shopping by merging physical and online stores.

The e-commerce giant this month rolled out China's first contactless 'magic payment' machine to homeware store Home Times in Hangzhou, east China, as part of founder Jack Ma' vision for retail.

The payment machine has built in sensors which enables it to detect items in a shoppers' basket, instantly providing a checkout total, and prompts to make the payment through Alibaba's digital payment method Alipay.

The transaction takes seconds, after which the doors to the airport-esque machine open for the shopper to leave the store.

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The payment method, which is also being trialled as a pilot programme at supermarket chain Hema Fresh, was designed to offer an quick alternative to waiting in a queue.

"Alipay is focused on providing consumers with an experience of new retail and what consumer experiences may look like in the future," said an Alibaba company spokesperson.

"The payment system is currently in its pilot phase to provide consumers with a look into what the future of consumption could look like."

However, the technology would not be used to replace human cashiers, instead enable a faster shopping experience, the spokesperson said.

China has been using digital wallets and QR code payment methods for more than 10 years.

The country's mobile payments sector is dominated by two major digital wallets - WeChat and Alipay - who are fighting for market share.

A woman uses a cosmetics vending machine in Hangzhou, China. Photo / Supplied
A woman uses a cosmetics vending machine in Hangzhou, China. Photo / Supplied

Alipay started in 2004 and became a mobile wallet in 2008. It was introduced into bricks and mortar retail stores in 2010 and is now used by more than 600 million Chinese. WeChat has about 650 million users.

Yang Xinyun, senior international communications manager at Ant Financial - the company which powers Alipay, said the mobile payment method had replaced cash transactions in China.

"QR codes, to us, is a type of solution in the form of payment," Yang said.

"We started mobile payments to provide financial services for individuals", many of which previously did not have bank accounts.

Chinese e-commerce giant Alibaba, has rolled out China's first contactless 'magic payment' machine as part of founder Jack Ma' vision for retail. Picture / AP
Chinese e-commerce giant Alibaba, has rolled out China's first contactless 'magic payment' machine as part of founder Jack Ma' vision for retail. Picture / AP

Yang said the digital payment methods had enabled the uptake in new technologies and unique consumer experiences in the retail space.

Alibaba founder Jack Ma defines new retail as the emergence of online shopping, physical retail and entertainment.

The company has also developed 'magic mirrors' and smart vending machines located in bathrooms of shopping malls throughout China, offering everyday items such as mouth wash or facial wipes.

The mirrors allow consumers waiting inline in bathrooms to use augmented reality-powered screens to virtually try on new makeup collection shades from beauty brands before prompting a purchase.

A shopper scans a QR code price ticket in Hangzhou, China. Photo / Supplied
A shopper scans a QR code price ticket in Hangzhou, China. Photo / Supplied

Home Times is using another retail innovation called smart shelving, in which TV screens enable shoppers to browse and purchase items that are not stocked in the store, and to see and personalise decor items in a virtual home setting.

The store uses Alibaba's Tmall technology to provide insights into consumer preferences and top-selling items, which is used to determine what products are stocked on shelves instore.

It also uses electronic price tags that automatically sync with the latest cost offered online, removing the need for staff to manually print and replace tags.

A man takes his drink order from a digital locker at Wu Fang Zhai Smart Restaurant. Photo / Supplied
A man takes his drink order from a digital locker at Wu Fang Zhai Smart Restaurant. Photo / Supplied

QR codes displayed on price tags enable access to product information, similar to how item descriptions are shown on online shopping websites.

China trialling smart restaurant concept

Alibaba has also begun trialling other contactless technologies in the food and beverage sector to increase productivity and flexibility.

In January, Alipay teamed up with Wu Fang Zhai Smart Restaurant to offer a self-service restaurant model and a 24-hour operating schedule with its vending machines.

The restaurant operates pre-order, pre-pay and pick up order options, allowing customers to open smart lockers used to store orders with a smartphone.

The RFID-enabled vending machines, opened by a smartphone, automatically detect items removed from the fridge and are charged through Alipay.

In four months the restaurant has increased its business by 40 per cent and reduced the number of employees to five from 13. The restaurant had proven to be popular with office workers in the area.

An Alibaba spokesperson said it intended to roll out the technology to other retail environments if the pilot programmes were successful.